THG Energy Solutions Revenue, Valuation & Funding (2024)

guys thg energy launched back in 2011 today doing about 200 000 a month in Revenue up from 125 000 a month just a year ago they work with over a thousand uh folks uh powering their businesses powering their utilities these are like schools hospitals Etc they help these folks report on gas emissions with tracking and measurement that's what they're sophomore software platform does he charges five dollars per meter uh per month as they scale looking to grow now they did a 10 million dollar seed round back in 2019 that caught a 50 million valuation looking to raise six six million now at hopefully close to 75 million valuation we'll see if we can get it done hey folks my guest today is Daniel Frye it's got 35 years of experience in the energy marketing and trading worlds building and acquiring energy Market marketing companies at thg they've built more than 35 energy in energy industry Partnerships excuse me to help companies expand revenue and product offerings to include sustainable and energy management data and Technology follow along with the podcast at thg energy.com Daniel are you ready to take us to the top yes all right so just be clear this is a this is a software platform correct yeah it's a software as a service platform uh we start with uh utility bills and we work with more than 300 000 accounts uh commercial industrial multi-facility accounts we're in all 50 states and we're in 20 countries uh we help uh companies what does that mean sorry when you when my audience hears you say 300 000 accounts they don't know what an account means to make that real uh so you can think about it as a utility meter uh or or something that needs managed and measured uh to help you with your sustainability or your Energy Efficiency so who's you is it me I'm a member that owns a house or is it a local government that needs to charge me it's a it you you can think of it if you're a business and you have a utility bill that you're paying and processing and tracking that's an account for us so we help companies pull together their sustainability efforts around electricity natural gas water waste uh recycling uh so all of those typically start with a utility account uh in some cases they might be a diesel or a propane bill or something like that but all of those uh we put them in one spot we provide auditable and verifiable uh greenhouse gas emissions tracking and measurement uh and we also help customers identify Energy savings uh through you know better energy management and uh particularly around electricity an area called demand management or demand response and Daniel when you say 300 000 utility meters is it a one-to-one ratio of utility meter per company or can one company have a 10 000 utility meters yeah so our our typical customers are the multi-facility customers that are trying to manage many buildings and facilities and they're paying and processing lots of utility bills so you can think about it as a school district or a hospital with a healthcare organizations everywhere or banks with branches or manufacturers with you know warehousing and and Manufacturing and distribution so most of our clients have lots of buildings and Facilities they're trying to manage lots of utility accounts and pull that into one place so Daniel how many unique schools hospitals Banks do you work with over 10 000 customers that comprise those uh 300 000 accounts okay so average 30 utility meters per account yeah that's that's correct interesting okay that's very very helpful give me the I guess give me the pricing here so what what is what's the average customer pay you per month or per year to do all this yeah so uh first of all the customer spends a lot of time paying and processing their own bills a lot of that is manual and it's old processes and it's inefficient and it doesn't gather the data that they need to be able to report uh to greenhouse gas emissions so there are some some new mandates around the report requirements as well as just a a stronger drive to pull together this information so we provide a much more efficient process for Gathering and paying and processing your utility bill and that actually saves the customer a lot of time and effort and money and streamlines that process and provides a much better data platform than what most companies are used to so we think about it in terms of you know uh five dollars per account per month uh to to get started a utility meter or per account per per utility meter that that we're measuring and managing okay so if the average account has 30 utility meters times five the average customer is paying about 150 bucks a month yeah that's correct and and uh and that gives them really good access to the SAS platform all of the energy analytics it helps him get started on greenhouse gas emissions uh we there's there's a lot more to that customers want to engage but you know that that gives them a really good uh start on Energy Management Energy Efficiency and greenhouse gas emissions oh what's going on there YouTube good to see you guys now imagine this you love watching these interviews with SAS Founders but imagine if we took all of the valuation data out from over 2807 interviews I've done manually saves you a lot of time well we've done this we've built the into the beautiful interface inside of founder path check this out I'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for evaluation this year now the secret valuation is there's many different ways to value a SAS business so the reason you're going to see three or four different evaluations inside of your founder path dashboard this is all free by the way is because depending on who's doing the buying of your SAS company you're going to get a different valuation a VC is going to pay a different valuation private Equity Firm is different if you're going to do a minority sale that's different and if you sell the whole business that's a different valuation you can see all those when I hover over here here right so the teal is what a VC would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on YouTube all these datas are built from real-time valuation data points Founders share with us on the show so traction 1.2 million seed around 3.7 raise they sold 22 percent of their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of SAS valuation than what you can get now inside of founder path and we're thrilled to bring it to you all right we're gonna go back to the YouTube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations or if you go to founderpath.com and hover over products click on get your