For anyone working in venture capital, there is a golden moment when a team you meet is perfectly placed to realize a huge market opportunity. At Antler, one of these moments occurred on a spring morning in 2022, when Julia Wadehn and Mona Hornung walked us through the market of energy renovation for residential buildings. One number struck us: 15% — as 15% of 119 million residential buildings in the EU need energy renovation before 2030. The market to support this giant overhaul is massive and the founders behind NOVO are set to solve this challenge in a novel and tech-enabled way.
A market ripe for disruption and perfect timing
It is always exciting to be confronted with a space that is ripe for digital disruption. But the perfect alignment of all crucial factors—team, timing, and scale of opportunity—is thrilling. Julia told us: “Since my career at Siemens Energy, I have been painfully aware of process inefficiencies. It’s absurd how energy renovation is still very much stuck in the 20th century.” The reality of this inefficient process does not meet the ambition that both the EU and the German government are pushing for—3.3 million buildings in Germany alone need energy renovation before 2030, and 14 million before 2045.
Or as state secretary Dr. Patrick Graichen recently claimed during the congress on energy transition: “The next big swing will be around buildings.”
It’s no wonder as buildings account for 36% of CO2 emissions within the EU. The ambition to bring those down swiftly is also huge. The EU “renovation wave strategy” underlines the ambition and opens up the market of 119 million residential buildings within the EU. EU member states are increasingly mandated to follow this directive in implementing energy retrofitting practices, whilst subsidy structures and regulations have also been put in place.
We are already seeing this trend reflected across the market and in the investment space. A recent report by A/O Proptech estimates investment rose to more than $2.2 billion in 2022 alone. Other reports on the market conclude that the whole energy retrofitting market in the EU is estimated to be more than €109 billion.
This means the potential of NOVO’s product to monetize energy advisory and access to a seamless process for financing and executing the project adds up to a €11 billion total addressable market. The market is moving. “We see this market picking up pace over the past months. More capital and more talent will flow into the space. I would expect that we are only seeing the tip of the iceberg and many others will join the bandwagon,” concludes Christoph Klink, Partner at Antler.
While this huge market is on the move, it faces a critical constraint. Today's processes are dependent on individual energy advisors, creating a massive bottleneck for homeowners and the planet. NOVO comes in at exactly this point.
The right team for energy retrofitting, which will be the dominant use case for the proptech sector this century
Julia Wadehn and Mona Hornung have been working together for years in various roles, scaling VC-backed companies together and combine over 20 years of experience. They have worked in the energy and construction sector, as well as building digital products and marketplaces. Their experience driving high-growth companies as well as working in a traditional industry is valuable allowing them to disrupt the market. Their speed in execution and structured approach in pushing this business forward impressed us. They have a high level of customer centricity which makes them well placed to build this product. A team with this level of seniority that runs like a well-oiled machine is impressive.
During the first days we worked together at Antler, Mona and Julia walked us through what has the potential to be the biggest use case for the proptech sector this century: energy renovation. Getting buildings to a higher energy efficiency level is one of the focus areas of the EU to reach carbon neutrality. The process is still stuck in a manual age, relying on a small number of individual energy advisors to complete the process.
A highly profitable entry use case for vertical integration
We need to significantly accelerate the speed by which we decarbonize the built environment. Getting there requires digital solutions to accelerate the process at scale. This is where NOVO comes into play. NOVO covers the entire journey of energy renovation for homeowners fully: Users are equipped with a renovation roadmap indicating clear measures to take, they get access to subsidies and loans, in addition to getting connected to installation companies to get the works done. Today, homeowners have to deal with all those different stakeholders individually. In contrast, NOVO turns energy renovation into a smooth user journey with only one single point of contact. With this streamlined approach, the lead time for renovation works contracted can be reduced drastically—from up to 12 months down to four weeks on average.
Streamlining the energy renovation into a seamless experience for the user is at the core of the solution of NOVO. By fully digitizing energy advisory and delivering individual renovation roadmaps, the biggest pain for users is already solved upfront. When users start their energy renovations, NOVO is the first touchpoint. This is not only the starting point of all decisions, but also a mandatory step for accessing subsidies. It does not stop there. Relevant value is created through financing and executing all retrofitting works. Eliminating the need for individual energy advisors through a fully digital process allows for a highly profitable entry use case into energy renovation.
Fast traction towards a seamless experience for users
Together with their growing team, Julia and Mona have accelerated the historically lengthy and fragmented process of collecting input about a building and transforming this into concrete output: creating key recommendations that inform an energy renovation roadmap. Today, following close collaboration with experts from the Technical University Berlin, a top German technical university, they are five times faster than the market average while maintaining high levels of accuracy. The process does not require home visits, homeowners are fully in the driver's seat.
“A good solution cannot stop there though, as we need to think from the users’ perspective of getting renovation done. Not just a plan for it. This is why we give access to both financing and subsidies as well as reliably connect to installers,” Mona states.
Since our investment, NOVO has launched the product and successfully processed a growing number of early customers representing different building types at a huge speed. They were able to adapt the product logic to several regionally-specific building types. Next to the high accuracy of results this delivers, it also enables a fast rollout in all regions of Germany and an easier adaptation to international markets.
Soon after our investment, the team rapidly brought their first key hire on board. They were also able to secure a network of scientists, energy efficiency professionals and engineers, covering building faculty leaders from the Technical University Berlin. This allows them to move forward fast and pursue the product vision of an automated roadmap generation based on machine learning and a platform for all processes around energy renovation.
Our investment rationale at Antler
We are at the beginning of a massive shift. Energy retrofitting will further pave its way to be the dominant use case of our times in the real estate sector. The need for digital solutions that allow for a massive increase in speed is enormous.
NOVO is perfectly positioned to take on that market and is showing significant momentum. Julia and Mona are a team with a proven track record in building and scaling digital products. They have a strong background in energy and marketplaces and have unique capabilities in high-quality planning and fast execution. “We’ve been impressed by Julia and Mona since day 1. The vision of the team on how to win the market in the long term is clear and concise—-as is the product roadmap to get there. Together, with their highly relevant and complementary backgrounds, they are a formidable duo and hold strong founder market-fit”, states Sarah Finegan, Director at Antler.
Beyond that, this will unlock a whole new business potential on how to use building data, enabling a suite of products ranging from financial services to insurance in the future. It all starts today.
