Erik Martinson’s solar startup has now raised well over $200M. With big plans to continue to scale beyond their current footholds in Europe.
On the Dealmakers Podcast, Martinson shared his insights on cleantech trends, bootstrapping and fundraising, how to deal with supply chain issues, changing regulations, and crises. Plus, the pain of layoffs, how they plan to add 4,000 new employees to their team, and his top advice for others starting a business.
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Starting A Solar Startup In Sweden
Erik Martinson was born and attended school just outside of Stockholm.
He told the Dealmakers Podcast audience that he was always technically oriented. He liked to build things and understand how they worked.
While studying technical engineering in college, he had the opportunity to do an exchange in San Diego, California.
This is where he first began exploring electric vehicles and solar. Especially after visiting a friend in LA, and encountering the Tesla for the first time.
Having first flexed his entrepreneurial talents with a student event equipment rental company, he and his cofounder returned to Sweden and began exploring what they could do in the renewable energy sector.
Initially, wind power was a much more obvious choice for Sweden. However, on deeper investigation, they found it would cost five million euros just for one windmill.
They dug in even further. While solar at first seemed more applicable to places like the US or Spain, they found a good financial case and potential for solar in Sweden. They figured that if it worked there, then it would work even better elsewhere.
They found the mission of speeding up the shift from stopping using fossil fuels to embracing solar very inspiring.
In December 2013, they formulated their master’s thesis for Svea Solar and began meeting with potential suppliers in Germany. They found one willing to make a bet on them and got started bootstrapping the business.
For the first year, Erik says that without funding, he and his cofounder would spend their days installing solar. Then they would put in another eight hours on planning, bookkeeping, and sales at night.
Managing Your Company Through A Crisis
Svea Solar had a tough, but successful first year. They grew, developed good cash flow, and became profitable.
Then right after raising their first round of outside funding at the beginning of 2020, and acquiring a company to aid their international expansion throughout Europe, COVID hit.
All of a sudden, they went from hiring fast in multiple countries to a complete lockdown.
Not only did this mean supply chain issues, but then Sweden shut off their solar subsidies in the space of just one week.
While Germany still has some subsidies, especially for batteries, Spain remains limited. In fact, overall, Erik Martinson sees solar subsidies being phased out. Especially with rising energy costs, which make solar more financially attractive for their customers, even without the subsidies.
Erik says that as a company, they focused on the long term, leaned on their strong investors, and were able to get the business growing again later in 2020.
One of the hardest parts of this process was the layoffs that they needed to make. While it wasn’t something he ever wanted to have to do as a CEO, he chose to see layoffs as a necessity. Something which just had to be done to enable the company to survive, and build the best company possible, including for the benefit of the remaining employees.
Raising Funding for Svea Solar
To date, Svea Solar has now raised over $230M. A feat he partially credits to structuring the business to be involved in both hardware and software. This has been more attractive to investors, than being one or the other. While raising more equity capital, has, in turn, enabled them to secure even larger credit lines to grow their business as fast as possible.
Storytelling is everything which is something that Erik Martinson was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
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Today, they provide the installation of solar panels and parts, batteries, and EV charging stations. As well as energy trading, selling electricity, and optimizing energy on the grid.
Their customers buy systems, lease them, can buy and sell energy to them, and get replacements when systems ultimately need to be redone.
Svea Solar Employs More Than 1,000 People
They are now at 1,000 employees again, with hopes of growing to 5,000 within the next two-four years. While being on track to hit 400M euros in revenue by next year, and billions by 2026. A growth trajectory that is definitely being helped by rising energy costs, and more focus on climate change.
Looking forward, Erik’s vision for Svea Solar is for there to be “no fossil fuels within the energy sector at all.” They are working to take out their coal, oil, and gas competitors. A part of this is strengthening the grid itself, so that it can handle onboarding the switch to solar that it sees every industry making in the future.
How Founders Can Avoid Being The Bottleneck In Their Own Businesses
When you are running a fast-growth startup, you have to be careful not to be the limiting factor of your own business.
As a founder and CEO, you must be evolving yourself and growing faster than your company. Or, you are just going to hold it back.
Erik says that understanding your own strengths and weaknesses, and hiring great people is essential to this.
He adds that you also need to not only attract the best talent, but give them a path to thrive within your organization and grow themselves and keep your eye on retaining them.
Svea has gone even further in addressing this by structuring its HR department at the top of the management team.
Listen in to the full podcast episode to find out more, including:
- This entrepreneur’s top advice when starting a company
- How to get in touch with Erik Martinson
- The future of cleantech in the world