Here you’ll find the full transcript for Episode 7 of Green Add Venture with Agnes Czako.
Listen to the episode available here.
0:02] Jake: Have you ever wondered what happens when entrepreneurship, environmental sustainability, and venture capital collide? If so, you’re like me, and you’re in the right place. Welcome to the Green Addventure. On the show, you’ll learn from the critical insights of both founders and investors alike, not random advice or generic guides, but real stories born out of their experience with genuine climate action. We aspire to create a network of people collaborating to build the green economy, accelerating us towards this critical target of net zero emissions. I’m your host and founder of the show Jake Woodhouse. For all the notes, links and episodes, please visit www.greenaddventure.com, take care when typing that in addventure is spelled with a double D. Thank you for listening, and enjoy the episode. Hi Agnes, welcome to the show.
[0:56] Agnes: Hi, thank you very much.
[0:58] Jake: So great to see you here today, thank you. To start things, could we have a snapshot of yourself and the summary of your current role?
[1:06] Agnes: I’m Agnes, I’m a co-founder and managing director of Airex. We are an IoT based Smart Home solution where a startup based in London, and it’s basically an energy efficiency solution to help reducing heat demand in building without compromising depth and air quality. So, I’m the MD of the business, which means considering it’s a very small team, and dealing with the strategy, finance, business, development, fundraising, and so on. everything apart from product development, I’m sure you’re familiar with small businesses.
[1:39] Jake: Awesome, it’s tough in the cases of founder of business that you end up doing a little bit of everything at certainly at the start. And I’ll be honest, to admit, I’ve seen you pitch before. So, just to summarize a little bit about what I saw is essentially, it’s a brick basically, that you guys are developing that helps a house become smart. And yeah, it looks absolutely awesome. What I’d love to do is to dig into the production little bit later in the conversation and start by pressing rewind, and finding out a little bit about where you’re from and how you’ve been on this journey today and what got you interested in sustainability to start with?
[2:11] Agnes: Okay, so before founding Airex, I’ve previously led the delivery of a few, tens of thousands of energy assessments. So, I was working in an energy efficiency organization called Sustainable Home Survey. So, during this time, I also had a chance to actually physically meet about 2000 families in the most deprived areas in London social housing. So, I had a very good hands on experience on what fuel poverty really is, and what are the major problems about dammed, cold condensation, and how we should be able to solve that. And on the funding journey, it’s basically an interesting one, because sadly, I had no financial support from friends, or family, nor did I have any network, I was actually quite new to the UK. So, I arrived a about eight years ago, I’m originally from Hungary, Budapest. So, I was actually really lucky to be able to work in an environment where I was very much encouraged. So, when I arrived, I was the first employee of Sustainable Ventures and then they were later on very much encouraging to me to spin out this company, Airex and to cofound it with them, so I couldn’t have done it without them, basically. So, that’s a massive hub. And on the funding side, and financial support, I think similarly to many other startups as well, we also started off with Innovate UK Ground funding. So, three years ago, we won an energy game changer, Innovate UK award and that was just enough to build the first prototype, test it, test the market and then angels followed. And here we are. That’s roughly the story.
[3:48] Jake: That is so great. And it’s often the genesis of so many good ideas, which come from personal pain points, and you know, spending many. Well, how many startups did you said you did?
[3:58] Agnes: So, the company did 30,000, I personally did 2000.
[4:02] Jake: Okay, so you understand very, very well, that marketplace. And it’s always such an interesting journey to follow when someone sees an opportunity and it’s like, we could do this so much better, because you’re working on a real problem, essentially. And that leads me nicely to ask and so, what is the problem then that you came across, that you felt so passionate to do something about?
[4:18] Agnes: The main problem, I think we’re all aware of the fact that cold, drafty, poorly insulated homes are massively contributes to the greenhouse gas emissions to carbon emissions. But only recently, research demonstrated that actually, air bricks are responsible for about 15% of the heat loss per home, which is a seemingly small problem. But in reality, it has a massive impact on a UK scale, that’s equivalent to 34,000 gigabytes hour per year energy waste. So, it’s not that small problem anymore. But in the same time, if these bricks are blocked permanently by residents, which happens a lot in practice, we’ve seen it in real life, then it causes damped and condensation issues which risk occupant’s health. So, we somehow try to find a way of balancing these two problems, thermal efficiency and air exchange. And that’s what Airex does.
[5:08] Jake: Awesome. And just to kind of, I guess, visualize for some of the listeners, these are the bricks that anyone who’s looked at a house before will notice they’ve got kind of tiny holes and don’t know that sit right down near the gutter or the drain pipe, etc. Because how amazing the, 34 gigawatt hours of energy is consumed on the basis of those actually being in buildings. Wow, what amazing. And so, on learning this problem, you obviously thought right, we’ve got to come up with a solution. So, what is your solution today, then, can you talk a little bit more about the product?
