"Timing can be critical to success or failure"

The Stuttgart-based start-up Metergrid wants to enable landlords to offer electricity to their tenants. Can this work?

High energy prices, inflation, crisis: At the moment, many people are trying to save money and are thinking about alternative ways to get electricity. Metergrid has one such idea. In the Startbase interview, co-founder Julian Schulz talks about the start-up's beginnings, the business model and why timing plays such a big role in founding a company.

Mr. Schulz, how did you come up with the idea of founding a start-up in the field of tenant electricity?

We got the idea from a landlord who rents rooms to the University of Stuttgart. He brought to our attention the problem that there is no way for private landlords to offer electricity to their tenants. We want to solve that.

How do you explain what your startup does to someone who has no idea about the subject?

Our customers are private landlords and smaller real estate companies. In the past, the utility supplied a property with energy. Today, it's possible for properties to be self-sufficient. Selling electricity to tenants is not as easy as you think, and that's where we come in. There are regulations, metering techniques and software to manage it. We support and make it possible to sell electricity to tenants independently. The landlord has an additional business model and the tenants cheaper electricity. Meanwhile, we start much earlier and help customers to implement such a project, covering all areas, from planning and economic feasibility studies, to finding an installer, to contracts for the tenants.

Can you explain the procedure using a specific project?

The customer wants to find an alternative energy supply for himself and his tenants. So he Googles tenant electricity and comes across us. On our website, he can request a consultation appointment. We will explain to him how the project will work and whether it is economically viable for him. If he already has a solar installer, we can directly make an offer and start the project implementation, otherwise we also arrange solar installers from our network for our customers. Then we calculate electricity prices for the tenants and prepare contracts. In our software, the landlord can, among other things, read the electricity of the corresponding tenants on a daily basis and send invoices.

What does your business model look like?

We have three pricing modules. First is the onboarding fee, which is always the same because our projects are standardized, making the business model scalable. Then there is a fee for the technology and finally a monthly fee for the software per tenant.

Is any type of house suitable for a project with Metergrid?

There are physical requirements, such as the statics, i.e. the question of whether a PV system can be built on the house at all. This is checked by a solar installer and we check in parallel whether a PV system would be economical and whether such a project is worthwhile for the landlord.

At what point is such a project worthwhile for a landlord?

In 2019, almost 5.2 million households in Germany rented out one or more properties. We address these households with our target group and for the large proportion, from two parties, such a project is worthwhile.

On your website, you advertise "up to 12% return". How do you arrive at that?

The return is made up of the investment costs minus all costs over the term. In the residential sector, we see returns of between five and 12 percent, and in the commercial sector even up to 20 percent. Based on previous projects, it has always been possible to generate such a high return. However, we cannot guarantee it, hence "up to."

Earlier this month, you closed a financing round. What are the next steps?

With this round of funding, we want to increase the scalability of our solution. On the one hand, we are building a PV partner network through new employees, so that projects can also be implemented promptly and our software comes into use. On the other hand, scalability must also be implemented in the software itself. A new round of financing is then planned for the first quarter of 2023.

What did you learn during the startup?

My biggest learning was about timing: a few years ago, we were confronted with the question of whether our business model served more of a niche or the large sales market. Current events regarding the energy crisis have led to a sharp increase in customer inquiries. From an entrepreneurial point of view, it was important to recognize the associated problems at an early stage and consequently to intervene. Timing and targeted intervention can be decisive for success or failure.

Looking back, what mistake would you have liked to have avoided?

I would start thinking big earlier. The mentality I grew up with and also picked up from other companies put the focus more on stability than growth. We made good financial plans from the beginning, but didn't expect to become a relevant player. At some point, this attitude changed and we started focusing on the goal of steady growth, tied to the determination to become a relevant player in the market.

Where do you see your startup in three years?

I see Metergrid as the contact and competence partner for private landlords in Germany on the topic of tenant electricity. The names Metergrid and tenant electricity should grow together like Google and "search.