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Challenge Cup Energy Companies are Tackling the Same Few Problems, Slightly Differently

Dena Levitz Headshot

Dena Levitz

Challenge Cup Reporting Fellow, 1776

Of all of the Challenge Cup categories, energy was the industry in which specifics mattered most.

Startups around the world were tackling similar problems in similar ways—so much so that it became difficult to keep them straight. And, even more so than with education, health and cities, founders competing in the energy category needed to explain what distinguished their companies from their competitors. Was this startup’s business model tied to individual consumers or corporate clients—or something altogether more creative? Which founders had more experience in their respective energy field? Was their first target market a local one, or was it Europe or Africa? The specific answers to questions like these separated the 100-plus companies.

Between the 16 Challenge Cup stops, here are 4 key findings about the energy sector:

Kenya came out on top overall

In many ways, Nairobi was the strongest energy city of the Challenge Cup tour. From a sheer numbers perspective, it boasted a field of a dozen companies, compared to some cities with just a handful in the energy space vying to win. More importantly, the startups, as a group, had more transformative missions and wider scopes of what they were setting out to do in the world of energy.

In the U.S. Challenge Cup cities especially, companies, by and large, have set out to help consumers make sense of energy-related data coming from thermostats or on energy bills. While crucial, this type of pursuit is on a different level than what many of the Nairobi companies are doing.

In that East African nation, a number of the competitors are creating entirely new forms of energy or getting electricity to populations who otherwise would not have it. Take Nairobi runner-up Eco Fuels Kenya. The company takes croton nuts, which are abundant in East Kenya yet otherwise inedible and entirely unusable, and processes them to produce a biofuel, a natural poultry feed and an organic fertilizer. EcoFuels also hires local women to pick the nuts, thus creating jobs along the way.

Competitor Cobitech Solar is targeting the 70 percent of Kenyans who are off the power grid entirely. Many of these families are forced to use kerosene each night just to have any kind of power. So Cobitech provides solar energy kits that include items like mobile charging ports.

Getting citizens power is also the aim of category winner PowerGen Renewable Energy, which can be considered a smaller, more concentrated utility power company. Rather than making energy kits available to in-need customers, PowerGen gives them electricity and gets East Africans on the grid. So far, PowerGen is generating $10,000 in monthly revenue and has nine microgrids running in Kenya alone.

“The people we’re targeting are not being targeted by [the Kenyan power company],” says business development manager Eve Meyer. “They’re lower energy users. They’re not factories. They’re mom-and-pop hair salons, restaurants, guest houses, homes.”

How hard-charging the energy companies in Kenya are has to do with the severity of the electricity access problem in wide swaths of the continent. Across sub-Saharan African, 600 million residents lack electricity, and the addressable market to provide power to this population comes to $200 million.

Outside of the Nairobi competition, there were scattered startups in other Challenge Cup cities who honed in on African or Third World marketplaces and are working to provide energy to those without. For instance, Chicago-based Totus Power is providing portable battery packs to run classrooms, starting in India, where there’s absolutely no electricity during the day. Power comes on at night, but this is too late to be of assistance to teachers. Totus’ product is  an energy pack that can run a classroom for 10 hours daily, complete with 20 iPads—and it is 10 times cheaper than its competitors.

And the Amman winner, Tagaddod (which in Arabic means “renewable energy”), is taking a resource that’s being wasted in the Middle East—cooking oil, which families pour down their drains in enormous frequency—and converting it into a new form of energy. The Cairo-based company is trying to stop the pollution to Egypt’s water supply that comes from the wasted oil and, at the same time, produce a biodiesel, says cofounder Ahmed Raafat. Tagaddod’s first customer is an Egyptian tourism agency that gives the startup about 20 tons of used cooking oil monthly; Tagaddod then delivers back three tons of biodiesel.

Companies spurring energy usage savings or energy cost savings ruled

Across the board, though, energy efficiency was the specific aspect of energy and sustainability that came up most during Challenge Cup pitches.

Within this energy efficiency concentration, there were two main classes: Startups whose energy savings are designed for individual families or homeowners and those startups whose customers are corporations and building owners.