[5:36] Agnes: Yes, so it’s technically an intelligent air bricks that replaces the traditional air bricks and that has a hardware and software element. So, within the Airex’s units, the vent units, they have inbuilt sensors and they are monitoring and analyzing the environmental conditions, such as temperature, humidity, and some aspects of air quality. And based on the cloud-based algorithms, it automatically regulates the air flow with a simple open and shut mechanism. But it also predicts occupant’s behavior and weather pattern for more efficient air flow optimization. So, the main outcome is to reduce heat demand through improved thermal efficiency of the building, but in the same time, not compromising damp and air quality. And I think one of the major points that we need to stress is that the payback is really, really short. So, we did lots of independent academic validation and we managed to prove that the payback is about two, three years through reduce energy bills, which is considered very short and attractive within the energy efficiency product.
[6:39] Jake: Well, absolutely, and just a simple calculation on, I personally had some startup ideas in the solar space and looking at smart meters and how to disaggregate data and consumption, what panels we put on someone’s roof and, you’re talking about 13, 15 years payback, which most homeowners don’t have that long, in an opinion on whether or not they’ll own it that long, let alone actually invest the 15, 20 grand it would cost. That’s a fantastic payback period. And so, taking that through, then obviously, you have a vision, and it’s a case of trying to get some early traction. Of course, no investor is interested in just an idea, they want to see some proof that people actually want what you are, you can go and build. Can you talk a little bit how you take that early idea, and you really translate that into a bit of traction and the next steps from there?
[7:19] Agnes: I think we touched upon one of the most critical points in the life of a startup and over business. Because the traction is the hardest to achieve because everyone wants to look at previous case studies and grant funded projects or pilots are not enough, they want to see case studies when a client was paying for it. And of course, somebody needs to come first and that’s a classic chicken or egg situation. So, that is really hard. And one of my key takeaways, and lesson learned is that try to approach the most pioneering organizations. Within our case, it’s mainly local authorities, housing associations, but also even energy companies. So, very recently, we managed to achieve a really significant milestone because Airex was approved under Ofgem, the UK energy regulatory body to be adopted under the Eco-scheme, the energy company obligation scheme, which then created and triggered a large commercial contract with one of the big six energy suppliers well done and that’s really exciting. And that also could mean that in a long term, because the Eco subsidy per property is fully covering the cost of the installed cost of Airex, that means it’s technically free to the end user. So, that will be the absolute game changer.
[8:31] Jake: Wow. And of course, any homeowner wants to hear something is free and will reduce that cost going forward. I guess you’ve already mentioned your experience with Sustainable Ventures, and of course, their impressive portfolio of investments that we all read about. But what I’m interested in, I guess, is how you’ve taken this problem, you find a solution, you build a bit of traction, but of course, investment is part of this. And there’s that kind of leap of faith moment as an entrepreneur and you’re going, how am I going to pay for anything, if I follow this idea? Can you talk a little bit about how you took that initial piece of risk and what you decided in your own head like, right, this is what I’ve got to go and do and then alongside that, how you followed into the investment piece?
[9:08] Agnes: So, I think it’s a very interesting funding structure and funding system in the UK. And it’s very, very encouraging that at the, such a very early stage of the businesses, there is grant funding available, especially for hardware-based startups where it’s really important that the development time takes a little bit longer. And me coming from Eastern Europe, it’s not really the case of that part of the world. So, usually, it costs so much, and it is so much more effort to build up a business. And I think we should really appreciate that, that we have these funding mechanisms in place. So, yes, to answer the question, mainly, we started off with innovate funding. And then it was so much more, easier to build that confidence within angel investors. And we have gone through to Angel round, so initially, that was a pre-seed, smaller, round with people who we know already. But now we have just closed a proper seed funding round whereby the lead investor is green angel syndicate and it was a very exciting journey; it was a lot longer than expected. This is one of the biggest takeaways, but I think we made the right decision that we were focusing on sector specific and very much cleantech sustainability focused investors. Because we don’t want just to raise money, we also would like to see the contribution and have some mentorship and network in the sector, which is so much more of an added value than just purely cash.
[10:38] Jake: It’s such an important part, isn’t it of that investment, you’re looking as a smart startup founder driven to push your vision to reality, you actually need not just the money that people can give you, but also the experience and the network that they bring with them because it opened doors in areas that simply can’t happen otherwise. And that makes it so exciting. How would you advise any founders out there? If they’ve got some early traction, they’re looking to go to an investment round, what did you find was perhaps the real takeaways, you mentioned the time but also like, how do you actually speak to investors? What’s the, I don’t know any tips or advice for anyone?
