EMatthias Martensen (31) and Karl Villanueva (32) could hardly have picked a worse time for their PR offensive. The founders of the Berlin start-up Ostrom operate in an industry that is currently being hit by a wave of bankruptcies. The reason: Electricity prices have been rising rapidly in Germany for months.
According to the consumer portal Verivox, a model household with an annual consumption of 4000 kilowatt hours paid 1171 euros a year ago. It’s now 1386 euros – a record increase of 18 percent over the course of the year.
The result: Smaller electricity suppliers in particular get into financial difficulties. They have to buy electricity at short notice on the expensive electricity exchanges, but are often unable to pass on the additional costs to their customers because of agreed price guarantees. Dozens of providers have already gone bankrupt as a result.
The generous financing that Martensen and Villanueva received for their start-up Ostrom is all the more surprising. A total of 4.4 million euros was recently raised by 468 Capital, J12 Ventures, the Samwer fund Global Founders Capital and Übermorgen Ventures, as Martensen Gründerszene reports.
A number of prominent figures in the scene have also taken part in the Berlin company. Gorillas founder Jörg Kattner, for example, Soundcloud inventor Eric Wahlforss or the well-known influencer Diana zur Löwen.
A “super app for energy”
What makes Ostrom so interesting for investors? The start-up offers green electricity at a variable tariff. To do this, Ostrom buys the electricity like many other providers, but passes it on to customers at cost price. It earns a fee of six euros a month.
This already differentiates Ostrom from traditional suppliers, as Martensen explains: “Because of the price guarantees, they are interested in customers consuming a lot of electricity. If necessary, we adjust prices, which means we go down again. That motivates us to use electricity efficiently and save costs,” says Martensen, especially when electricity is expensive.
Customers of the start-up can see on their cell phones what the effect of not turning on the washing machine until late in the evening. An app shows the current meter reading and uses diagrams to show how much money has already been saved compared to the selected electricity discount.
That’s just the beginning, according to the plans of the founders: In the long term, Martensen and Villanueva have a whole ecosystem around energy in the household in mind. Customers will soon be able to order and control charging devices for e-cars and smart thermostats via Ostrom. Martensen calls it a “super app for energy”.
The idea came to the WHU graduate while he was employed at the consulting firm Oliver Wyman. There, Martensen advised large electricity companies and municipal utilities – and, according to his own statement, quickly found himself in “structures that were poor in innovation and hostile to customers”.
“Many old electricity providers never had to advertise for customers, but are still sitting on their metering points through their basic supply activities,” says Martensen. Therefore, at the beginning of 2020, he looked around for alternative business models.
Duel with Tibber?
Martensen found one of these in the Norwegian start-up Tibber, which uses so-called smart meters to measure consumption. However, due to bureaucratic hurdles, these are not very common in this country. Martensen recognized a gap in the market. “I wanted to develop an offer that also works in Germany,” says the founder.
Through an investor friend, Martensen finally met Karl Villanueva, his current co-founder. Villanueva previously worked at Hellofresh for a few years and later went through an accelerator program. He also wanted to set up his own start-up. So they both got together – and founded Ostrom.
According to its own statements, the start-up now supplies households in more than 400 cities. Martensen does not name specific customer numbers. Probably also for reasons of competition: because the number of young green electricity providers with flexible tariffs has risen sharply in the past two years.
This includes the Berlin start-up Zenstrom, which is backed by the well-known founders Felix (Homebell) and Florian (Barzahlen) Swoboda. Stromee and Awattar also advertise electricity at cost price – smartphone app for consumption measurement included.
And then there is Martensen’s role model, Tibber: the start-up from Norway, financed with more than 70 million euros, has been courting customers in Germany for almost a year with an adapted offer. Lively competition between providers is therefore likely to develop in the coming months.
Especially when electricity prices normalize again. Only then can customers benefit from flexible tariffs. “Currently, these tariffs do not work or are extremely expensive because the procurement costs are so high,” said consumer advocate Udo Sieverding recently in an interview with the “Handelsblatt”.
Ostrom founder Matthias Martensen hopes that this will change again by summer at the latest. After all, he and co-founder Karl Villanueva would not have to fear that their start-up would go bankrupt. Because Ostrom does not give its customers any price guarantees, there is no immediate risk of insolvency.
“We are lean and tech-driven: This allows us to act much more efficiently than other providers,” explains Martensen. With the money from the investors, he now wants to further develop the app and, above all, increase the IT staff. Ostrom currently employs eleven people. By the end of the year, it should be twice as many.
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