Kepner_1776_066In the first subset, Sealed, which won the New York Challenge Cup energy competition, is focused on what founder Andy Frank says is the biggest barrier to scaling energy efficiency: consumers’ confidence that they’ll actually save.

“Bottom line is [that] people don’t believe you when you say you can save them money. So we’re solving that problem by actually guaranteeing them savings,” he said after his startup’s win.

Sealed does energy assessments for individual homes and then takes over the homeowner’s utility contract, paying them on their behalf. The East Coast startup makes money by taking a chunk of the energy savings they’ve made possible.

Several similarly themed startups took part in Challenge Cup and have business models that involve sharing in customers’ savings. For one, Effortless Energy, out of Chicago, provides free, energy-efficient home appliance upgrades and then shares in the energy savings created.

In terms of startups geared toward corporate clients, Beijing winner Seeder connects building managers with green contractors for retrofits, becoming an energy matchmaker of sorts. The company gets paid on the vendor side, based on the contracts they win and has it as a goal to be the go-to intermediary that brings all green resources together.

The Sydney winner, Wattblock, works to reduce energy waste not in individual apartments but in the common areas of buildings. So in a multi-tenant apartment the startup doesn’t care what people do inside their own apartments; it’s looking at the energy consumed by the lighting in the hallways, in the basements, the hot water boilers, ventilation fans, air conditioning, the services of the building and then coming up with improvements to cut back. Cofounder Brent Clark says these common areas comprise 60 percent of the building’s complete energy footprint.

Making sense of energy-related data

In a similar—and sometimes overlapping—vein, startups throughout Challenge Cup are using data to help customers better understand energy information. As a result, we heard no shortage of NEST comparisons. A few of the smart-thermostat startups, like Dublin-based AskStory, pointed out what made them better than the well-known NEST. In AskStory’s case, it’s greater energy savings (up to 20 to 30 percent versus NEST’s 10 to 20 percent) and a cost of $100 less.

ChallengeCupToronto_20Other energy startups that participated in Challenge Cup are taking a commercial route, making sense of data or communications for utility companies. For instance, Toronto energy winner GridCure provides a smart-grid analytics solution that is able to consume utility data from smart meters, combine it with utility external data such as weather or local population demographics, and return utilities insights. GridCure’s first pilot was in Tennessee, and now the startup is in talks with major utilities providers to manage their big data in this manner.

In D.C., energy runner-up BitGridInc., founded by two George Washington University students, is addressing the failure of municipal utilities providers to collaborate and communicate effectively during natural disasters such as Hurricane Sandy.

“We’re trying to give them a platform to get them there and have the work ready to go as opposed to having to call each individual one and hoping to meet them before any work can start,” says cofounder Charles Taylor.

Fostering composting and ridding the world of waste

In some cases, startups in the fields of waste management and recycling competed in the cities category. But composting and trash also found its way into the energy competition.

Bangalore, particularly, struggles, with how to dispose of waste properly, according to startup founders there.  So it made sense that the majority of energy companies in that city’s contest are in the waste space. That includes Aruna Green Ventures, whose steel device converts waste into organic compost and Oorjaa Consulting, whose Ragpicker portal enables consumers to compare composting options in Bangalore—and hopefully across India and beyond.

Meanwhile, in D.C., Agricity has developed Compost Cab as a pick-up service that makes it easier for people to compost. Similarly, Compost Pedallers, which has been operating in Austin for two years, also enables citizens to compost, since only 2 percent of the U.S. population currently does.

One of the key differences between the two startups is the “how”: Compost Cab uses trucks for pickup, while Compost Pedallers has a fleet of cargo bikes that pick up organic materials from homes and businesses and deliver the waste to local urban farms to put back in the soil and grow more food.

Dena Levitz Headshot

Dena Levitz

Challenge Cup Reporting Fellow, 1776

Dena Levitz is traveling to almost all of the Challenge Cup cities to cover the competition and analyze startup ecosystems around the globe. Dena joins 1776 after finishing the first…