SolarMente is a Barcelona-based solar technology company that provides full-home electrification–including solar panels, electric vehicle charging, and heat pumps—with a monthly subscription.
The company was founded by Victor Gardrinier and Wouter Draijer in 2019, and it participated in Y Combinator in 2021.
Recently, SolarMente raised $50M in debt capital via a special purpose vehicle and $2M in a seed extension equity financing led by Leonardo DiCaprio. We sat down with founder Victor to hear more about his fundraising journey.
Highlights
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How SolarMente got into Y Combinator
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Raising venture debt at early stages
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What to do after you raise your first round
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Turning a customer into an investor
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Working with Leonardo DiCaprio
CARTA: You were part of Y Combinator a few years ago—tell us about how that came to be.
VICTOR GARDRINIER: I’m from Paris, France, but I studied in Canada and the U.S., and while I was studying computer science at Stanford, I spent a lot of time interviewing founders and VCs in Palo Alto, getting around on a bike I got at Walmart. So my approach to startups was really influenced by the Palo Alto-style of company building.
But when I moved back to Europe and started working on this project, I had a bit of a culture shock. The startup ecosystem in Spain is very different. The access to capital, the tech talent…it's just a different world.
So one of our early obstacles was how can we build something in Spain that is valuable without trading for the access to talent and capital and also just ambition that you find in the States? I would say the ambition is very, very different, on both the founder and investor side, between Europe and the U.S. And I really didn’t want to trade off for that.
Y Combinator was something that friends of mine had talked about before, and I thought that it could be our ticket to access that network and keep that ambition while building a business in Spain, because Y Combinator isn’t only U.S.-focused. So we decided to apply at the very beginning of our company journey. At that point, it was just me, my co-founder, Wouter, and a couple of MBA interns.
We applied and did an interview with Gustaf Alstromer, who later became our YC partner. He told us, you guys seem to be onto something, but our learnings from the U.S. market are that solar in general can be very subsidy-dependent. And he said if you do that then your success depends wholly on what the government tells you you can do. And so you need to prove that you’re doing something different, and which has value beyond the regulatory framework, for us to build the confidence to invest.
So, he said, why don’t we have another chat in a few weeks or months?
And so we did that. We proved it by building not just a company that puts solar panels on roofs, but one that provides a whole home-electrification kit, from EV, heat pumps, and batteries, at no upfront cost to the customer, and then uses our smart energy home system to optimize energy management, and trade solar energy at the right times. And then we got into YC.
What was that experience like once you got there?
YC was a crazy sprint. Especially because we were in different time zones. It was still during the Covid era, summer 2021, so we were working during the day in Spain, and then at night we’d talk to our partners and investors.
It was a very, very intense summer, but we loved it. Gustaf was an amazing partner. And YC gave us this incredible advice, which was how to be laser-focused on a couple of things and leave everything aside. It allowed us to grow massively from almost zero in revenue per month to $100K per month in eight weeks.
So we built that and we kept on coding our platform as well. And very quickly, a few investors reached out before Demo Day.
We were in a situation that I've never been in, where there were people asking us if they could put millions of dollars into the company. I was like, I didn’t know that could happen [laughs]. I thought you beg and beg and then maybe something happens.
So that was the fortunate situation we ended up in, and YC helped us a lot with how to navigate that interest. Because access to capital is one thing, but also, who are these investors? Are they going to be helpful or not? Do you want to over-dilute and raise at too high of a valuation and end up struggling to raise the next round? YC gave us a lot of learnings for how to have a balanced seed round.
That’s when you closed your first round of funding.
Our first round was YC Demo Days, where we raised $2 million on SAFEs. Looking back on it now, it was a very smooth and simple fundraising process. We got to choose who we wanted to work with and make sure that the [valuation] cap was good for us, but also not too crazy.
And then we got back to work pretty quickly. The raise process was only a few weeks, so that was very nice.
What was a bit weird is we went from being singularly focused during YC on building sales traction and building our MVP, and then we raised our seed, and then it was like, “Now it’s back to normal.” You know, we actually need to hire a bunch of people and justify that valuation and growth. We looked around and it was still just me, my co-founder, and the interns.
People don’t talk about this enough—there’s an adjustment that happens. You do this sprint and you get that capital that allows you to get to the next stage, but it’s not as linear as you would think. You need a different team and a different structure to reach those next steps. That was a big learning for us.
That was your $2M seed round. And then you raised $50M in venture debt—what was the thinking behind that decision?
After our seed, we realized the market we are in had a lot of potential, but the competition obviously was also there. And we had the vision of equipping every home with solar panels, storage, EV charging, and even a heat pump.
So there are all these assets we want to equip the homes with, but we're going to ask customers to invest zero dollars. They only pay a subscription from the savings we’re providing them every month. To provide all these assets, you need a lot of upfront capex to pay our partners who install these.
And we realized it would be stupid of us to use VC money for this part. So we set up a structure where we raised debt to finance that capital, and then you have recurring revenue that will come in for the next two to three decades from these subscriptions. We needed access to that smart debt capital.
But obviously we were a one-year-old company with a balance sheet that's, well, the balance sheet of a startup. So all the banks told us, politely, to f— off, right? [Laughs]
We realized, okay, so we cannot do that. So what do we do?