evaluation here and go ahead and sign up to give it a whirl again all that valuation data live right inside the platform I hope to see you there all right let's jump back into the interview and Daniel how many folks full plan are you guys today we have 30 folks uh 20 of them are in Tulsa and they work on data management and then we have about eight folks in Austin that are engineering focused and and really help companies on their integration of meters and smart meter data and distributed energy resources which is the other side of our business we pull together a lot of multi-facility multi-sourced data and put it in one spot so if you're trying to track your solar panels and your batteries and you're behind the meter uh information and integrating that into a platform that's the other piece of our business before we get to that though 300 000 utility instruments that you're installed on today at five bucks a pop would mean you're doing about 1.5 million a month in a revenue is that accurate that's that's accurate for that side of the business uh there's also additional opportunities to well hold on Daniel before you go away from that side of business though so if you're doing 1.5 today just we can calculate growth rate what was just that part of the business doing one year ago uh one year ago that same business was was probably about 30 percent less so it's about a million a million dollars yeah and uh Daniel is that a month or a year just to be clear per year oh got it got it so it's not 1.5 million a month it's five dollars per year per meter well so there's there's a lot of uh Nuance to to that number and there's a lot of different uh services and relationships around this so we although we track 300 000 accounts uh we we're actually engaged in about 20 000 active meters and we're seeing an opportunity to expand to another 250 000 300 000 accounts so we don't we haven't deployed our full service offering to Daniel I just want to make this really clear for the audience so if you're if you're deployed on 20 000 meters at five bucks a meter then that's you're doing about a hundred thousand dollars a month on that part of the business correct across still 10 000 unique customers correct so they each have two active meters on average then well so so here's here's what here's here's the opportunity Nathan hold on sorry you keep I want to just make sure I get the economics right there's ten thousand unique customers with two meters each so you have twenty thousand active meters today at five bucks a meter no I'm I'm sorry we'll have to back back up and look at this a little differently so we've got twenty thousand active accounts that that we gather that five dollar meter on and and that that's probably about a thousand customers uh we have access to another eight thousand ten thousand customers that we we've started to get their electricity data on but we haven't fully deployed our services around so when you look at at total revenues and what we're engaged with today we're in front of about 10 percent of our customers and and starting to deploy a much broader offering to a much bigger population uh so twenty thousand active accounts we've got access to around thirty thousand three hundred thousand accounts that we can start to engage this energy management and uh got it again I'll just try to what I'm trying to focus on is your current paying customers I understand you want to talk about the big market and we have access to but your customers you're paying customers right so you've got a thousand active customers today with 20 000 active meters at five bucks a meter which would mean you're doing about a hundred thousand dollars a month in revenue on that SAS recurring fee today correct so then can we calculate growth rates so 100 Grand today what were you at exactly one year ago we were we we finished last year on on an account uh recurring Revenue basis uh of around 1.2 million dollars okay this year uh in 2020 uh two we finished at 2.25 million dollars some of that recurring Revenue sometime some of that one-time revenue and there's actually two uh revenue streams associated with that so hold on Daniel sorry hold on we have to compare apples to apples so if you're doing 100 Grand a month today recurring Revenue what we're doing exactly one year ago recurring Revenue monthly probably around 75 000 a year recurring revenue for 2021. so finish it up so one year ago so beginning so March 2022 yes what were you doing monthly and so 75 000 a month okay that's great that's great and then you said you finished 2022 with a total of about 2.2 million in total revenue so that's the recurring fees plus another million 1.2 and what setup fees uh so so recurring revenue of of about 1.8 uh in total uh hold on that map doesn't work if you're doing 75 000 a month so there's there's two components of our of our uh of our Revenue that there's what we've talked about the SAS platform which you've identified as a hundred thousand dollars a month and then we've got another component of energy management Advanced Energy Management which is device and and integration of demand response products which is you know another product that that we offer uh so all in we're we're we closed the year at right at two million dollars of annual recurring revenue and have grown that we're growing it at about a half million dollars a quarter of annual recurring Revenue so we should end up the Year by at the end of 2023 uh somewhere in the range of four million dollars of annual recurring Revenue that's helpful the second product on you just talked about the device and integration demand response that's also a recurring fee correct okay got it and so what that's like another 100 Grand a month there uh it's it's in that range probably a little less okay okay so all in today like last month they did about 180 000 bucks a month in Revenue something like that yeah our our revenues uh for the first quarter of of this year were were up significantly from that uh probably in in the range of 200 000 a month of recurring revenue and and and moving up so we have seen pretty strong growth uh in in the fourth quarter in the first quarter of this year that's great uh thanks for breaking that all down for us um so what's your plan you have a thousand pound customers today you've already identified how big the market is how do you go get the other 10 000 customers yeah so we we start with the electricity utility bill and we're working with a lot of our uh Channel partners and and these Channel partners are typically energy suppliers or uh consultants in the energy space that help these end users purchase