NYC Climate Week (phew)
September 28, 2024 (Review of Week
EOY-14)
I don’t think I realized how big NY Climate Week has gotten –
it seems like everyone was here this year!
Personally, I spent nearly all my time at VC events,
which was productive, if not my absolute first choice:
- Met two of our VC prospects in person. Both firms were in my current top 10, and meeting them in person was a nice bonus.
- Met a handful of VCs I’d never heard of before who asked for our deck
- Met in person a handful of VCs we’ve pitched before and hopefully piqued their interest in the Seed
- Met several founders!
Wrapping up week 3 of fundraising, I am hoping that by the end of this coming week
we’ll have a few VCs showing firms signs of interest in leading the Seed.
Right now, we have two VCs in the midst of pre-termsheet diligence
and three that I think will move into that stage.
On the one hand, we only need one of these to come through as lead;
on the other hand, until one does come forward, all the other “follow” VCs are on hold!
FYI, here’s how this works, process-wise:
- Intro meeting: Whether meeting for the first time or catching up, the first meeting in a raise is a half-hour call. It’s either a 10-min pitch with a deck (new to us) or a recap and update since last convo. The usual outcome from this is a promise to follow up with the outcome of their deal screening meeting
- Deal screening: We get presented to the deal screening committee. I think what happens here is a principal or a partner, or if they run on consensus, more than one partner (depending on firm) has to express interest. Whether they’re interested or not can depend on seemingly anything, but in theory, it’s mainly whether they think we have a “fund returner” potential – much of which has to do with whether they think our market is big enough. If no one feels like we’re worth pursuing, we get a quick no (if they’re nice) or they ghost us at this point (wump wump).
- Pre-termsheet Diligence: If they want to keep dating us, they ask for our data room. The data room has our deck, round FAQ, financial model, leadership resumes, and founding documents. We used to do a Series A style data room with everything under the sun, but that seemed to hurt rather than help us, so we’ve pared it WAY back to the bare minimum. This stage often ends with a list of DD questions.
- Partner call(s): After they look at stuff on paper, they want to see the product in action, talk to some customers, and have a more in-depth convo with me and Marc. Hopefully, by this point, the conversation is future-oriented: What do we need to do to hit our next set of goals; where do we see opportunities and challenges; how can they help us beyond money. If we get here and we’re still having market and competition discussions, it’s probably moribund. If they like us, they tell us they like us…and hopefully the 2nd half of that is not “but we’ll come in when you get someone else to lead.”
- VC Valley of Death: I hope we don’t have to live through this again, but when we have a VC who is 80% bought in, but for whatever reason wants/needs someone else to lead the round, we go into a slow death spiral: longer it takes to get a lead, the less likely these people are coming back. This is why I am focusing on getting a lead in place before talking to a bunch of follows.
- Termsheet! We get an offer.
- Post-termsheet DD: We’ve not lived this before, but for a priced round there are a couple months of additional legal diligence and negotiation, for which our corporate lawyers have been waiting in the wings. Fun fact! We get to pick up the VC’s legal fees in addition to our own!
- First close: When we have 2/3 of the round, we’d do a first close. That means we get checks!
- Final close: When we raise the rest of the round, we do a 2nd close. And hopefully, we’re off to the races, with 3-4M to spend on growth.
Here’s the narrative that seems to be getting the best reception at the moment:
- Multifamily is a big market (spends 65B annually, etc.)
- The value we deliver is to get retrofits to happen faster (lower risk).
- We’re plugging into where the potential retrofits already go get in line – at the lender or the rebate provider – we tap into existing aggregations of projects
- We’re making subscription revenue now, but there’s way more $ in transactions
- We’ve figured out how to deliver transactional value in the LL97 case, and we can do this and more with a national footprint
- We’ll have a national footprint with GGRF in 2025
That’s it from me for this week! I wanted to go over the eNPS results, but I guess we can talk about that next week. Have a good one! -Bomee
Metrics
- Unique Buildings: 5,588 (Aug)
- Annual Run Rate: $1.3M (unchanged)
- Monthly net burn: $60K (averaged over last 3 months)
- 2024 Transaction fees to date: $6,257.34 from CPC (no change from last week) and $15,164 invoiced from LL97 PECM.
