How Enact Systems Processed $1.5B of Solar Projects With 18 Employees and a ~$1M Run Rate (Interview with Co-Founder Deep Chakraborty)

Introduction and Platform Overview

Nathan Latka

00:00Hey, folks. My guest today is Deep Chakraborty. He is an entrepreneur business leader currently leading Enact, an award winning cloud platform for the distributed energy industry. The company's on its fifth year with market leadership globally in the sector of software platforms for solar and storage. Deep, are you ready to take us to the top? Absolutely. So when you say global leader in this space, how do you measure that?

Scale: $1.5B in Projects Across 23 Countries

Deep Chakraborty

00:22>> We measure it by a number of users, customers, and projects. So the Enact platform processes over $1,500,000,000 of projects now for solar and storage across the world in 23 countries. And we have deployed over three gigawatts of projects we always measure in terms of capacity.

Nathan Latka

00:40Okay, and is that historically over the past five years or just in 2021?

Deep Chakraborty

00:45>> The run rate is in 2020. Since September 2020, we have processed over 1,500,000,000. And of course, just to remind you, we are a software platform. We are not a developer. We are not selling any hardware or financing anything. We're just doing what we call the solar lifecycle project management software. And so that's really unique, having a platform that's so active in so many countries.

Nathan Latka

01:07So what does that mean? Since September 2020, you put 1,500,000,000 of solar projects through your platform. What does that mean?

Deep Chakraborty

01:13>> So our platform is unique. It's a cloud software hosted on Amazon, used by both solar developers and installers, as well as the end customer, and what it does is automates the entire journey of the project, so they can pick any address in the world, design a system remotely, generate signed contracts, and then execute the project, all tracked online. And of course, the end customer, they're spending a lot of money on these projects to save money on

01:38>> the electric bills, as well as doing the green thing. They are able to measure the benefit, too, for the first time in dollars. So we project the benefit in dollars, and then we measure it. So we're really making it transparent for customers and providers to now do these transactions seamlessly using an independent platform that's the source of truth, and so this platform has processed over $1,500,000,000 of projects in the last twelve months.

Nathan Latka

02:04And deep across how many customers?

Customer Base and User Count

Deep Chakraborty

02:06>> So we have over 100 enterprises in 23 countries, and 1,000 plus users, users meaning people who actually log in and do work on it. Industry, of course, is a niche. Solar is not a massive industry, but even in The US, there's a potential 50,000 plus users for our platform, and we've already crossed the first thousand.

Nathan Latka

02:26What does the average provider pay you per month or per year to use the technology to manage these solar installations and projects?

Pricing Model and Average Spend

Deep Chakraborty

02:32>> The average company, SMBs are small and medium companies, which is the majority of the market, they're spending less than $10,000 a year to use the platform, and it's a user per month subscription model. The end customer, which could be a building owner, a home, might spend only $50 a year on the app. A large commercial hospital might spend $1,000 a year because their system is much

Nathan Latka

02:56When you look at your revenue over the past twelve months, what percent came from the providers versus the homeowner wanting to track their energy usage and tax rebates and things like that?

Revenue Split: B2B vs Consumer App

Deep Chakraborty

03:04>> Great question. So we actually launched with the providers first in 2015, and that platform is still 80% of our revenues. The end customer app, which is now on iOS and Android too, that's less than a year old, it's growing really quick, but the revenues are 20% of the total because it's a newer offering.

Nathan Latka

03:23How many homeowners are on it so far, or larger facilities with solar installations?

Consumer App Traction and Geographic Markets

Deep Chakraborty

03:28>> Yeah, we have crossed a thousand homes last quarter in Q3, and in specific markets, specifically markets like California where we are in, or even across the world, like in Delhi or in Dubai, there are pockets of dense use because we have very active platform users. For example, in Delhi now, have crossed 500 users on the platform in the city of Delhi who have solar, and it's growing rapidly because of the ecosystem we have built there.

Nathan Latka

03:56So the 100 providers, which is 80% of your revenue, paying on average $10,000 per year, that would mean you're doing, just on that side of the business, about $90,000 a month in revenue. Is that accurate?

Revenue Run Rate and Growth Rate

Deep Chakraborty

04:05>> Yeah, I don't wanna disclose our revenues, but I will say that we are right now around a million dollar a year run rate in revenue, and it's growing rapidly, especially the last eighteen months.

Nathan Latka

04:17So you'll break a million in terms of run rate by the end of the Absolutely. Okay. And where were you exactly a year ago so we can calculate growth rate?

Deep Chakraborty

04:24>> We were much lower. We have grown about 40% this year,

04:31>> which is a great growth rate considering we haven't really invested much in the business. We're still bootstrapped. There's no venture investor on this. We are not institutionally funded.

