Hometree raises £1.9m from four venture capital investors

Hometree raises £1.9m from four venture capital investors

The London start-up which hopes to revolutionise the way people buy boilers has raised £1.9m from investors which have previously backed the likes of Purplebricks, Zoopla and Eve.

Hometree has secured £1.9m from four venture capital investors: LocalGlobe, DN Capital, Oxford Capital and FJ Labs - who between them - have backed some of Europe’s leading start-up’s including Purplebricks, Zoopla, Eve, Shazam, Transferwise and Improbable. Veteran private equity investor Jon Moulton is also one of a handful of city backers. 

The start-up is launching in the boiler installation market initially, but intends to build a next generation energy company that can provide a whole range of energy efficient services and products to homeowners, allowing them to take control of their energy consumption.

As energy in the home becomes more complex with the introduction of smart meters, connected devices, battery storage and solar, the consumer needs a partner they can trust.

The company chose the boiler market as a logical starting point, since buying a boiler is one of the most expensive and difficult home repairs that people face.

New boiler installations is largely an offline market with poor price transparency and requiring multiple visits to the home and with little assurance of quality.

The market is worth more than £4bn a year, yet the biggest player (British Gas) has less than 10% of installations, with 80% plus of new boiler installations still carried out by independent tradespeople where it can be tough to find a trusted installer.

Using registered and vetted installers across the South East of the UK, HomeTree wants to bring the ease of e-commerce - speed, price transparency, endorsement from customers - to this traditional trade.

The hybrid online/offline business contracts directly with consumers, offering them a painless way to get a boiler installed, in what is a mostly offline market.

Hometree will offer a choice of boilers from leading brands including Worcester Bosch, industry leading 10 year guarantees, finance options through Shawbrook Bank, annual servicing and a range of smart thermostats such as Hive and Nest.

The average price of new boiler installations on Hometree is £2,250, below the industry average price of £2,300* and on average 25% cheaper than British Gas.

If Hometree manages to establish itself as a force in boilers, it then plans to build a full home services installation business, capable of challenging the big six energy companies in providing services to the connected home in a way that puts the consumer in control.

Simon Phelan, co-founder and CEO, said: “Installing a boiler remains a painful and mostly offline experience for homeowners. Much like Eve and Purplebricks have upended their sleepy and over-priced industries of mattresses and estate agency, we intend to disrupt the heating industry with best practices from e-commerce, fair and transparent prices and a great brand.

"We will use this strong foundation as a springboard into the broader home energy space, re-thinking how energy companies interact with consumers from the ground up.”

George Henry, partner at Local Globe, said: “Across Europe the relationship between energy companies and homeowners is shifting. Hometree is taking a radical new approach to providing services to the home and building a 21st century utility. The best companies often start from a very specific pain point.

"Boiler installation is just the first step on the way for a company that will challenge the incumbents to win the customer relationship and is entirely rethinking the way that houses improve their heating systems.”

In the long-term, Hometree’s founders’ aim is to play a leading role in reinventing the home energy model for the 21st century - helping homeowners reduce their energy consumption, while providing safe and reliable products and services quickly and easily.

The business is building on current trends in the energy sector: lack of trust in the big six energy providers, the connected home, distributed generation and the desire for renewable energy and sustainable products.

As an indicator of how these disruptive trends are becoming more commercially attractive, Hometree is one of the first energy companies in Europe to raise primarily tech focused venture capital.

Co-founders Simon Phelan and Andreu Tobella have experience working in private equity and climate change projects around the world and across the British Isles.

Both are passionate about the need for British homes to become more sustainable when they replace or upgrade heating systems and have identified many points where the energy retailing sector can become more efficient, using online tools.

Founded in North London in early 2016, Hometree has also attracted investors with significant energy industry experience, including Ian Marchant, the former chief executive of energy company SSE; Ian Nolan, former head of the UK Green Investment Bank and Oliver Pawle, one of the City’s best known headhunters and founder of the New Entrepreneurs Foundation.

The head of GE in Europe, Mark Hutchinson, is also an investor, as are a number of directors at Generation Investment Management, former US vice president Al Gore’s London based investment management firm, who have invested personally.