Energy efficiency is becoming a top priority for building owners, and companies. Businesses are quickly seeing the benefits of switching to more eco-friendly power solutions, and the reason for doing so is evident when checking the numbers.
As early as 2006, when a McKinsey Global Institute report found that the saving potential for commercial entities can be substantial transitioning businesses, the trend became clear. Specifically, “the McKinsey report offers a long list of suggested steps, including the adoption of compact fluorescent light bulbs, improved insulation on new buildings, reduced standby power requirements, an accelerated push for appliance-efficiency standards and the use of solar water heaters. Those moves, among others, could reduce the yearly growth rate in worldwide energy demand through 2020 to six-tenths of a percent, from a forecast annual rate of 2.2 percent”.
Like any restructuring plan of this nature, especially given the potential scale involved for large commercial buildings, financing can become a roadblock. Effectively connecting building owners with willing lenders is a challenge.
Noesis, an Austin, Texas based startup is aiming to facilitate easier transactions between both sides of the equation. The company connects commercial building owners, and companies with financing options to fit their needs. We spoke to their CEO Scott Harmon to learn more about the company’s goals, and how he sees the future of this quickly growing industry.
“We’re an online lending marketplace, we work with people who own commercial buildings and the vendors who sell equipment, and we connect them to loans. Our goal is to make energy more cost efficient to operate” he notes when asked about the primary function of the venture.
Noesis was launched in 2011, and since then has been able to amass over $20 million in funding from numerous venture capital backers, a testament to the promising nature of the energy efficiency field.
The goal of the company is two-fold. Help businesses grow while making the transition to more efficient equipment, and also provide strong financing options to lenders across the board. As Harmon puts it, “we really manage the process from start to finish. We identify the best lender from our network, and do the matching upfront, along with facilitating the underwriting, and provide the loan documents directly. Noesis selects the lender based on the criteria we’ve established”.
As one might imagine, competition in the market is high. However, that doesn’t stop Noesis from being able to offer a unique service, and one which Harmon feels sets the company apart from its competition. “We’re really the only company which uses software tech to enable vendors and building owners to provide a savings analysis. They really need to understand the savings they’ll have and also be able to access financing , which many times cant be reached via bank. We’re the only company which does both”.
Savings Potential and Future Vision
With regards to the last quote, the first question any potential client would have is how much they can stand to save by making the transition with Noesis. “We have analytics which keep track of that” Harmon adds. “The best two measures are the average payback period (number of years it takes to accumulate the savings to pay for the product). For us it’s between 4-5 years. The other analytic we track is the IRR (internal rate of return). The average for these projects in above 20%. We’re tracking over 500 different applications, that’s the average, but many are higher”.
As for looking to the future, no startup would be able to maintain such a steady growth rate, and acquire the venture capital Noesis has if there wasn’t far-reaching potential in the market.
Businesses are starting to see the benefits of energy efficiency, and given the market pool in both the US and abroad, the company’s executives see significant further expansion as a realistic target for the coming years.
As far as the statistics go, Harmon is clear in his view, “I think we’re really just scratching the surface in terms of opportunity. there are 7 million commercial buildings in the US alone, and we’ve only touched the tip of the iceberg. We want to expand beyond the United States in the future, and with 30 million commercial buildings around the world there’s tremendous opportunity. We’ve focused on specific technologies up to this point, but there are many others we currently don’t cover. We’d love to cover those as we expand the business”.
Noesis is leading a trend which has fintech merging with energy to produce viable financing options to an array of clients. It’ll be interesting to see how the company continues to develop in the future, and how many new entrants make their mark in the industry.