or Supply electricity or natural gas so they have portfolios of customers that and they have a traditional gas supply electricity Supply relationship with those customers uh so these Channel partner owners we private label our solution we allow them to expand their services around Energy Efficiency sustainability reporting it gives them more Revenue it builds a deeper relationship with those clients and it allows them to actually you know build a broader base of energy management and sustainability so our Channel Partners bring a lot of customers to us that are starting to look for those kinds of solutions we private label it like you've identified you said we've got 35 Channel partners that utilize our SAS platform these are people that are in the market that have portfolios of commercial customers that they serve and Supply so our plan and and what we've done is integrate the electricity bill uh with some of these large suppliers and then be able to go in and offer expanded services so we've already got your electricity bill we've already got a load profile file on your energy use Daniel I've got to jump in here sorry just because we're short on time so quick quick back and forth here would be ideal talking how you've capitalized the business have you raised Capital are you bootstrapped we we uh have raised 10 million dollars of C Day Capital uh what year was that uh 2019 okay and uh we're in the process of raising another six million dollars that will accelerate this growth that we see in front of us and uh and really allow us to get to profitability and uh grow the business to to north of 10 million dollars and most folks in their seat around you mentioned you to see around 2019 for 10 million bucks most folks in their seat run are selling 15 to 20 percent of the company were you in that same range uh yes okay so you're like a 60 million evaluation 50 million valuation back then right interesting what do you think your valuation would be today as you're trying to raise six million you know it it is interesting uh you know if you look at a multiple on Revenue we think we can get to 5 million dollars of annual recurring revenue and a software platform that really justifies the investment so if you look at that as as maybe a 15 multiple in today's market uh you know that's in the 75 to you know million dollar range something like that is probably where uh both the the the market for sustainable products software and that kind of you know achievable growth uh you know probably values the company are you guys burning right now are you guys profitable we aren't we are not yet profitable but we can see profitability within the next year that's great so when you say burning you're talking like 50 000 a month in that burn 100 or more uh we're probably in the uh 100 uh in the hundred grand uh burn rate but it is we are reducing that significantly as we move into 2023. how are you doing that team Cuts something else just growth in revenue and and uh option so so you know Revenue growth will will be stronger than 70 percent this year uh and and you know really see a lot of opportunity around it yep now if you don't get the growth and you're still burning 100 Grand per month how I mean do you have a 12 months cash runway in the bank today yeah we have a great Capital Partner currently uh George Kaiser Family Foundation six billion dollar Foundation that's funded our seed round and has continued to support us uh as needs come along that's great all right we're out of time great story here let's wrap up with the famous five number one your favorite book my favorite book have to have to be uh Team of Rivals uh with the Yates from on Lincoln yeah number two is there a CEO you're following or studying uh I follow a lot of CEOs uh and and really try to uh you know look at that obviously Elon Musk has changed the world uh so you know if I had to pick one it would have to be Elon number three what's your favorite online tool for building thg energy uh you know we we've done a lot of work around uh our CRM uh HubSpot and uh have developed a lot of CRM capabilities through that through that tool so leaning on it more and more nowadays number four how many hours of sleep do you get every night well I've learned to function on six hours uh and and and seem to be pretty productive on six to seven hours and what's your situation Daniel married single kids married for a long time uh father of two grandfather of four wow okay and how old are you I'm 62. 62 last question something you wish you knew when you were 20 years old uh life is uh a journey and uh just enjoy enjoy the enjoy the ride guys thg energy launched back in 2011 today doing about two hundred thousand dollars a month in Revenue that from 125 000 a month just a year ago they work with over a thousand uh folks uh powering their businesses powering their utilities these are like schools hospitals Etc they help these folks report on gas emissions with tracking and measurement that's what they're sophomore software platform does he charges five dollars per meter uh per month as they scale looking to grow now they did a 10 million dollar seed round back in 2019 that caught a 50 million valuation looking to raise six six million now at hopefully close to 75 million evaluation we'll see if we can get it done Daniel thanks for taking us to the top thank you one more thing before you go we have a brand new show every Thursday at 1pm Central it's called Shark Tank for SAS 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 our poo CAC LTV you name it they share it and the buyers try and make a deal live it is fun to watch every Thursday 1 p.m Central additionally remember these recorded founder interviews go live we release them here on YouTube every day at 2 p.m Central to make sure you don't miss any of that make sure you click the Subscribe button below here on YouTube the big red button and then click the little bell notification to make sure you get notifications when we do go live I wouldn't want you to miss breaking news in the SAS World whether it's an acquisition a big fundraise a big sale a big profitability statement or something else I don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack Community for B2B SAS Founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathanlacka.com forward slash slack in the meantime I'm hanging out with you here on YouTube I'll be in the comments for the next 30 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 got to push them away click the thumbs up below to counter them and know that I appreciate your guys's support all right I'll be in the comments see ya