Nathan Latka

04:39So you own 100% of the business?

Deep Chakraborty

04:42>> No, our employees do. I mean, every employee has equity in Enact, but together, the founders and employees still own the company. We have no institutional ownership.

Nathan Latka

04:50How much of your ESOP pool did you decide to set up? I mean, talking 10%, 20% to employees, or more?

Deep Chakraborty

04:55>> We have always done, you know, we have maximized the ESOP grants legally possible in the last five years, but employees typically in The US have an annual ESOP, cannot be more than 15% of your holding, and we have tried to maximize that. So yes, together, the employees and founders own the majority of the company. We do have, though, some equity investors this year. We have announced that, who are early stage SaaS investors, family offices, they're on

05:22>> our website. We also now listed on StartEngine.

Nathan Latka

05:25Oh, sorry, so how much did you raise in equity?

Total Funding Raised and Capital History

Deep Chakraborty

05:28>> We have raised almost $4,000,000 now, but our cumulative revenue has been more than that. So we're kind of leading by example, revenue comes first.

Nathan Latka

05:36So sorry, 4,000,000 you closed this year?

Deep Chakraborty

05:40>> We have closed $4,000,000 of equity investment in Enact Systems since launch, and of course, the first round was in 'fifteen, which was announced, and then 'eighteen, we got seed investors who took preferred shares, and then we also got early stage SaaS investors now in the last year who are helping our growth specifically.

Nathan Latka

05:58Deep, break this down for me. So the SaaS investors this year, how much did they put in?

Deep Chakraborty

06:03>> We have raised 700,000 on SaaS investments. I think you should go to Crunchbase. It should have the exact numbers. Please don't quote my numbers on the interview. I don't have them on the top of my head, but Crunchbase has all the exact details. On our website, we have lists of investors also.

Nathan Latka

06:18I understand, but I wanna capture more of the pattern here, right? So when you did the round in 2015, why couldn't you bootstrap the business, and and and how much did you raise from those family and friends or or however you did it to get the MVP up?

Deep Chakraborty

06:31>> We still so what what what's the question exactly again? Could you repeat that?

Nathan Latka

06:36How much did you raise in 2015 to get the MVP live?

Deep Chakraborty

06:40>> We raised a million dollars in twenty fifteen May, which was announced release, and then we were probably the only company that has gotten US government grants, Department of Energy grants, to develop a platform, which is patented, by the way. It's a blockchain enabled platform, and that's in 'seventeen. So we could not have done it with just a million. It's a massive platform, now active in 23 countries, same product, but yes, the government grants helped us, and

07:07>> then we raised money in 'eighteen, 'nineteen, and 'twenty to make sure that we have always runway for growth, because we have been hiring employees in The US, as well as in India and some other markets.

Nathan Latka

07:17So I see you raised 1,400,000 in 2018 from MB Ventures. I don't see anything in 2019, What did you raise in 2019?

Deep Chakraborty

07:23>> 2019 and '20, I would I will email it to you separately. I think there's some disclosures out there, Reg D. Probably not all of it is on Crunchbase, but I think you should all have it in Crunchbase if you have an account there. If you

Nathan Latka

07:36Well, no, Deep. It's not. Because I'm in we my research team looks at Crunchbase. Obviously, that's a public source. That is not list there is no round listed under Enact Systems in 2019 on Crunchbase. So you used Start Engine, it sounds like, to raise some capital in 2019. Is that what happened?

Deep Chakraborty

07:49>> No. We just got listed on last week, and we are SEC approved on StartEngine. I think we have already raised almost 100 k on StartEngine in two weeks. It's a great way for you guys to spread the word. Individual investors never get a chance on these, let's say, accredited rounds, so we're seeing good traction there.

Nathan Latka

08:08Mhmm. Okay. Year so Start Engine's just now, but going back a little bit, you said you then raised, you know, whatever. It's it's 1,100,000 on a convertible note here in 2020, 2021?

Funding Rounds Breakdown by Year

Deep Chakraborty

08:19>> So let me give you what I'm reading of start engines. So million 25, May 2015, then we raised 1,800,000 May 18, and then we have raised 1,200,000 between 2019 and 2020. It's also on Crunchbase. ARCA Ventures is our lead investor. It was announced in January 2021. ARCA Ventures, is part of a billion dollar venture capital firm, the early stage arm. And then we also raised money from Olympus Capital, it's also announced. So I think maybe this

08:47>> Crunchbase you have is a little old, and I'll email this to you.

