Rolling blackouts see record seed round for solar startup

Endless power cuts have driven a record seed-funding round for South African startup Hohm Energy, which connects homeowners with installers and financiers to ease the process of installing rooftop solar panels.

The Johannesburg-based company raised about R151 million from venture capitalists including E3 Capital and 4DX Ventures LP, eclipsing the previous seed funding record in the country of $5.3 million (about R100 million) set by Inseco, which converts maggots into insect oil and meal, it said this week.

Hohm is capitalising on a boom in home solar installations in South Africa where rolling power cuts can exceed more than 10 hours a day as Eskom struggles to supply the grid.

While the installations were initially the preserve of affluent homeowners, requiring a large immediate payment, banks and solar-installation companies are now providing finance or deals that allow people to pay for the panels, inverters and batteries over several years.

“We’ve seen a massive shift from solar being this high-end, hyper luxury, out-of-reach purchase for only the richest people in South Africa to now becoming accessible to the middle class,” said Tim Ohlsen, who co-founded the company in 2021, in an interview.

“Everyone is now thinking about solar as a viable option.”

Hohm provides homeowners with financing options from banks including Investec, Nedbank Group, FirstRand and Capitec Bank.

Ohlsen, whose company grew revenue more than fivefold over the past year, said the average cost of a solar installation has fallen by about half from about R227 171 in 2022 as less affluent South Africans put panels on smaller homes.

Eskom data shows that that amount of rooftop solar panels installed increased to 4 412 megawatts in SA as of June last year compared with 983 megawatts in March in the prior year.

Other investors in the seed round include Breega Capital Sarl, E4E Africa, To.org, Tekton Ventures, Sunu Capital, Musha Ventures LP and Climate Capital Ventures Fund LP. Its founders retain more than 50% stake in the firm, which raised $800 000 (about R15 million) in a pre-seedfunding round.