One of our super exciting young bets of the last year had been Lun, who today announced a new €10M round with Norrsken, Lowercarbon and Partech, which they raised ultra quickly on the back of assembling one of the best management teams in the space in Europe and executing a super unique product (more on that below). We are proud to have led Lun’s pre-seed just 12 months ago.
This financing coincides with market shifts across Europe. For example, the German Green Party is driving a policy through which installing fossil heating shall be banned. While it might not happen in its most radical form (who knows), chances are it will pass at least in some partially modified form.
For a bunch of folks out there the above Venn diagram might not make sense at first. What do design and workflows have to do with heat pumps. It‘s all about buying small shops, training some people, isn’t it?
No, it isn’t.
A lot of companies approach the thermal renovation opportunity across Europe from an Enpal-like angle (basically super-heavy asset-financing model). There’s Thermondo, 1KOMMA5 and many others with slightly different but fundamentally similar takes across Europe etc.
If you really break it down to first principles, these models resemble asset-financing businesses where they take some workforce constraints out. The workforce aspect is secondary though – when you read the P&L and Cash Flow Statements, you see that these models are asset-financing with some bolt-ons left and right.
The not so attractive part with that approach imo is (1) this is a model born out of a low interest environment, and the cash economics of such models are just not what I look for in firms (2) you cannot be a credible arbitrator of a merit order of renovation measures, cause you know, it has to be always eg. solar first (even if the building would benefit from another thermal upgrade first) because that’s where I need to put my OWN workforce into constant work and (3) if you look at reducing our CO2 footprint on the grandest of scales – we are talking 100M+ homes in Europe as fast as possible – these asset-heavy models just cannot move the needle. Only a software play that enables hundreds of thousands of installers can reach that scale and reach it quickly.
Therefore, my thesis is different:
Therefore, my thesis is that a B2B installer-centric design and workflow software for heat pumps which helps with spec’ing and all the tedious overhead work and customer-centric and supplier-centric workflows in itself can free up 50% of installer capacity (i.e. double the current capacity) across Europe. And do this fast and at scale.
In other words: Scaling heat pumps to mega-scale is a design and workflow problem (because it requires skill and is highly varied).
There is precedent and a playbook to get inspired by from the US in rooftop solar – Aurora. And for heat pumps, this formula is even more relevant due to their complexity.
And that’s what Lun does for European heat pumps. No marketplace, no asset-heavy workforce – just amazing design + workflow software to enable installers.
Lun has assembled one of the very best climate-tech and software management teams in Europe. The next year could be fun, now that we stocked up with cash 🙂
P.S. some resources for my readers who love physics and who’d like to become heat pump geeks:
Applications of Thermodynamics- Heat Pumps and Refrigerators | How heat pumps work | What is a Heat Pump? | Why Proper Heat Pump Sizing is Important | How to Find the Right Size Heat Pump For Your Home | When It Comes To Heat Pumps, Does Size Really Matter?