The building sector causes almost a third of the CO₂ emissions in Germany. 42watt wants to change that and is getting millions in a financing round.
With the new heating law, the traffic light government wants to accelerate the climate-friendly conversion of the building sector. This is likely to be a decisive factor on the path to climate neutrality, as almost a third of CO₂ emissions in this country currently arise from the construction and use of buildings. However, the new requirements also mean an enormous financial and organizational effort for homeowners.
“That leads to a lot of frustration and uncertainty,” says Marcus Dietmann. In 2021, he founded the startup 42watt together with Jörg Überla, which addresses exactly this point. The company, based in Munich, offers owners who want to renovate their property to make it more energy efficient, independent and individual advice including a cost plan and accompanies them throughout the entire process. This is intended to reduce the hurdles for renovation.
Dietmann, a trained architect and expert in energy efficiency, had the idea when he was looking for a new project that could combine sustainability with a successful business model, he explains in an interview in Gründerszene. His co-founder Überla, who previously helped set up the VC Wellington Partners and founded and sold a company himself, was actually supposed to join 42watt as a business angel. “I found it so exciting that I said: I want to take part myself,” says Überla.
Update from September 25, 2023: The founders have now been able to collect a mid-seven-figure euro amount for their startup. The lead investor in the round is the climate tech fund Contrarian Ventures. In addition, the existing investors have joined in, including Protech1 and McMakler founder Felix Jahn. The money will be used to expand the product portfolio, expand the team and open up new market segments. According to their own information, the Munich-based company has increased its sales more than twenty-fold in the past twelve months.
Advice from 42watt shows how much money a renovation saves
The founders see their project as a “gigantic lever” for climate protection in Germany: On average, consumption of less than 42 kilowatt hours per year per square meter must be achieved in order to achieve the climate goals – hence the name of the startup. While new buildings are usually already below this, unrenovated buildings would have up to 200 kilowatt hours. “So we won’t be able to avoid decarbonizing all existing buildings,” explains Überla.
So far, this is happening far too slowly, adds Dietmann. “The renovation rate would have to double, if not triple.” From an energy perspective, there is particularly great potential for savings in converting heating systems from oil or gas to climate-friendly alternatives such as district heating or the much-discussed heat pump. “Climate protection is important,” emphasizes the expert, “but people will only take action if it also makes economic sense.”
The advice from 42watt also provides an outlook on possible savings through the renovation work. Two different products are available to customers: Firstly, a state-funded renovation plan that is drawn up on site by a certified energy efficiency expert. Here the state covers 80 percent of the costs, and the customer pays a personal contribution of 395 euros. In return, there is a five percent discount on certain renovation measures if they are actually carried out.
Since this process is complex and there is a lack of experts in many places, the founders have developed a free, digital scenario planner together with the Technical University of Munich. Based on a few data points and an algorithm, this calculates which measures would make sense for your own property, what they will cost and when the investment will be profitable.
Rapid growth is the most important goal for 42watt
Unlike other providers, the advice is provided independently of your own interests because 42watt does not carry out the renovations itself. “This is one of the core needs of our customers and this is what we deliver,” says Überla. The co-founder does not want to disclose how many homeowners the startup has already advised. But sales have increased “more than twelvefold” since last summer, he says. “Of course this also affects a certain amount of staff growth.”
In order to finance the expansion and development of the scenario planner, the startup closed a pre-seed round at the beginning of the year, according to its own statements, in the single-digit million range. The investors include the social VC fund BonVenture from Munich, Proptech1 Ventures from Berlin as well as Beate Fastich and Christoph Behn via the business angel club Better Ventures. McMakler boss Felix Jahn and founder and industry expert Kristofer Fichter also joined as business angels.
In the coming period, the startup’s main concern will be to continue to grow quickly, say the founders. “We are still on day one when it comes to energy-efficient renovation,” says Dietmann, “there is still a lot to do in the next two decades.” If they set their mind to it, the company could become profitable “relatively quickly,” adds Überla. “But of course that doesn’t make sense when you’re in a market that’s currently exploding.” Instead, the aim is to reach millions of households with their product at some point. “We are building the company with this vision.”
This article first appeared in June 2023 and was updated to include the financing round in September 2023.