Nathan Latka

08:50I know, Deep. It's the exact same crunch base you're looking at. We're looking at the exact same data. Okay? I'm looking at literally right now on my screen. So so just to be clear, though, the reason I said this is you just said that you were bootstrapped. You are not bootstrapped. You raised 4,800,000. So you've you've raised 4,800,000 to build a million dollar a year business. In other words, you raised $5 for every dollar of ARR

09:08you currently have.

09:09Correct?

Deep Chakraborty

09:10>> We have also generated $4,000,000 of revenue while we raised $4,000,000 of capital. And the I wanna correct you there. We have raised 3.5 is equity and 1,000,000 is grant. I see. We are proud of the fact that we have actually generated more revenue than what we have raised. Our competitors have raised hundreds of millions of dollars, probably raised one of our competitors has raised $321,000,000.

Nathan Latka

09:33Well, Deep, here's the problem, though. You raised 1.2 seed in 2015. You only grew 50 now, by the way, if you're bootstrapped, this growth is fine, right, growing 50% year over year. At your stage, growing 50% year over year and you're on the VC track, that's not a good growth rate. That's a that's a really bad growth rate, actually. You should be doubling or tripling year over year. Why aren't you growing faster?

Deep Chakraborty

09:53>> Well, we should definitely we we are doubling and tripling, but we can only grow once we build the platform.

Nathan Latka

09:59No. You're not doubling or tripling. You said you're doing 62,000 a year a month a year ago, and that you grew 30 to 50% year over year, and you're about to break a million dollar run rate. That that's not fast enough growth for the VC capital you've raised.

Deep Chakraborty

10:09>> You're absolutely wrong there. So two things. First, we haven't launched our Engage app until 2021. As I told you, the Engage is the future, which is the app for the end customer on iOS and Android, which just went live on iOS in June. So the whole platform wasn't really live till now. And the year we have gone live, we are in Delhi, Dubai, and DC at the same time, 18 employees and a million dollar spend. We're

10:32>> growing at a rate which is unheard of. We are the only platform in the world.

Nathan Latka

10:36Sorry. I just wanna make sure factually you're accurate. You're not growing at an unheard of rate. You're growing at a rate that is way too low for someone that's raised $4,000,000 of of VC capital. That's way too slow.

Deep Chakraborty

10:46>> Yes. Slow relative to some some other platforms which are pure b two c, but don't forget, we haven't finished building the platform yet.

Nathan Latka

10:53Well, you're not B2C, you're B2B. 80% of your revenue is coming from providers paying you to manage 1,500,000,000 of spend, correct?

Deep Chakraborty

10:59>> No, we are both B2B and B2C, remember? So I think you never asked me what the platform does and how it works. Let me explain that to you, but that'll probably help you understand what it does. The b to b is definitely a history, which is where we started, but that's not where the market is. Consumers, when they go and get their solar systems and now they're apt to measure, that's really the market, which we have

11:20>> launched in 2019 and 2020, and that's the growth we are seeing now. Yes, it's only 20% of our revenue, but that's where the future growth will take us to a huge potential. Of course, it takes time to build the B2B first, right? You can't have B2C without the B2B in the back end, and that's what you're referring to as a slow growth.

Nathan Latka

11:38Well, but when you say that other people have raised unheard of amounts, it's because they're growing faster than you. That's why they're able to raise so much.

Deep Chakraborty

11:44>> I don't want to comment on raising money. It's a good thing, but we are proud of the fact that we have gotten to a point where most of the revenue funded the company, not unheard of capital before it was needed.

Nathan Latka

11:56Yeah, I just wanna dive there because you said, I wouldn't have driven so deep here if you didn't say you were bootstrapped at the beginning of the show. You're not bootstrapped. You've raised

Deep Chakraborty

12:03>> Of a bunch of course. Not anymore.

Nathan Latka

12:04You were never bootstrapped. You raised 1,200,000 in 2015. You were never bootstrapped.

Deep Chakraborty

12:09>> Yes, you are correct that in 2014, we were completely bootstrapped. In 'fifteen, we definitely raised many. And then as we grew, we have gotten in family office and angel investors, right? Not institutional capital. And that's very different from some of our competitors.

Nathan Latka

12:25Fair, fair. That's fair. I'll agree with you on that. Okay, so tell me more about the team today. How many folks full time?

Team Size and Engineering Focus

Deep Chakraborty

12:30>> We are only 18 employees, seven in California and 11 in India.

Nathan Latka

12:34Oh, wow. How many engineers?

Deep Chakraborty

12:38>> Well, I would say of the eighteen, sixteen are engineers. So we are definitely tech focused and product focused. We don't have a big sales team yet. The product is literally selling itself.

