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Founder Interview

How Brightmerge Built a 50-Customer Waitlist and Sells Microgrid Optimization at Just Under $10K per Customer (Interview with CEO Daniel Schwab)

Interview Date
November 10, 2021
Interviewee
Daniel SchwabFounder and CEO
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Watch the full interview

Company Metrics at Interview Time

Avg Contract Value (2021)

$10K

Seat Price (2021)

$250 per seat per project

Customer Waitlist (2021)

~50 customers

Team Size (2021)

8

Pre-Seed Raised (2021 round)

$550K

Historical Snapshot

These numbers were reported by Daniel Schwab during his interview with Nathan Latka in November 2021 and are a historical snapshot, not current figures. See Brightmerge’s current numbers.

Key Takeaways

  • 01Brightmerge charges $250 per seat per project and aims to start engagements at $10K to $15K per year per customer.
  • 02The company had a waitlist of around 50 customers ready to onboard as of November 2021.
  • 03Brightmerge was onboarding new customers at a rate of about two per month.
  • 04The team had grown to eight people, including five engineers.
  • 05The company raised $450K in early 2019 from the US and Israeli Innovation Authority and the Department of Energy.
  • 06An additional $550K pre-seed round was raised in 2021, bringing total funding close to $1M.
  • 07Brightmerge had been building its simulation and optimization engine for about two years at the time of the interview.
  • 08The company started selling approximately six months before the interview, beginning from zero revenue.
  • 09Daniel Schwab targeted $500K total ARR for the following year.
  • 10Expanding existing customers was cited as the faster near-term growth driver, with new customer growth expected to accelerate by end of the following year.

Company Metrics at Time of Interview

MetricValueSource
Avg Contract Value (2021)$10KFounder interview, Nov 2021
Seat Price (2021)$250 per seat per projectFounder interview, Nov 2021
Customer Waitlist (2021)~50 customersFounder interview, Nov 2021
New Customer Onboarding Rate (2021)~2 per monthFounder interview, Nov 2021
Team Size (2021)8Founder interview, Nov 2021
Engineers (2021)5Founder interview, Nov 2021
Grant and Pre-Seed Funding (2019)$450KFounder interview, Nov 2021
Pre-Seed Raise (2021)$550KFounder interview, Nov 2021
Years Building Product (2021)2 yearsFounder interview, Nov 2021

Growth Breakdown

Revenue

Brightmerge began selling approximately six months before the November 2021 interview, starting from zero. The company targets an average starting engagement of $10K to $15K per year per customer, with a seat price of $250 per seat per project, and aims to grow each account into the millions over time.

Customers

At the time of the interview, Brightmerge had a small number of early customers described as design partners, with around 50 additional customers on a waitlist ready to be onboarded. The company was bringing on new customers at roughly two per month.

Team

The team had grown to eight people as of November 2021, including five engineers covering data science, algorithm development, and electrical engineering, with the remaining members focused on sales, marketing, and administration.

Funding

Brightmerge raised $450K in early 2019 from the US and Israeli Innovation Authority and the Department of Energy, followed by an additional $550K pre-seed round in 2021, bringing the total close to $1M. At the time of the interview Daniel Schwab said he was looking to raise about $1M more, with a larger round planned for the following year, and that no investor had yet set a price.

Growth Strategy

Land and Expand Within Enterprise Accounts

Daniel Schwab described a model where customers start with one seat and one project, then expand to dozens or hundreds of projects over time. He identified expanding existing customers as the faster near-term growth driver, since new customers typically take around six months to get comfortable with the product.

Large Pre-Built Waitlist

Before launching commercially, Brightmerge built a waitlist of around 50 customers ready to onboard. This gave the company a pipeline of known demand to work through at a controlled pace of roughly two new customers per month.

Targeting High-Volume Enterprise Verticals

The company focuses on energy companies, utilities, and real estate firms with aggressive decarbonization and ESG programs. These customers are expected to run dozens to hundreds of projects, making each account highly scalable in terms of seat and project volume.

A Long Technical Build Before Going to Market

Brightmerge spent approximately two years building a simulation and optimization engine before launching commercially. The product integrates consumption profiles, weather data, tariff structures, and carbon content by energy source, and Daniel Schwab credits that long build for the customer interest that had accumulated before launch.

Institutional Funding for the Pre-Launch Build

Brightmerge's earliest money came from institutional sources rather than venture funds: about $450K in early 2019 from the US and Israeli Innovation Authority and the Department of Energy, which Daniel Schwab describes as "very much sort of big picture funding." That money went into the simulation and optimization engine, a roughly two-year build that was well underway before the company started selling six months before the interview.

