Finding the economy’s sweet spot in solar

Investors’ Circle , the angel investors group, recently held its semi-annual conference and I wondered which startups attracted the most interest. One attention-getter was Sungevity, a Berkeley, Calif., company that runs a portal for solar-energy contractors and customers.

For Sungevity co-founder and former Greenpeace activist Danny Kennedy, the future for the solar-energy industry in this country doesn’t lie in manufacturing. It’s in service and installation. His company’s one-year-old web site simplifies for home owners the process of looking for a contractor, while also making it easy for contractors to put in a bid, finalize a sale and process the reams of paperwork required for any installation. “Everyone focuses on the hardware,” said Kennedy. “But that’s 50% of the customers’ cost. The other 50% is getting from the factory to the roof.”

The big innovation is remote design–the ability for contractors to design a proposed system without visiting a customer’s home. Usually, contractors have to spend several hours at a potential client’s house, climbing on the roof, taking measurements, and returning back to the office. They may have to do that ten times before they get a bite. Sungevity’s satellite-imaging software uses aerial pictures from Microsoft’s Virtual Earth platform that allow contractors to calculate a roof’s measurements, build a three-dimensional model of the home they’re targeting and produce a design, without ever having to lift a foot outside the office.

Why did Kennedy go from Greenpeace to entrepreneurship? According to Kennedy, the U.S. has moved from the first two critical stages of social change–realizing a problem exists and that “business as usual won’t cut it”–and is now in the third, in which there’s a need for real, tangible successes and institutional changes. He thinks the time is right for an enterprise aimed at boosting the number of homes using solar power. And, he said he’s been able to attract top talent, as a result. The head developer of the company’s remote- design software left a job at a successful software company in Sydney to work for Sungevity “because he believed in it.”

Kennedy and his two partners raised about $2.5 million in 2007 from a group of angels who included actress Cate Blanchett, (Kennedy’s parents are Australian and he has lived for many years in that country, working for Greenpeace), Solon Solar Investments, a subsidiary of Solon, a German solar power-plant manufacturer, and several other angel investors. He’s close to finalizing a deal for a much bigger investment from a source he doesn’t want to name and hopes to get more from Investors’ Circle members. One big attraction is the potential to create jobs installing and maintaining solar systems. “Our industry is the sweet spot of the economy,” he said. No argument there.