Fixed Fast Forward | How 1komma5grad Redefines Energy Tech Growth

January 17, 2025

German energy tech unicorn 1komma5grad secures €150M pre-IPO funding, showcasing how fixed costs and PE-style acquisitions can build a generational company in record time.

Patric Hellermann

Fixed Fast Forward | How 1komma5grad Redefines Energy Tech Growth

tl;dr

1komma5grad's unique growth strategy combines PE-style acquisitions with tech innovation

Marketing genius and stage presence drive brand value for IPO positioning

Fixed costs versus variable costs reshape construction tech business models

Outcome-as-a-Service emerges as compelling model for AEC tech startups

Virtual power plants represent next frontier in energy management

PE-style acquisition strategy proves effective for rapid market consolidation

Sometimes you don't have to be good to be famous. You only have to be relevant.

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1komma5grad's unique growth strategy combines PE-style acquisitions with tech innovation

We dive into 1komma5grad's fascinating journey from its 2021 founding to becoming a pre-IPO powerhouse. The company's approach differs markedly from traditional venture-backed startups. Founded by Philip Schroder, former Tesla Europe executive, 1komma5grad has acquired over 30 traditional solar installation companies. This private equity-style playbook focuses on buying regional installers with strong capabilities, existing workforces, and succession planning needs.

What makes this strategy particularly compelling is the multiple arbitrage opportunity. 1komma5grad pays lower multiples for traditional installation companies while positioning itself for higher tech company valuations. The company has leveraged this approach to reach several hundred million in annual revenue and achieve EBITDA profitability in just four years.

We see this as a masterclass in market consolidation. By acquiring existing installation capacity and layering technology on top, 1komma5grad addresses key bottlenecks in the solar market: installation capacity, workforce distribution, and control software for virtual power plants.

Marketing genius and stage presence drive brand value for IPO positioning

At the heart of 1komma5grad's success lies Philip Schroder's exceptional marketing prowess. We've observed how his ability to generate buzz and maintain relevance has been crucial for the company's brand positioning. Even recent litigation over market leadership claims has paradoxically enhanced the company's visibility.

For an IPO case in this sector, building a compelling brand narrative proves essential. A purely operational or workforce management story likely leads to a strategic or PE exit. But by crafting an innovative technology and energy transition narrative, 1komma5grad aims for the higher multiples typically reserved for tech companies.

The recent controversy over market leadership claims illustrates this dynamic perfectly. While a regional competitor successfully challenged 1komma5grad's marketing claims in court, the incident generated significant attention and discussion in the industry. This aligns with the old adage that there's no such thing as bad publicity, particularly when building toward an IPO.

Fixed costs versus variable costs reshape construction tech business models

We're witnessing a fundamental shift in how construction tech companies approach their business models. The traditional SaaS playbook of converting variable costs to fixed costs while selling fixed-price subscriptions misses a crucial opportunity in construction. Our industry uniquely values outcomes and naturally purchases them as variable costs that scale with project revenue.

Consider the pre-SaaS era, where companies typically had high costs of goods sold that scaled directly with revenue. The SaaS revolution allowed companies to convert variable costs into fixed costs through software development. However, in construction, customers prefer paying for outcomes rather than fixed subscriptions.

This creates an opportunity for companies that can produce at fixed costs but sell variable costs tied to customer outcomes. Construction customers inherently understand and accept variable pricing models that scale with their project volume. This approach allows tech companies to capture expanding margins as they scale, potentially building generational companies in the process.

Outcome-as-a-Service emerges as compelling model for AEC tech startups

We're seeing a powerful evolution in how construction tech companies deliver value. The Outcome-as-a-Service model perfectly aligns with construction industry preferences for risk transfer and outcome-based pricing. This represents a departure from traditional SaaS models that charge fixed subscription fees regardless of customer usage or success.

Take robotics companies like Monumental as an example. Traditional bricklaying involves variable costs - more bricks mean more labor hours and higher costs. Robotics converts this into largely fixed costs, as robots don't demand overtime or raises. Yet these companies sell their service based on the number of bricks laid, maintaining the variable cost model customers prefer.

This approach proves particularly effective in construction because the industry has evolved around risk transfer. Construction companies routinely distribute risk across numerous specialized subcontractors. When tech companies can deliver guaranteed outcomes while assuming execution risk, they align perfectly with these established industry practices.

Virtual power plants represent next frontier in energy management

We're exploring how 1komma5grad positions itself in the virtual power plant space. This technology allows coordinated management of distributed energy resources - from rooftop solar to heat pumps - creating a network that can participate in wholesale energy markets.

The virtual power plant model requires sophisticated control software to balance power generation and demand. While 1komma5grad has faced some scrutiny over whether they developed this technology internally or licensed it, the potential remains significant. The ability to aggregate and optimize distributed energy resources could create substantial value in wholesale energy markets.

However, we recognize scale presents a crucial challenge. To compete effectively in energy trading markets, companies need significant asset bases. While managing thousands of residential installations provides a start, competing with traditional utilities requires substantially larger scale.

PE-style acquisition strategy proves effective for rapid market consolidation

We're witnessing how 1komma5grad's acquisition strategy enables rapid market consolidation while maintaining operational efficiency. The company has demonstrated remarkable execution in integrating over 30 companies since 2021, focusing on solar installers with strong regional presence and technical capabilities.

This approach solves multiple challenges simultaneously. It addresses the workforce shortage in solar installation, provides succession planning for existing business owners, and creates a platform for technological innovation. The strategy proves particularly effective because it combines the best aspects of private equity with technology company potential.

The model works especially well in fragmented markets with many regional players. By acquiring existing operations rather than building from scratch, 1komma5grad accelerates its growth while reducing execution risk. This approach could serve as a template for other construction tech companies looking to scale quickly in fragmented markets.