SaaS Interviews with CEOs, Startups, Founders
She's using her marketplace to fund $1m in ground heating systems in Finland and charging a SaaS Fee
06 Feb 2024
Chapter 1: What is the main topic discussed in this episode?
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Chapter 2: What is the main focus of the Action Energy Marketplace?
Guys, Action Energy Marketplace was launched just in fall of 2023. She's based in Finland. And as an example, she's launched a marketplace which connects, call it a housing project in Finland that wants to install something like an underground heating system. She connects that housing unit with all those providers.
She's got a housing, a hundred of these sort of buyers, these housing companies and property managers on the platform, and also a hundred providers. They put hundreds of thousands of dollars of project value through the platform in the first, call it, four, five, six months here. The way she makes money is she charges a SaaS monthly fee. Those providers, 100 of them, pay 29 euros per month.
So call it three grand a month in revenue. But the real play she's building towards is the fund she's raising, an SPV of 10 to 15 million euros, so that when that provider gets the contract to put in a million-dollar heating unit, ground unit, with the housing unit, she can fund it and then sign a contract with the housing unit as a cash flow stream. We'll see what happens.
If she can get that off the ground, Hey folks, my guest today is Tara Teppo. She's the founder of two companies in the energy and financing area. She co-founded Cleantech Invest, which is later called Loudspring, now Eagle Filters. In 2005, that company was listed on the NASDAQ First North Helsinki in 2014. She then founded Action Energy Finance, AEF, in October 2021.
The company focuses on energy asset financing and building a digital marketplace and a community that brings providers, buyers, and investors together. All right, Tara, you ready to take us to the top? Yeah, already. Okay. I'm excited for this. So just to be clear, are you making sort of a marketplace fee on the projects flowing through your system?
Or are you charging sort of a flat SaaS fee, traditional software model?
Yeah, it's a flat SaaS fee. So, I mean, that's what it is for now. So what we do is that in the marketplace, so we actually, we have developed a marketplace platform and we currently operate three different marketplaces. One is sort of the actual energy market Finland, which focuses on the energy projects in the Finnish market where we are based.
Then we operate Action Energy Finance 24, which is the finance service for the energy projects. And we're currently developing a third service, which is sort of for Action Energy Market Global, which is a marketplace for cross-border energy projects.
So let's focus on that first. I noticed that. Okay, got it. Let's focus on that. So I heard marketplace two was fund and then three is another marketplace coming. Did I get that right? That's right. That first marketplace, paint that picture for us. For my audience not familiar with the energy space, who was a buyer and a seller on that first marketplace that you talked about?
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Chapter 3: How does the marketplace connect buyers and providers in Finland?
Yeah. So this is the one. So the Action Energy Market Finland is the one that we operate in Finland, and the buyers are housing companies. So this is like apartment buildings that are organized as housing companies. Obviously, it can be used by other buildings and facilities as well, but this is the biggest market segment at the moment.
And the buyers are looking for ways how to improve energy efficiency or make new energy investments in the building. So they want to change the heating system. They want to do an energy efficiency project. It could be heat recovery, could be solar, could be charging station or something like that. So that's an example of the project. So they're looking for offers in that area.
So on the marketplace, we bring the buyers and the providers together.
So that buyer is the housing company. The seller is the heating system provider, the solar provider.
Exactly, exactly. And the buyer can be represented by a property manager. So it could be, you know, this is one of the user segments on the platform. So it's, you know, the property managers, they are managing could be hundreds or thousands of housing companies in this area.
So on behalf of their clients or the housing company directly, if they have a very active board in the housing company, so they create an offer request on the platform and then can receive offers for their energy project.
And what's the average project value that goes through that marketplace?
It can be very small projects.
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Chapter 4: What is the revenue model for the Action Energy Marketplace?
I mean, sort of more like consulting related, sort of planning related. So this could be some tens of thousands of euros. So roughly about the same as USD. Or, you know, it goes up to a couple of millions. I mean, when it comes to the actual implementation. So we support providers in various stages of the development.
Chapter 5: What is the significance of the SPV fund being raised?
So it could be that they are looking for a provider that's going to do the initial sort of like survey, you know, does it make sense to sort of implement this sort of a heating system change? Then you could find an engineering company via the service to do the actual planning work. And then you can use it to, say, if you're doing a ground heat project, which are very popular here.
So, you know, you drill like, say, 300 meters underground. And that's where you get the heating. I mean, we truly need the heating in this country. Currently, it's minus 15 Celsius here. So these are important projects.
I think the marketplace, what you do, makes perfect sense. I'm just trying to get a sense of traction. So if I asked you, like, what was 2023 total project value that flowed through your marketplace, what would you say?
Well, we have just launched this now this fall. So we are in the early stages of this. So what would I say? You know, this is in some hundreds of thousands of euros at the moment.
Okay, so hundreds of thousands of euros in terms of projects completed in fall of last year, right? Moving into obviously winter. And what do you think you'll do in 2024 in terms of total project value?
Well, it really depends on how many of the projects we're able to get in the implementation stage. When it's a consulting-related project, this is obviously much smaller projects. But before I answer that question, what we actually aim to do with the marketplace is we're digitizing the project data. And we bring financing for it.
So the type of projects that we want to get via the marketplace, we actually want to originate projects that need investment. So our aim, so we're currently fundraising a SPV so that we can actually start investing into the projects directly.
How much are you targeting in that SPV?
Um, in the first, we first want to do sort of more like a carve out. So, um, so 10 to 50 million euros. So, um, so depending how much sort of debt leverage we can bring to that. So, so it depends what's the absolute project value, but we aim to raise about 10 to 50 million euros. So we can start investing directly into the projects that are originated through the marketplace.
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Chapter 6: Who are the primary users of the marketplace?
I mean, this is a choice that we wanted to make.
Yep. And how many unique housing projects put a project through your platform since you've been around?
I mean, we launched this fall, so we have about 150 registered companies on the platform.
Those are buyers of energy or providers?
We have about 100. This is about 100 and something buyers. Actually, yeah, you're right. We have about 200. So 100 and 100. So 100 providers, about 100 registered housing companies.
And how many of the registered housing companies, 100 of them, how many put at least a dollar project volume through you since you launched all time last fall?
It's not a large amount yet. This takes some time to build up. So about 20 or 30 housing companies.
Okay. Well, that's great progress for only being around for six months or so. So that's great. Cool. And then you, just to be clear, you don't, again, make money on the marketplace. You see your way to make money here as the fund structure and the cash flow is generated from the service agreement you signed with the housing company.
Yeah, actually, we make money from the providers. So the service is free to use for the buyers. The providers pay a SaaS fee. So, you know, either monthly, three months, six months, or yearly fee.
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