We decided we were going to do a pilot with that subscription model. We would use our equity money, a certain part of it, but we would pay everything ourselves. We do a pilot to show the traction for that subscription model, and then we go to private equity firms that can help us raise that debt and see what happens. And so we did that.
Meanwhile, we were in touch with a European private equity firm, GNE Finance, which is focused on renewable energy and had been helping us with traditional solar loans. And we established a very strong personal relationship with them. They really got to see who's behind SolarMente, not just the balance sheet.
So after the pilot, they took a bet on us and we decided to create a separate special purpose vehicle together, specifically for that subscription model. That's when we signed our term sheet for $50 million to deploy that capital over the next few years.
That took a lot of time because it's not easy for a seed-stage startup to do that. Actually, I've never seen anybody do that at our stage. In this market, especially in Spain, it was a first, but that was important for us.
Then we could go to investors and say, look, the money you put in, every dollar of equity you guys invest in goes to our tech and to our team and to our growth, but it doesn't go to buying solar panels.
So the debt financing was early 2023, and then at the end of 2023, and beginning of 2024, that’s when we did part two of our seed round, around $2 million.
What was the thinking behind the seed extension?
We realized we had this debt and this seed funding that we had since 2021. Obviously, we still had some cash, but what we're trying to build is quite an ambitious company. It's a fintech play, where we deploy debt capital to install these home energy systems to get recurring revenue over 20 years. There's an execution play where we need to work with installers to provide excellent customer experience so that customers come back to us every time they want to upgrade their system over time. And then there's a pure tech play where we need to digitize this whole process of energy transition, how to get your solar panels, your storage, your EV charter, and so on.
And then once you have that done, what do you do with the energy management piece of it? Now you produce your own energy, but at any time of the day, how do you know if that energy should go to your house directly or should go to your battery, to your Tesla, to a heat pump or to the grid? How do you optimize all these decisions? Because if you send to the grid in the middle of the day when there’s the most sun and less demand for energy, you might end up getting charged by the grid instead of making money by sending your power. Which is something most solar companies didn't anticipate, and something our system is built to manage. In the energy market, you have huge fluctuations in price during the day. If you are able to make those decisions every few seconds, the arbitrage is huge.
So you can provide tremendous savings for customers compared to any other solar companies if you have that technology—but that's a very ambitious project.
We realized we needed more capital to make all this happen. And for us to win, we're going to have to make this all happen.
We had interest from our current investors for a seed extension. The funny part is one of our customers was so happy with the experience that he said, by the way, I own a fund, in case you guys didn't know, and I'm interested.
That’s pretty unique. How did that come about?
My co-founder, Wouter, is the one who is more focused on customer experience and sales, because he’s incredibly good at that. What he does a lot is visit customers and check in on how it’s going, how the installations went and what we can do better. He especially likes to go anytime there’s a Dutch customer, because he’s Dutch, and they bond about that.
So we had this customer, and we installed the system, and Wouter went there and got to meet this customer and hear their experience. And this customer knew a lot about startups and climate and had this fund. That's how the relationship started.
This was right around the time we were talking to our current investors about a seed extension, so the timing was perfect. And in a way, it's like an investor that will also act as a customer. He will see the metrics, but also see the experience he's having and what can improve. I thought it was an interesting set of incentives.
The deal happened fairly fast. It took a couple of months total, but only a few weeks of actively working on it. Part of that speed was because we kept it simple and did SAFEs again.
Leading that round was Academy Award-winning actor and environmental activist Leonardo DiCaprio. How did that come about?
It started with Y Combinator. In 2023, we went to the annual YC founder meetup in San Francisco for the first time. We got to see our friends from YC and some people we’d never met before. Sam Altman was there, as well as [Y Combinator Managing Director] Michael Seibel, [Y Combinator CEO] Garry Tan, and Tim Ellis, the founder of Relativity Space. It was really nice and we also managed to catch up with some people from our YC batch.
One of my YC founder friends had received an investment from Leo, and offered to introduce us to his point of contact for climate investments.
We got in touch with that person and it was great. We had a really quick call, very informal. He was very nice, extremely professional and very knowledgeable about the industry.
Leo has a small investment team—it was more of an angel investment than a typical VC strategy, and it’s just him and this one other person—but when it came to knowledge about the industry and climate, they’re extremely good and I think before we met we underestimated the quality of Leo’s climate startup portfolio, even compared to other VCs.
So we had this informal relationship that we established. And then when the seed extension was coming together, we started to talk a bit more. We ended up flying to L.A. to meet Leo and pitch the company and talk more in depth. We had lunch and spent a few hours talking about SolarMente and climate in general and his vision of things.
Then we agreed that it would be a great idea to have Leo on the cap table.
A great thing about Leo is that, yes, he’s a famous actor, but he’s also been involved in climate for years, and is a UN Messenger of Peace focused on climate change. And when we’re thinking about SolarMente and helping people understand the importance of their carbon footprint, Leo is a great messenger to help us share that message.
Overall, the bet we're making is selling a full home electrification and solar product. We’re betting on the fact that people are going to want more EVs and want to electrify their homes with heat pumps. And that the grid is going to get more chaotic as the energy transition happens, and we’ll need technology to manage that.
And generally, I think that pitch works extremely well with investors that have done their research on the markets and will understand that, but it won’t work as well on investors who haven’t. So we’ve thought about how to target investors who know about climate and know about the energy industry. The good news is that’s also a great filter for who would be a great partner for us.