[11:11] Agnes: I think one of the best and most effective format of talking to investors is pitch events, really, because whilst it’s a lot more convenient and comfortable to have one on one conversations, but you just simply don’t have time to do all of those. So, mainly approaching Angel Syndicates, because what happens is, I think the best example is to have the structure of the Green Angel Syndicate pitch events, there are more than 50 people in the room, you pitch to all of the investors and it’s also recorded, so all the other hundreds of members could also see your pitch. And then they conduct a really thorough due diligence process. But you don’t need to repeat those questions over and over again. So, I found that answering the questions is one of the most tiring and exhausting part of the process, because of course, there’s also you have a business to run on the side. So, the more you can prepare with already prepared Q and A’s, so that you could share that with the investors, the better it is on the time saving aspects. So, yeah, some people find pitch events a bit too intimidating. But I think as long as there is a good encouraging environment built out that it could be a very efficient way of doing it.
[12:24] Jake: And some of those questions that you are asked, I mean, what are the things that come up time and time again, I mean, in terms of promoting or trying to sell your idea and your business? What areas would you think got interested, the most interest from investors?
[12:37] Agnes: I think most investors are quite confident about the technology part and often have a comment that, oh, that’s really nice and neat and simple. Of course, in the background there it is not that simple. But yes, everyone gets it, basically. But most of the questions are on the commercial side. So how are you going to get that traction, and this is why this big milestone with a large contract with an energy company was so important to build up the confidence of investors and everything just sped up from that point.
[13:05] Jake: Yeah, well done. I’ve sat in the Green Angel Syndicate audience, and I’ve seen plenty of pitches over the last two years. And it looks very intimidating process from sat down in a nice comfy chair I was in. But certainly, one of the big questions is always, what’s the traction? So, how many of these things have you sold, how many things you’re potentially going to sell? If I give you some money, what happens in the next six months, blah, blah, blah. And it’s yeah, it’s really interesting to hear you talk about it, but from the other side of things. And so, many founders do mention that the fundraising process takes so long and so much of your time up, maybe there’s a business idea out there that tries to reduce that time but that’s a conversation for another day. Moving forward Agnes, the key part of any startup is, of course, the people you work with, and the kind of expertise that you can pull into your idea and your vision, and align them with some equity, etc. Can you talk a little bit about the colleagues you pulled together and the talent that you have within the company?
[13:55] Agnes: Yes, sure. The talent and the team are basically one of the strongest points of the business, I have to say, and I’m so pleased to work with such an inspiring and smart people. So, our product lead, James has also been teaching at Imperial College and the Royal College of Art on innovation design engineering course. So, he’s a really creative person, amazing to work with him. And, Will, our software engineer who also happens to be a mechanical engineer as well, coming from a corporate background, he’s really good at problem solving, Malik, our electronic engineer, he single-handedly put together the whole product certification side of things. So, I think everyone is really good at learning as you go, which is such an important skill in a startup. It’s so much more important than any formal qualification and as per me, I don’t personally have an engineering background, but I can learn from the team so much every day, which is really refreshing and very inspiring.
[14:51] Jake: And so, Agnes, your background really comes from the almost the domain expertise in terms of all those surveys that you did, what degree did you take in the past? I mean, has that helped feed into the role you’re currently doing?
[15:01] Agnes: Yeah. So, for the undergrad that was focusing on economics and I did that back in Budapest. And then I also did a part time master course at Cambridge called interdisciplinary design for to build environments, longer title, I say IDB. So, that was more focusing on sustainable building design and I very specifically want to align that with my work as well. So, that was massively helpful but mostly also for the network, as well. So, given it’s a part time masters, so I was doing full time job alongside of it, everyone was more mature, everyone had at least 5, 10, 15 years’ experience in the sector.
[15:40] Jake: And so, how many of those people today you still in touch with that? Were you able to get advice from—
[15:45] Agnes: All of them, they’re all in a WhatsApp group.
[15:46] Jake: Oh, awesome. Gosh, How interesting. I bet they’re all working on some really interrelated projects that, you know, you can take advice from each other, or you can help for contacts into certain markets. And that really focuses around that point of network, doesn’t it? One of your superpowers as a startup is obviously, you know, the talent that you can bring in. It’s about learning, it’s about being flexible, but equally, it’s that network that you can start to build, because you need it really badly for all the different things you can’t do. And yes, I guess it’s very clear that this business has come from an area where you saw an opportunity from a big problem. And your mission is kind of shining through your passion. Can you talk a little bit about the actual impact that Airex might have, if you can get to the scale that you think might be possible, and specifically, from a kind of admissions perspective, because of course, that’s really the driver of what we’re all looking at. And hopefully, the green economy is not too far away. But there’s many, many years of work to go. So, I’d have to understand the numbers perhaps, or, or at least the theories that you’re trying to put into place that might well come true.
