What does it take to scale a sustainable start-up in the built environment?
Both developing new innovations and more widely implementing existing solutions are an important part of achieving a more sustainable built environment. Many exciting companies are trying to do just that, including our expanding community of innovative start-up members. UKGBC convene this group every quarter in an Innovative Start-Up Forum to create a space for the sharing of market insight, learnings, and challenges. Our most recent Forum involved peer-to-peer learning between start-ups and scale-ups, during which we welcomed the following speakers:
- Agnes Czako, CEO & Co-founder, Airex which has a smart air brick which reduces homes energy bills
- Michelle Taute, Head of Strategic Engagement, Tallarna which uses software-led risk analytics and integrated performance insurance to deliver ‘Decarbonisation-as-a-Service’
- Chris Mortensen, Built Environment Innovator (and former Co-founder and Chief Product Officer, Modulous)
- Evie Faure, Business Development Lead, BIOHM which is developing various biotechnologies for the building sector, including mycelium insulation
UKGBC’s Solutions & Innovation Team have summarised the key insights from this session below.
Challenges with physical products and certification
For many start-ups, the cost and length of product certification and testing is a barrier, especially for smallest companies. Some natural materials do not conform to traditional testing methods, and standards may need to be rewritten to make way for the new wave of alternative materials. There is also a trade-off between starting the certification process early and the fact improving your product or changing company location may mean recertification is needed. Some of these concerns can be addressed by working closely alongside certifying bodies and doing a lot of in-house testing. Airex, for example, obtained recognition with the Standard Assessment Procedure (SAP), the national calculation method for assessing the energy performance of buildings. While this was time consuming and challenging, it allowed access to energy efficiency funding which is critical in the retrofit space.
Pivoting business models
Being flexible to changing and adapting your business model was also discussed as an important strategy for start-ups. BIOHM now operates through a licensing model, which has allowed them to enter to into manufacturing partnerships and bring their products to market quicker. These partnerships work primarily because BIOHM has established legal and IP protections, enabling these collaborations to remain mutually beneficial. This licensing arrangement can also be beneficial for large organisations, as they have sufficient dominance in the market to work closely with certifying bodies and push for change.
Procurement
It is important to find champions at different levels of the value chain, not just within a company’s sustainability team
One of the most discussed topics was the idea of identifying individuals within organisations that will champion your product and advocate for your solution. However, it is important to find champions at different levels of the value chain, and not just within a company’s sustainability team. Start-ups must also become experts in procurement – pilots don’t always lead to more purchases, as they are disconnected from wider procurement. A good business case is critical and must be defended when it comes down to the bottom line. Researching the open innovation challenges of larger companies can also prove fruitful, but resource implications for doing this need to be carefully considered.
Fundraising
Some VCs are scared of hardware, as many don’t like the risky nature of its manufacturing. It is worth looking at VCs’ websites to see whether they have start-ups with similar types of solutions, and speaking to portfolio companies about their experience can be informative and lead to warmer introductions. Gaining a better understanding of which investors are right for you will ensure you are not wasting your time. Light-touch market research can also be useful before your funding round opens.
At times, fundraising is a full-time job. Some of our start-ups said that since starting their company, they haven’t stopped looking and fundraising. While there are some government grants/funding available in the sustainability space, a lot of time and effort goes into fundraising research and applications. Using grant writing services which only charge if the applications are successful is a helpful approach for some companies.
At times, fundraising is a full-time job
Intellectual property and the importance of partnerships
It is critical as an innovative start-up to find your niche and use this to develop your IP. After this stage, you should embrace the value of partnerships. The right partner will not only defend your IP but enhance it with their own product set, market insights, and network.
Partnerships come into their own in the building decarbonisation sector, particularly as the market increasingly moves towards one-stop-shop models. In developing an end-to-end solution, you need to recognise where in the customer journey you add the most value and bring in complementary partners who complete it. These partnerships need to be structured around maximising the customer proposition. Tallarna’s ‘Decarbonisation-as-a-Service’ offering is an example of an end-to-end solution that simplifies net zero action for C&I occupiers and social housing providers. The company launched this initiative in collaboration with system integrators and technology providers, with Tallarna’s IP guaranteeing the performance of partners’ products.
It is also important to acknowledge that, as a start-up, your IP will evolve as you find new applications and new geographies. These updates must be robustly documented to defend them to your various stakeholders and customers.
It’s important to acknowledge that, as a start-up, your IP will evolve as you find new applications and new geographies
International expansion
Expanding to other countries was a key point of discussion. There is a programme called Grow London Global by London & Partners which helps scale-ups expand out of London. Tallarna is currently participating in this initiative and has connected with global leaders in the C&I real estate sector as a result.
The US market was labelled as a particular challenge to move into with regards to building codes, which may vary from state to state. One solution to this problem would be to focus on specific markets and areas first and prioritise by need.
Building a team
It may be challenging to hire a full development team when funding is a concern. Modulous, for instance, took a partnership approach and spoke with a number of different universities with various research groups looking at generative, low-carbon design to find a group to partner with. Through this collaboration, Modulous could then better understand the skillset required. Accelerator programmes can also allow start-ups to become embedded in a world they may not be familiar with to find new team members and better establish their purpose, values, and culture.
To conclude, the built environment can be a complex space for innovators due to certification and testing, building code variation with location, and the complexity of stakeholders involved in projects. This Forum sought to provide a platform to share learnings and experiences of those navigating some of these challenges. Knowledge sharing and collaboration is key to UKGBC’s Solutions & Innovation work, which you can find out more about here.
Solutions and Innovation
Innovative Start Up Forum
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