Investors poured more than half a billion into solar software in the last week alone

Any startup still standing in the rooftop solar space is a survivor.

They struggled through lean years when both the market and the amounts of money you could raise to serve it were tiny. When things looked good, the urge to grow too fast took down some of the biggest names in the business. But the ones that made it through the ​“solar coaster” years of the last decade have found a reward: Cash is no longer an obstacle.

Three major funding rounds in the last week alone drive home this point. The companies winning funding are not solar installers in the traditional sense. Nor do they tinker with hardware. Instead, they use software to streamline the steps needed to sell rooftop solar and get it installed. The cash flowing to them suggests that software to enhance the solar business is no longer an auxiliary function to a niche industry — it’s a billion-dollar market in the making.

“The overwhelming majority of eligible homeowners do not have solar on their house,” Aurora Solar co-founder Samuel Adeyemo told Canary Media. ​“Software can really help address one of the biggest obstacles to us solving this problem: It’s not technology for the most part; it’s cost.”

Aurora Solar, the emerging software-as-a-service titan of the distributed solar industry, closed a $200 million Series D Monday. The Bay Area startup has been on a fundraising spree, having closed a $250 million Series C less than a year ago. It’s all the more striking given that Energize Ventures, which led the latest round, estimates the total annual recurring revenue of the top 20 solar software companies this year is just $250 million.

Last May, Aurora claimed ​“unicorn” status with a valuation of $2 billion. This week’s deal values it at $4 billion.

But that’s not all. On Tuesday, Complete Solar confirmed to Canary Media that it had raised $50 million Series D to grow its digital platform, which coordinates rooftop installations with third-party solar sales and installation pros.

The Carlyle Group led the round, with a private equity investment coming from its infrastructure division. The round also included T.J. Rodgers, the semiconductor billionaire who backed solar manufacturer SunPower and spearheaded a stunning turnaround at microinverter company Enphase.

And just last week, Palmetto raised a gobsmacking $375 million Series C, led by celebrity venture capitalist Chamath Palihapitiya’s Social Capital. Palmetto, based in Charleston, South Carolina, operates a digital platform where third-party sales reps and installers compete for business, while the company oversees all the other steps of the process.

Is there such a thing as too much funds?

Installing solar is a physical business, involving trucks and warehouses full of equipment and employees talking to customers and getting up on roofs. Most installation companies that tried to scale that to the national level failed.

Software promises a ​“capital-light” business model: Hire your software engineers, sell subscriptions, then scale up. If the software makes life easier for the local or regional workers who do the labor of solar sales and installation, everyone should come out ahead.

But today’s ​“capital-light” software companies are piling up staggering amounts of capital. That brings a risk of having to deliver on an inflated valuation, especially in a market that’s still so young. And when you’re suddenly flush with cash, it’s easy to spend money rashly to justify having raised it in the first place.

The jury’s still out on how much enterprise value solar software can support. But Aurora isn’t daunted by its newfound liquidity because it spent so long with so little.

“They were extremely bootstrapped — we had to encourage them to invest in even faster growth, and now they’re finally listening to us,” quipped John Tough, managing partner at Energize Ventures.

Aurora launched nine years ago and made do for five years with less than $1 million raised from friends and family until 2019 when it raised a $20 million Series A. But the challenge of climate change is massive, and ​“to create a future of solar energy for all” requires resources, Adeyemo said.

“We are quite familiar with building a very capital-light, capital-efficient business,” he said. ​“If we went in a very capital-light, unfunded situation, we could get there, but it would be 10, 15 years from now.”

The new cash will fund hiring across the organization, which is already 300 employees strong. That includes more software roles, customer support staff and the operations team needed to keep a growing enterprise running smoothly.

The combination of a well-funded business and the chance ​“to work on something that matters” will help Aurora hire talented engineers from mainstream tech companies, Tough noted.

And no, this does not mean that Aurora burned through all of its last $250 million round in a few months, Adeyemo said. Some of that money went to growing the team and acquiring software company Folsom Labs last year, but the rest is still available. Beefing up the balance sheet even further was a goal for the latest raise.

“We wanted to make sure that everything ranging from the mom-and-pop shops to national and international powerhouses could feel comfortable relying on us,” Adeyemo said.

Aurora launched with a digital design tool to make it easier to lay out a rooftop system remotely. It’s been expanding into other steps in the solar process. Its recently launched software module Sales Mode AI lets users instantly draw up accurate models of how much energy a rooftop solar system could produce, so sales reps can close deals around the kitchen table without having to wait for an accurate assessment of the roof’s potential electricity production. That product builds on the company’s earlier design software, which has been used 7.5 million times so far.

Future growth opportunities for the company include finding other steps in the solar-delivery checklist to automate, expanding into commercial deals and ultimately going global. Adeyemo insisted the Series D round did not come with ​“specific plans for an IPO or other liquidity event.” But Energize’s investment did come from its growth fund, not its venture funds — the growth fund is typically for a final round before an IPO or exit, Tough noted.

Software for solar specialization

If an eight-figure fundraise looks small compared to one that’s nine figures, Complete Solar founder and CEO Will Anderson insists $50 million was exactly what his company needed.

“We brought in a serious partner with the right amount of capital for what we want to do,” he told Canary Media, referring to Carlyle’s minority stake. ​“When you take too much money, you can get yourself into trouble.”

Anderson’s goal is to build ​“the platform for the entire solar industry,” and he’s been at it since 2011. It works like Uber for solar: companies that want to sell can hand off deals to Complete Solar to arrange design, engineering, permitting and financing. Then Complete Solar assigns the deal to a vetted local installer based on their availability and quality of past work.

The idea is that no one company needs to do all the highly varied tasks required throughout the chain of events from sale to solar installation and beyond. The platform lets people specialize and get better at their chosen task, which lowers costs. Philosophically, it’s the opposite of the ​“do it all in-house” vertical integration of many early national solar installers.

“If you’re a great sales company, you can come to us and just crush the sales part,” Anderson said. ​“We make it easy for anyone to sell solar, and the more people are selling it, the lower the prices are going to be.”

Carlyle was impressed by Complete Solar’s track record of working with installers and making the solar process faster and cheaper, said J.B. Oldenburg, managing director with Carlyle’s Renewable and Sustainable Energy Fund.

“We believe Complete has a fundamental product offering that can scale as the distributed energy market continues to evolve,” Oldenburg noted. 

At the start of last year, Complete Solar operated in six states. Now it’s in 21.

Palmetto, founded by Chris Kemper in 2010, takes a similar approach, looping in independent sales reps and installers while managing the other tasks of the solar delivery process. It now operates in 24 states.

That company declined to comment on its $375 million raise beyond what’s in the press release. The startup will spend its now-considerable capital on growing the marketplace, expanding its team and technology, and improving operating efficiencies.