Best Quotes

“We work with, energy companies, utilities, and real estate companies who are very aggressively pursuing a decarbonization program.”
“What we do is we we help people understand the real economic opportunity there so they can, you know, turbo boost the adoption of renewable energy.”
“They typically will pay us per seat about $250 per seat per project. Typically, our clients will do dozens or hundreds we hope thousands of projects. So it's kind of a very scalable business model where you can start with one project, one seat and then expand from there.”
“So we have a few customers. They're more design partners and investors as well. So we've been working with two key customers for the last year.”
“So we've got around 50 customers waiting, ready to be onboarded. So we're probably onboard at the rate of about two a month.”
“We've been funded by The US And Israeli Innovation Authority and the Department of Energy. So this is very much sort of big picture funding.”
“For a customer to get comfortable with the product and see the value, it takes six months for that to happen. So the big growth of new customers will be seen at the end of next year.”
“So we've just grown to about eight now. We've got some data scientists, super smart algorithm developers, enterprise SaaS, really smart electrical engineering. So we have to have a really deep and integrated team of different skills.”

What Happened Next

This interview captures Brightmerge at an early commercial stage in November 2021, about six months after the company started selling and shortly after it closed a $550K pre-seed round on top of the $450K it raised in 2019. Daniel Schwab said he was looking to raise roughly $1M more at the time, with a larger round targeted for the following year. The figures here reflect what he reported at that point in time and are not current. Visit the Brightmerge company profile on GetLatka for the latest available data on revenue, customers, and funding.

View Brightmerge’s current profile and metrics

Full Transcript

Chapters

Introduction to Brightmerge and Daniel Schwab

Nathan Latka

00:00Hey, folks. My guest today is Daniel Schwab. He's the Founder and CEO of brightmerge, a leading data optimization platform for local renewable energy systems or microgrids. Daniel, you ready to take us to the top?

Daniel Schwab

00:11>> Go for it.

Nathan Latka

00:12Alright. Tell us more about, about BrightSource sorry, about brightmerge. Who who's paying you for this technology?

Who Brightmerge Serves: Energy, Utilities, and Real Estate

Daniel Schwab

00:19>> We work with, energy companies, utilities, and real estate companies who are very aggressively pursuing a decarbonization program.

Nathan Latka

00:28Mhmm. And ESG targets, that sort of stuff?

Daniel Schwab

00:32>> Yeah. And just capturing the value of renewable energy that is tremendous. That's one of the greatest economic opportunities of our age. And know, the economics are just so attractive now. It's not just about decarbonization and ESG. It's just super attractive. What we do is we we help people understand the real economic opportunity there so they can, you know, turbo boost the adoption of renewable energy. Mhmm.

Pricing Model: Per Seat Per Project

Nathan Latka

00:58Now you say this is an end to end SaaS platform for microgrid economic optimization. Who are some of the customers paying you and and how much are they paying you on average per month to use the technology?

Daniel Schwab

01:08>> So so we've we've worked with some a global real estate company. They typically will pay us per seat about $250 per seat per project. Typically, our clients will do dozens or hundreds we hope thousands of projects. So it's kind of a very scalable business model where you can start with one project, one seat and then expand from there. So, you know, we aim to start an average $10,000 to $15,000 a year and then grow from there,

01:38>> go very quickly into the millions per per enterprise customer.

Nathan Latka

01:42I understand. And are you guys pre revenue today or do you have a couple customers already?

Early Customers and Design Partners

Daniel Schwab

01:46>> So we have a few customers. They're more design partners and investors as well. So we've been working with two key customers for the last year and we're now expanding over the next 10 and as I say each one of them are doing big volumes so they'll expand the acquisition costs are relatively low. We can grow internally into the organization.

Nathan Latka

02:12So Daniel, how many paying customers today? It sounds like three or four?

Daniel Schwab

02:16>> Yeah, yeah. So we're sort of doing just south of $10,000 ARR per customer.

Nathan Latka

02:26Yep. Yeah. So four customers at, you know, a $10,000 ACV, I mean, would put you at like $4,000 or $5,000 a month right now in revenue. Is that about right?

Daniel Schwab

02:33>> Yep. It's a good ballpark.

Nathan Latka

02:36And when did you start selling?

When Brightmerge Started Selling

Daniel Schwab

02:40>> Six months ago.