Nathan Latka

12:47When you raised the 1,200,000, I mean, most companies are selling 10 to 20% of their business every round. Were you in that same sort of range?

Deep Chakraborty

12:55>> We were always Yes, very similar.

Nathan Latka

12:58Okay. So how do you think about dilution? I mean, you're getting diluted like crazy here, every one of these rounds.

Deep Chakraborty

13:04>> As I said, even after all this money raised, the founders and employees own more than majority of the company. I think we are at the point now that the platform has finally achieved what we wanted to do five years ago, that we are ready for growth, and we're not really looking at our holdings. I think in terms of value, the platform can do significantly more revenue, and we will need capital to grow that. So, yes, we

13:29>> are ready for dilution because we know that'll create value for investors and us.

Nathan Latka

13:35That's the bet that it will create value. That that's the bet. Right? You also lose optionality when you raise at certain valuations because that means you obviously have to grow into that valuation, and then it takes certain m and a opportunities off the table as well. But it sounds like you have you plus the ESOP pool is 70%, and Investors Own Call at thirty, forty percent today as you scale.

Deep Chakraborty

13:55>> Correct, and other founders, not just the ESOP pool. We have two other founders who have

14:00>> with me on the trenches the last six years. So we know what we are up to, and it's a very exciting time ahead. I'm sure you're reading what's happening with solar and storage.

Nathan Latka

14:09I mean, if you have three founders, again, I'm assuming ESOP pool is 20%, and then that means you three founders are splitting the other 40%, and investors are the other 40%. I mean, so you're already diluted down to like 15% of the business, right?

Ownership Structure and Dilution

Deep Chakraborty

14:21>> I don't wanna comment on holdings because I'm not legally allowed to, but I will say that, no, our founders and employees together, are well above 60% total. And in terms of investors, we know that will change, right, when we announce our next rounds in Q1 and Q2 next year.

Nathan Latka

14:39What do mean investors will change?

Deep Chakraborty

14:41>> As we bring on more investors, obviously, know that we'll get diluted, and that's okay. We're ready for it. No issues.

Nathan Latka

14:47Got it. Makes sense. How are you getting new customers?

Deep Chakraborty

14:50>> Online. We have B2B and B2C marketing, so both ends are active. Most of our customers, especially since the COVID changes, we're finding the need for software significantly higher than before, and people are willing to buy and pay and use something online with a webinar or a Zoom call like this. We have no on-site sales. It's all inside sales.

Nathan Latka

15:14How many sales? I mean, what, have one inside sales rep?

Sales Team and Customer Acquisition

Deep Chakraborty

15:18>> We have three people selling in the company, including me. One, of course, is myself. You're looking at him. One in The US and one in India. With three people, we have gotten over 100 customers in twenty twenty

Famous Five Rapid Fire Questions

Nathan Latka

15:29Deep, let's wrap up here with the famous five. Number one, favorite book.

Deep Chakraborty

15:33>> Favorite book. Gosh, that's a tough one.

15:40>> Sherlock Holmes.

Nathan Latka

15:41Number two, is there a CEO you're following or studying?

Deep Chakraborty

15:44>> Elon Musk.

Nathan Latka

15:45Number three, what's your favorite online tool for building Enact?

Deep Chakraborty

15:50>> Online tool for building Enact.

15:54>> Jira.

Nathan Latka

15:55Number three, how many hours of sleep do you get every night?

Deep Chakraborty

15:58>> I always get my six hours.

Nathan Latka

16:00That's good.

16:01And situation, married, single kids?

Deep Chakraborty

16:02>> We are married, two kids, high school and middle school. We're in California, and we're enjoying the the weather, of course, finally, raining here after nine months of drought.

Nathan Latka

16:11And how old are you?

Deep Chakraborty

16:13>> I'm 45.

Nathan Latka

16:14Last question. Something you wish you knew when you were 20.

Deep Chakraborty

16:18>> That's I wish I knew how hard it is to build a company from zero, and this is my first one.

Nathan Latka

16:26Guys, Enact Systems working with folks managing solar installation projects, over a 100 enterprise customers put 1,500,000,000 to the platform since they launched five years ago. They've raised, call it, 3.8 to 4 ish million in total capital. Some of that is obviously grant money as well. But team of 18 scaling out, they just launched their consumer app. So homeowners can track tax savings and usage of those installed solar panels. And that is their fastest growing revenue

16:49stream. They're flirting with a million dollar run rate today up from, you know, $600,000, $700,000 a year run rate just a year ago. Deep, rooting for you. Thanks for taking us to the top.

Deep Chakraborty

16:57>> Thank you so much, Nathan. Appreciate the opportunity.

Nathan Latka

17:01One 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 one

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