- Outstanding invoices as of today: $63,913.37 (+$10,164 week over week)
Last Week’s Highlights
- We released a new blown-in wall insulation measure, one of a few new building envelope measures we’re adding as we expand outside of NYC. Users in other markets will expect these kinds of options in order for Momentum’s recommendations and estimates to be relevant. (JB)
- Jason and Marc attended a Climate Week Nerdfest discussing the real world performance of commercial VRF heat pumps in multifamily buildings. These larger centralized heat pump systems are not performing anywhere close to their rated performance. This has big implications for projected operating costs, which owners care about, and energy demand, which electric grid operators, utilities, and effectively all ratepayers, care about. (JB)
- But it’s not all doom and gloom in heat pump land! Just before said Nerdfest, NYSERDA effectively asked us to build an app that allows building staff or residents to take a picture of their existing PTAC or sleeve AC and follow a guided interaction to procure the right high performance PTHP (packaged terminal heat pump–not centralized equipment). This would help provide the intelligence for larger manufacturers to enter this space, building the market for these products with us positioned at a critical point in the procurement process. See Marc’s notes for more background. (JB)
- In this week’s Horizontal Practices meeting, we discussed our shared understanding of our strategy and challenges in the market. Great opportunity to identify spots where we’re unclear on priorities, and discuss ideas. (FH)
- We’ve passed the (very symbolic) threshold of 10,000 commits in our Momentum code base on Thursday, and are already at 10,105 at the time of this writing. Round numbers aside, release 80 addressed 42 tickets: in addition to the new blown-in wall insulation measure, we’ve added video tutorials, security hardening improvements, features for national, and progress on GP bidforms. (FH)
- Key Insights from GTM Sessions: Strategies for Achieving $10M Revenue Goal by 2026 with Focus on Demand Aggregation for Retrofit Projects. I put this deck together to work backwards on defining a GTM consistent with a goal of $10M in revenue in 2026. We used this material as a jumping off point with folks being in town for Climate Week to have two deep GTM sessions with our investor partners Mike Palmer of Great Wave and TC Ostrander & Chichi Anyoku at Catalyst. We spent about 5 hours with both organizations on separate days.The essence of the feedback from these discussions is captured in slide 3…underscoring the importance of aggregating demand for retrofit projects. Note that a subset of this deck (slides 10-13) is a compilation of KPI’s and some qualitative learnings from the 3 rounds of bidding that Kate and Martine have driven forward. (MZ)
- Q4 2024 FinOps Update: Over the past month, we have made some FinOps progress that help us to create a robust, scalable financial infrastructure that will support data-driven decision-making and optimize our operations. This overview provides a current state and goals for four main areas: FinOps Infrastructure, Financial Reporting, Financial Compliance and Financial Literacy and Transparency. If you have any questions, let me know! (EP)
- Compliance Documents to Sign in Justworks: Taking another opportunity to remind everyone to sign the Handbook Acknowledgment and Bring Your Own Device policies that were shared in Justworks on Friday. Any questions, reach out to me via Slack. (EP)
Any missing highlights? Please share in Slack comments.
Watch List
Bomee’s List:
- [NEW] “I don’t understand…“ I feel like I’m hearing from several quarters that they don’t feel like they know enough to make decisions, or what decisions they should be making.
This is something we need to keep digging into (eg via the horizontal meetings). If people aren’t clear on how/when to make decisions, that is a big red flag that our decision processes are not working for us, and that is not a problem to be brushed under the rug!
- 2024 Revenue Erika is working on the year-end outlook and 2025 budget. Anticipating lower total revenue than originally budgeted, but we’ve also spent a bit less than budget.
- Pace of product delivery: We have a pressing need to be nimble, so we need to figure out how to respond to that need, given our currently long dev cycles. This is a high risk area, from my perspective.