Nathan Latka

02:41So a year ago, you were at zero revenue, right? That's a good growth rate, 0 to $48,000 a year,

Daniel Schwab

02:46>> Yeah, I mean, I think, you know, what we did was we spent a lot of time building the product before and so, you know, there was a big waiting list, big customer interest in the product before we actually launched.

Nathan Latka

02:57How big was the wait list?

Waitlist of 50 Customers and Onboarding Rate

Daniel Schwab

02:59>> So we've got around 50 customers waiting, ready to be onboarded. So we're probably onboard at the rate of about two a month.

Nathan Latka

03:07And Daniel, when did you write the first line of code for Sorry? The

03:10When did you write the first line of code for the platform?

Founding Timeline and Grant Funding

Daniel Schwab

03:13>> So it's a pretty complex product. There's a simulation and optimization engine in the back end. So we've been doing this about two years. Yeah. And we've been funded by The US And Israeli Innovation Authority and the Department of Energy. So this is very much sort of big picture funding.

Fundraising History: 2019 and 2021 Rounds

Nathan Latka

03:32So how much was your first fundraise in what year?

Daniel Schwab

03:35>> We raised grant funding in 2020, we started 2020, Sorry. 2020 sorry. 2019. Early twenty nineteen, we raised about $450,000. Mhmm.

Nathan Latka

03:49And what have you raised since?

Daniel Schwab

03:52>> Additional 550. So it was close on a million.

Nathan Latka

03:56Mhmm. We Okay. So 550 was in 2020 or this year?

Daniel Schwab

04:00>> This year.

Nathan Latka

04:01This year. Okay. And that you'd consider that what your seed round?

Daniel Schwab

04:05>> Well, it's kind of pre seed, early seed.

Nathan Latka

04:07Yeah. Yeah. Got it. That makes sense. Now now help me understand, you mean, most people when they're doing the pre seed round, they're selling about 20% of the business. Is that about what you sold?

Daniel Schwab

04:16>> Yeah. It's a little less than that. But yeah.

Nathan Latka

04:19Okay. Little less. Fair enough. Very cool. And so so that would put I mean, that would mean, you know, $3,000,000 to $4,000,000 valuation, something like that.

Daniel Schwab

04:26>> Bump it up a little bit more.

Nathan Latka

04:29Fair enough. Alright. We'll call it 5,000,000.

Daniel Schwab

04:30>> Talking about today.

Nathan Latka

04:315,000,000 valuation today. Fair enough.

Daniel Schwab

04:33>> Yeah. We're looking we're looking at a big jump since the the previous round.

Nathan Latka

04:41Since the previous what?

Daniel Schwab

04:43>> Since the previous round. So I'm saying if you look at the valuation now, it's north of that.

Nathan Latka

04:49North of 5,000,000? Yeah. Set by who? Is that what you believe it's worth or did someone invest at that price?

Daniel Schwab

04:55>> Well, we're having discussions now with different investors.

Nathan Latka

04:58Oh, I see. So if you do raise right now, how much are you targeting to raise?

Raising Another $1M, With a Larger Round Next Year

Daniel Schwab

05:02>> We're looking to raise another million now and then early next year, probably in the round of 6,000,000.

Nathan Latka

05:11And why do you need a million today?

Daniel Schwab

05:14>> There's couple of features we wanna get into the product so that we can scale it much quicker. So there's some heavy R and D lifting that we needed to do.

Nathan Latka

05:26And if you're at above a 5,000,000 valuation today, what was your valuation back in 2019 when you raised $450,000?

Daniel Schwab

05:32>> Close to $2.02 to 3. 2.

Nathan Latka

05:35And that was a cap on the note. Right?

Daniel Schwab

05:36>> Yeah.

Team Size and Engineering Depth

Nathan Latka

05:37Yeah. Tell me more about the team today. How many folks?

Daniel Schwab

05:40>> So we've just grown to about eight now. We've got some data scientists, super smart algorithm developers, enterprise SaaS, really smart electrical engineering. So we have to have a really deep and integrated team of different skills.

Nathan Latka

05:56Daniel, how many engineers total?

Daniel Schwab

05:59>> Five.

Nathan Latka

06:00Five engineers. And what do the other four do or three do?

Daniel Schwab

06:05>> Sales, marketing, admin.

Nathan Latka

06:07What's your target? You're doing $4,000 or $5,000 a month today in revenue. What do think you can hit in six months?

Revenue Target and Growth Strategy

Daniel Schwab

06:14>> Well, I'd like to do next year total ARR $500,000. I mean, there's significant growth coming up.

