For Philipp Schröder, the success of his startup and its mission isn’t just an existential challenge for himself as founder and CEO, but for Europe as a whole.
Hamburg-based climate tech company 1KOMMA5° has built a marketplace for homeowners to buy and install carbon-neutral energy systems like solar panels and heat pumps, as well as providing the software to optimise consumption and bring down energy bills.
As such, it reduces Europe’s dependence on fossil fuels — which tend to be in the hands of regimes that do not share European values when it comes to democracy and human rights.
“[Emitting] CO2 correlates with making political systems stronger that eventually would like to destroy democracy and the way we live in Europe,” says Schröder.
“What we love about the product we have is that we decarbonise, but we are also taking customers out of the cycle of oil and gas.”
1KOMMA5° was recently valued at $1bn, just two years after launch. Despite the current bleak IPO market, Schröder says the company is still considering a public listing in 2025. He tells Sifted that the natural home for 1KOMMA5° would be on the US NASDAQ, rather than a European exchange.
Schröder concedes that there are “multiple drivers against [doing an IPO],” including market volatility. However, he believes that a public listing makes strategic sense.
1KOMMA5° has been on an acquisition spree, rolling up companies that employ electricians and other trades, and can sell and install their products. Schröder says the company has acquired a total of 32 companies and is closing up to five transactions in December. It has operations from Germany to Australia.
These acquisitions have been paid for, in part, by giving acquired companies a re-participation in 1KOMMA5° as part of their purchase price, meaning they would profit from a potential IPO. “If we are listed, it's much easier for us to do asset deals,” Schröder says.
But it makes ethical sense too. Over the next decade, 1KOMMA5° could be operating a great deal of critical infrastructure in Europe and a public listing could provide reassurance.
“We want our customers to be our shareholders,” says Schröder. “For sustainability-minded Europeans, it is really important to understand the company that is operating these systems.”
Next steps
A number of similar companies have emerged in Europe recently including Germany’s Enpal, which supplies heat pumps and solar panels on a subscription model, and Sweden’s Aira, which launched in the UK, Italy and Germany earlier this year and offers solar panels, heat pumps and insulation.
As well as a potential IPO, the company is looking at manufacturing its own solar modules in Germany.
Behind this decision, too, is geopolitical uncertainty: although 1KOMMA5° sources its polysilicon in Germany, its solar panels are manufactured in China. In the event of a dispute between China and Europe, shipments could be halted.
So while Schröder is wary of turning 1KOMMA5° into a hardware company, with all the manufacturing costs that would entail, he also needs to be able to mitigate the risk of dependence on Chinese manufacturing. As such, the company is pursuing a “hybrid model”.
“There is a high dependency on assembly and production capacity out of China,” says Schröder. “We are hoping not to get caught in the middle.”
Customers
Schröder describes 1KOMMA5° as three companies in one: a roll-up that acquires companies, an operational company that is trying to make installation more efficient and a virtual power plant operator through its software.
He says the company will post €450-€500m in revenue this year and has gross profit margins of 35-40%. Schröder believes the company could have grown faster and turned down several potential M&A opportunities this year to focus on its existing processes, particularly making the installation of assets like heat pumps more efficient.
The company has brought down installation costs through methods such as using AI for quality assurance, and Schröder says 1KOMMA5° doesn’t pay for any advertising or mainstream marketing, relying instead on customer referrals. This has helped the company keep customer acquisition costs at 3-6% of cost of sales, he says. The average customer basket is €30k.
Ahead of an IPO, Schröder’s priority now is convincing existing investors that the mission is sound.
“The favour of investors is super important for us to allow us to scale,” he says.
“We need to show that the model works, that gross margins are expanding, that we keep profitability and we are profitable.”