[16:45] Agnes: I think I can speak on behalf of the whole team, really not just myself that we are all very much driven by addressing problems such as fuel poverty and climate change. And I don’t think anyone else could imagine, ourselves working anywhere, not related to sustainability. So, that’s a real important drive and we’re all very passionate about it. And also coming from the background on the Passive House side of things that’s very much focusing on currently on more on a high-end market, it should have made should also flow into social housing. And I’m hoping that at some point, it will be, but where I find the gap is that immediately that cannot reach out to the mass market. So, my motivation was to try to address both sustainability and social issues in the same time and fuel poverty sits right in the middle. And on the energy savings impacts, so thanks to that, the system can achieve about seven tons of carbon lifetime, carbon savings per property. So, on a scale of food market penetration in the UK, that’s roughly about 120 million tons of carbon saved for the lifetime of the measure. So, hopefully, we will get there in the next few decades or so, there’s a lot of air–.
[17:58] Jake: That sounds like a huge number, in terms of trying to bring some context to listeners out there. And what does 120 million tons of co2, I mean, yeah, I don’t have a clue either. And this is one of the interesting parts about looking at the sustainability space as a core purpose behind all of the missions that we’re trying to work towards. But it’s often not necessarily enough for someone to purchase something. So, cost and price drives 99% of business still. And so, what’s really fascinating here is you’ve said, right, I want to work on this issue, and I want to work on another issue over here, both have a social impact. But somehow you have to find a way into that market that actually makes financial sense for someone to buy something from you. And you’ve got to really healthy place, it sounds super exciting, well done. I’m going to try a little around now, Agnes and it’s not wasn’t trying to download it. I’m calling the sustainability sprint trans basically three quick questions that you apply what comes to top of your head? And what is the coolest piece of cleantech that you’ve recently used? So, this can be in daily life of any form at all that’s perhaps not a fossil fuel-based piece of transport or some of the views that should be more sustainable than previously?
[19:03] Agnes: A lime scooter.
[19:05] Jake: I said the same thing. Yeah, exactly, aren’t they awesome, the e-scooters? And finally, what in your own kind of lifestyle is the most important alteration that you’ve made for a sustainability impact?
[19:17] Agnes: Putting on three more jumpers rather than turning on the heating.
[19:22] Jake: Okay, nice. Yeah and heating is a big one in that. I can’t remember the statistics a huge in terms of our emissions for heating and cooling. It’s a kind of Titanic type discussion, isn’t it? No one’s doing anything about it, except for yourselves. So, okay, this is really my last question, actually. So, the fast forward round, imagine yourself in 2030. what do you think would have been the highlights of the last 10 years if Airex is super successful?
[19:49] Agnes: I feel we would have been rolled out in most of European houses and having sold millions and millions of Airexs and probably their companies also acquired by—
[20:00] Jake: Yeah, I mean, that’s the dream, isn’t it? As an entrepreneur, as the exit at some point. So, if just to take that concept, so you’ve been focused on the British market so far, but the Airex market is global, I mean, these bricks are everywhere.
[20:14] Agnes: Yeah, so we did a really extensive market research on the European market. So, we identified beyond the UK market, another 15 million homes as well within Europe that’s suitable for and also identified some US market as well. But we still need to learn more about that part, we started with Europe first.
[20:32] Jake: Yeah, of course, well lots of business to do. Well, Agnes, thank you very much for your time today and thanks for joining.
[20:36] Agnes: Thank you.
[20:38] Jake: That was the Green Addventure, thank you for listening. If you enjoyed the show, then please help us out by sharing this episode with your networks and rating us on the platform, wherever you may listen in from. For any questions at all, we’d love to hear from you, so please reach out on social media or email. Whether you’re wondering about a technical term that’s being discussed, would like an intro to a guest from the show, or even perhaps feature yourselves, we’re here to help. My Twitter handle is @JakeWoodhous, spell as it sounds, but drop the final e, my email Jake@Greenaddventure.com. Remember that ‘add’ spelt with two D’s. Finally, for the notes, links and episodes that will be coming, visit www.greenaddventure.com. Remember, that’s add, with a double D. Until next time, we’ll be back soon. Thank you and goodbye.