Nathan Latka

06:24And how do you get there? Is it expanding the number of seats and projects on the current four customers or adding brand new customers altogether?

Daniel Schwab

06:31>> We'll do both. We'll do both.

Nathan Latka

06:33What do you think is gonna be more powerful driver of your growth?

Daniel Schwab

06:38>> Think expanding our existing customers, that'll be a much quicker ramp because it does the time for them to And for a customer to get comfortable with the product and see the value, it takes six months for that to happen. So the big growth of new customers will be seen at the end of next year.

ESG Measurement and Carbon Tracking

Nathan Latka

06:56How do you measure like the success folks have using you to hit their ESG goals? Is there like a number, tons of carbon removed from the atmosphere metric you can track through the platform or something like that?

Daniel Schwab

07:06>> Yeah, exactly. So we'll measure it at a very hyper local basis. So if it's an industrial zone, a commercial zone or a community, we can do that calculation sort of looking at a baseline, what they currently are, their energy carbon emissions and then what it will look like once they deploy new systems.

Nathan Latka

07:26And how do you measure that? Take us into the tech a little bit. Is there a physical installation of something?

Daniel Schwab

07:31>> No, it's a data feed. So we've got the APIs connected to different systems, consumption profiles, weather data, tariff structures,

07:43>> the energy content. So understanding if the energy content is coal, gas, nuclear, wind, solar, that each energy production system has a different carbon profile. So you have to really understand that specific carbon profile of that particular location.

Product Walkthrough: From Feasibility to Dashboard

Nathan Latka

08:02Interesting. And so which of these product solutions? You've got dashboards, onboarding, feasibility reports, some other stuff. Which one right now is the number one sort of use case?

Daniel Schwab

08:12>> Yeah, I mean, we take people from conceptualization of the project. So they start collecting data on our platform through a questionnaire process. Then the analytics occur and then there's dashboards. It's currently very focused on the financials and we'll be layering on additional. Also the reliability is becoming more and more of an issue. So it's not just about carbon and economics, it's also how reliable is your energy. So think about the modern world, it's critical that you

08:41>> have uptime twenty fourseven, 365. That's actually not happening even in places like California, Texas, New York in this hurricanes, fires, earthquakes, freezing. So it's really important for the customers to understand what is their predicted reliability of energy and they wanna make sure they have as reliable as possible, but they don't wanna pay a premium so we have to keep it optimized.

Famous Five: Books, Tools and Personal Questions

Nathan Latka

09:06Understood, Daniel. We're rooting for you on that note. Let's wrap up here with the famous five. Number one, what's your favorite business book?

Daniel Schwab

09:13>> Favorite business book is Jack Welch. It's called The Winner.

09:19>> Winner.

Nathan Latka

09:20Number two, is there a CEO you're following or studying?

Daniel Schwab

09:23>> I'm a big fan of Elon Musk. There's nothing that beats him.

Nathan Latka

09:27Number three, what's your favorite online tool for building the business?

Daniel Schwab

09:33>> We're using Slack. I think it's a great product to keep teams going especially in this world where we're doing a lot of remote work.

Nathan Latka

09:42Number four, how many hours of sleep do get every night?

Daniel Schwab

09:46>> Oh, it varies between six and four, so.

Nathan Latka

09:49Okay. Fair. And what's your situation? Married, single kids?

Daniel Schwab

09:53>> Seven kids, divorced.

Nathan Latka

09:55Wow. Seven kiddos. Okay. Not married. And how old are you? 46. 46. Last question, something you wish you knew when you were 20.

Daniel Schwab

10:06>> That each day is special. Don't think too far ahead into the future. I was very much a forward thinker and perhaps that was a benefit at the time. But I think today it's about getting the most out of every day.

Nathan Latka

10:20Guys, brightmerge is a platform that helps companies meet their ESG goals to build a better, cleaner world. They raised $450,000 pre seed at a 3,000,000 valuation in 2019, just raised $550,000 on another pre seed round, it called a 5 or 6,000,000 valuation. Looking at raising another million today to keep driving their growth. Four customers are onboarding these customers now doing $4,000 or $5,000 a month in revenue, hoping to scale a 500,000 run rate next year, team

10:41of eight today as they look to continue to hire. Daniel, thanks for taking us to the top.

Daniel Schwab

10:45>> Thank you very much, Nathan. Have a great one.

Nathan Latka

10:49One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday 1PM

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11:58for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode. And if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people. We

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