- Onboarding is improving, but still has a ways to go. We are still coming out of 90 days with less clarity than would be ideal – as evidenced by e-NPS sentiments
- Recruiting: If we raise, this will be a high-priority item, and we haven’t yet been able to do more to prepare for January
- Focus we always have a lot going on, especially with external partnerships. Having a lot that competes for our attention is a risk (even if we seem to do OK balancing things).
Erika’s List:
- 2024 Revenue and Expenses Making sure we have everything in order for year-end expenses and 2025 budget. We have higher cost obligations in 2025 (legal fees, loan payments) that we need to account for and ensure they are being recorded properly on our balance sheet and P&L.
François’ List:
- Light(s) at the end of the productivity tunnel(s): I’ve been feeling good about our productivity in the back-end, with rapid turnaround on demo feedback. On the application side, things are perking up, but the conversion of hard work into results isn’t there yet. Improving our processes, stack, and tools to reach a pace we can all feel good about is a top priority.
- Framework choices: The Building Edit Details page re-work is a great opportunity to evaluate gradually pivoting away from Livewire. Thanks to Luke’s work, we’ve identified Inertia is a strong contender, which would enable us to use Vue or React, technologies that are easier to work with (and likely easier to hire for) than Livewire.
- Development papercuts: a fast, reliable, comprehensive test suite is a must-have foundation to get things done quickly for large projects. Momentum’s is neither fast (~10m per run), nor reliable (flaky tests gallore), nor comprehensive. In the rush of pushing features out we’ve put fixing this on the backburner, but interest on this tech debt is accruing fast.
- Flexing: Our product can juggle complex parameters to reflect local costs, climate, utilities, rebates, tax incentives, building types, etc. Showing more of this work in the front-end not only help us catch bugs faster, but demonstrates the depth of our technology to users and investors.
- SOC 2: Our 3-month audit period begun 9/1, and our auditor will start engaging with us to review our processes throughout the audit (Reuben leading) starting 10/7.
Jason’s List:
- Getting clarity on the revised GTM plan. We have a good sense of product needs for Q4, but what to prioritize in 2025 is less clear. Knowing direction sooner would also impact decisions made during the implementation of Q4 product work.
- Expanding to the next geographic area after Massachusetts. This should be faster than going to MA has been, thanks to the flexible calc service foundation put in place by François, Robin, and Naina.
Marc’s List:
- Spinning wheels without a North Star: Based on a post Climate Week GTM debrief with Bomee, I need to do some work better document our “one to many strategy” (TC from Catalyst’s words) to aggregate projects. Also need to just generally better articulating “what kind of business” we are trying to run per Bomee before we can define an executable GTM. Also need to take outputs of this past week and feed into Erika’s Q4 2024 and 2025 budget projections.
- 2025 Revenue: We were expecting (and preparing for) a large “Retrofit Accelerator” RFP to come out from NYC during Climate Week… this didn’t happen but we will continue to monitor.
- Contractor Transactions: The winning contractor of the first round of bidding proposed a monster change order, significantly increasing the cost of their bid and potentially undermining the efficacy of the streamlined bidding process. We are digging into the root causes of this change order and will be discussing further with Urban American on Monday.
On Deck for This Week
- Naina’s 90-Day 360 (JB)
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With the first version of generic projects and the new dashboard work coming to a stopping point, we’ll be starting to plan out the next big feature work: a) directly incorporating user-submitted data from loan applications into our scoping and b) generic programs. This will help CPC with their CFHF program today and sets us up to better support GGRF (and other) programs in the future. (JB)
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10 VC meetings this week, and then lots of follow-ups this week on VCs pitched during the first 3 weeks (bj)
- Here’s what’s on the Company Radar
Please Leave Feedback
Please note your reaction to this update in the Slack channel. It helps us to know what is resonating, what is unclear, etc. Thanks!
- What are your highlights / lowlights?
- Did we miss a highlight? Something else you want to react to?
Naina (Generalist) Sep 30th at 9:18 AM
Seeing the whole process for getting VCs written out is very useful and super interesting
Jason (BuildSci Lead) Sep 30th at 12:32 PM
I didn’t realize we “get” to pay for the VC’s lawyer fees. How risk averse are these venture capitalists?