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VARM secures Pre-Seed funding to accelerate home insulation and building decarbonization

October 9, 2023

VARM secures seven-figure funding to make home insulation easier and affordable, facilitating access and training installers.

Today, insulation startup VARM announced a seven-figure Pre-Seed round of funding. The company is on a mission to drive household decarbonization by making it faster, easier, and more affordable for homeowners to insulate buildings’ cavity walls and roofs.

In Europe, a shocking 75 percent of buildings are deemed energy inefficient. Whilst solutions such as PV modules and heat pumps have emerged as a way to decarbonise homes, insulation not only increases the comfort of a home, but lowers energy costs.

VARM is founded by second-time founders Christian Gruener (longevity supplements startup Vitalon) and Sebastian Wuerz (co-living startup homefully).

I spoke to Christian Gruener to learn more.

According to Gruener:

"We're speeding up the transition to net-zero by providing homeowners with everything they need to safely and affordably insulate their homes."

Have you ever lived in a home where you can see your breath when you wake up and suffer from freezing winters and boiling summers? A lack of insulation (and draught-proofing) makes it impossible to keep the inside temperature at a comfortable range.

Building insulation has huge sustainability (and comfortable living) benefits, reducing the need for heating and cooling, resulting in lower energy bills

Further, insulation can take less than three years to reach a return on investment, compared to 10 years for a heat pump, while also providing carbon dioxide savings and enabling PV modules and heat pumps to maximise their efficiency gains.

VARM helps bring standardisation to a fragmented industry

Currently focused on the Berlin area, homeowners can use VARM to get a quote, access grants, and have their insulation installed by skilled VARM insulation installers.

This provides order to the insulation market, which Gruener describes as complicated and fragmented, akin to where the solar market was 10 to 20 years ago:

"There's not one standardised methodology or agreed upon standard. This offers a huge potential for us to become the market-leading company and define market standards within this space."

The company has created a digital solution that supports all installation materials providers. By digitising the customer journey, breaking down the costs, and improving accessibility to quality installers, VARM aims to insulate one million homes in the next ten years.

Providing critical skills and career advancement during a labour shortage

Like most of Europe, Germany faces a shortage of skilled blue-collar workers.

One of the main pillars of Varm is helping train insulation installers. Gruener explained:

“I think the overall labour market from an employer’s perspective is very tough. Companies are in dire need of well trained staff, especially in blue-collar jobs.We want to solve this skill gap by training people to become insulation installers and connecting them with homeowners to reduce their carbon footprint and improve energy efficiency in their homes.“

The company is starting with single-family homes in Berlin but hopes to extend this to apartments in line with EU regulation, which aims to ensure that all buildings have zero emissions by 2050.

Berlin is characterised by property owners with large portfolios, with some owning over 100,000 apartments each. Despite a 2021 vote for the state to take property back from landlords with massive property portfolios, action has predictably been slow.

Gruener explained that the company didn't make apartments its first priority due to the length of sales cycles, which can take over a year to establish.

"But once you have a deal with them, you're able to retrofit, even if it's just 5 per cent of their portfolio. It's huge compared to the B2C model, which requires a new customer acquisition every time you do an installation project."

Furthermore, he sees insulation as not only a source of huge market potential but a gateway to other environmental retrofits such as PV or replacing an energy-inefficient heating system.

The funding round is led by Foundamental and A/O. Strategic angels include the founders of German central heating specialist Thermondo and construction tech specialist ecoworks.

Patric Hellermann, general partner at Foundamental, shared:

"Tens of millions of buildings need retrofit insulation to remain viable economically and climate-wise. Christian and Sebastian found an ingenious way to industrialise retrofit insulation with their technology and process.We're delighted to be supporting them and the entire VARM team to scale their impactful model across Germany and beyond."

Gregory Dewerpe, CIO and founder at A/O asserts:

"We can't decarbonise the built world without retrofitting existing building stock, and upgrading insulation is often the most efficient way to do this. Unfortunately, the shortage of installers and the fragmented journey has meant that homeowners often overlook insulation.VARM is making it easier and more affordable for buildings and homeowners to upgrade their insulation, reducing energy consumption and bills. We're excited to be partnering with them on their journey."

The funding will be used to build the technological infrastructure for cavity-wall insulation and expand its footprint in Germany, as well as advance the first batch of graduates of the insulation academy.

Gruener shared:

We're only at the beginning of our journey, and we're excited to have the support of Foundamental and A/O, two of the leading construction and built-word investment funds to help us grow and succeed."

The company has a goal to insulate a million homes in 10 years. Gruener assured me that it's not as crazy as it sounds:

"The market potential is huge. Internationally, we need to renovate and retrofit over 50 million houses in the next 20 to 30 years. So 1 million within 10 years is not that big."

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