Transcript
Chris Saunders
Thank you very much. Thank you. Now, prior to the kind words of the Minister earlier referencing Navetas, probably most of you had not heard of our company before today and you might be wondering, quite reasonably, why I’m standing up here in front of you today. Well, I’m pleased to tell you that 10% of our employees drive a Land Rover and, in fact, the vast majority use one type or another of an Apple product.
I probably should qualify that statement by telling you, we have 20 employees. But we do actually have a story of our own to tell and I look forward to explaining more about us. And to introduce us, I’d like you to take a look at this.
Voice Over
We need a low-carbon society. Millions of people…
New legislation on smart meters, on [overtalking].
As a country, we’re going to take the carbon dioxide out of what we do.
Consumers will save energy and save money.
[Overtalking]
Chris Saunders
So hopefully that explains a bit about what we are. I’m here to talk to you about how the right design transformed a UK technology company. We’re talking about a technology start-up company. Looking at game-changing technology, potentially, that can change an industry and touch on everyone’s lives here today.
Now, taking a technology from a university and transferring that into a business requires certain criteria to be met. Firstly, to get investment in technology, IP is critical. The technology must be unique and for investment, it must be able to be protected through patent strategy.
And there must be a clear market opportunity to raise investment. We cannot do design and development for design and development’s sake. It must meet a need and we must be able to define what that need is and how we are going to address it. And you need more than just the designers and the great technologists that we have in our universities and throughout the country. We also need to be able to attract the right business professionals and the right management team to transform the technology into a commercial reality.
And to get finance from venture finance companies and capitalists, the reality is, if you can’t demonstrate a scaleable business model and high growth, you may struggle. Venture capitalists look to get a return on maybe one or two investments out of ten or 12 that they might make.
And finally, design. Good design and an effective design process can take innovative technology to a commercial reality. Without that, we’ll all struggle.
So what is our technology? Hopefully you got a bit from the video. But effectively, we can determine from a single point of the home what each appliance in the home is consuming in the way of energy. So we can engage with consumers and advise them really how and where they consume and spend money on energy.
We look, using very complex algorithms and artificial intelligent techniques, at current and voltage variations in real time to identify precisely what’s going on around the home. This, as you can probably tell, is actually a washing machine followed by a fridge coming on and then, indeed, someone having a cup of tea by switching on the kettle. That may not look that complex for, say, picking out individual appliances but when you think of the number of appliances within a home, when you think of the number of combinations of appliances being used and multiple appliances being used at the same time, it becomes exceptionally complex and this is where the heart of our technology lies and the value that we bring to our customers.
So this technology was born out of the University of Oxford, led my Dr. Malcolm McCulloch, our leading designer in innovative, sustainable energy technologies, and was six years in development at the University, basically driven by PhD courses and projects and also postgraduate work as well.
And it got to the point where there was cutting-edge, raw technology in a lab-based environment that had the potential to come out into industry and make a significant change. But even with those credentials, it was difficult to raise finance and investment because – going back to my original slide – putting all the pieces together was hard.
In fact, then they came to the Design Council and the Design Council gave tremendous support in visualising and prototyping what a product could look like with this technology in and how it could benefit the industry and consumers at large.
Navetas, on the other hand, was a business founded by myself and a colleague, who’s here today, from the industry, having worked many years in the energy management industry at very senior level. And we recognised that there was an opportunity to innovate in this sector. In fact, we found that innovation was either coming from the giants – I would include companies like Google and Microsoft in that area – or it was coming from technology start-ups.
Really, when you look at mid-cap businesses, there’s very little room for innovation because they’re focused on the bottom line and new products driven purely by market requirements and not so much having the capability to focus on research, on pure research.
And we were able to bring basically the know-how of the industry to provide a credible business plan that could be invested against. The two combined found investment quickly and we’ve raised £7 million since 2008, which actually is not such a large amount of money, particularly when you compare with equivalent businesses in the US that have probably raised, in the same period, over ten times that amount.
Now, looking at the opportunity, again in the video we touched at that at the first. This is very high up on the political agenda and everyone is becoming more conscious about energy price increases and the effect of our energy consumption on climate change. Yet, with the aggressive targets to reduce carbon emissions, we have a contradictory requirement with the fact that demand is set to increase dramatically.
And in order to address this, we must look at a number of solutions. One is obviously a move from fossil fuel generation to much larger reliance on renewables and clean generation. But also we must look to appliances being more efficient and consuming less energy and also we need to inform consumers more about what energy they are consuming and how they are consuming it in order for them to make – and for us to make informed choices.
So how can consumers influence these things? Well, the likelihood is, far more complex tariffs, variable time of use tariffs which consumers will have to manage. They will need help with this. No doubt, the ability to switch to other suppliers, to choose tariffs that are lower-cost and also that meet their requirements more. But consumers don’t understand this today. Only 12% of consumers switch brand.
And finally, understanding their energy consumption so that they can make informed choices. Today, the consumers are confused and don’t have the information to do that. This creates a culture where there’s a great opportunity in there for a low-carbon society to innovate to create value, to provide information and to change the industry.
So focusing on design, being able to look at industrial design, I’ve already mentioned, unlocked the ability to raise finance but now the real challenge is creative design because creative design will unlock the ability for people to engage with information and data that, quite simply, they don’t engage with today and, at first glance, can seem quite complex. So we have to find innovative ways to show people and to inform people.
I think the list there probably speaks for itself but the one I’d like to pull out is appliance efficiency monitoring. With our technology, we can inform consumers how much energy, or how much money they will save by changing their old, energy-inefficient fridge for a new energy-efficient fridge. So not only look at the cost of purchase but the running cost, which are things we’re going to have to consider more and more into the future and, I believe, will become very differential points for appliance manufacturers and suppliers.
So implementation of the technology; it was very important for us to make this viable to the industry and to consumers alike. So this technology works from a single point of measurement within the home; either the meter, the smart meter, or an in-home energy monitor. But the point of a single point of measurement means that it is retro-fittable into the existing housing stock with minimal disruption. Going in with a solution that means rewiring the house really isn’t going to fly.
And then we have a communications network and multiple ways to engage with the data in order to make sure that we provide as broad an accessibility to the information as we can and also, through the communications network, to allow for future capability of control, not only understanding what energy we’re consuming but how we can control it more effectively and in a more automated fashion.
And I think this slide, very quickly, to show in two-and-a-half years, the companies we are now engaging with at quite a serious level, to show you the potential of this technology and how, I’m sure, all of you will become far more familiar with this technology in your homes in the years to come.
In conclusion, taking technologies from universities into the commercial world is complex with high risk and, when it goes well, high reward. I hope that Navetas is a great example of doing this with the University of Oxford. But in order to have more British success stories in this area, we need to look to long-term investment.
Venture financers look at a three to five-year exit and for this type of technology, the development is longer than that and the commercialisation is longer than that. So if we want it to be in Britain and to stay in Britain, we have to work out how to get continued support as the business grows and not to let it go prematurely before all the value has been realized.
Tangible government support; one of the key requirements is to get the right people into this business. Why would people go to a high-risk technology start-up company when they can have a very good corporate career? So getting the right people in is important, and incentives around that are always well-received.
And also, to have ministers lobbying industry so that British industry supports British technology spin-out companies is very important to us, to see that growth and innovation and commercialisation. It’s important, of course, to have collaboration between businesses and academical investors. And I have to note that University of Oxford not only developed the technology but has supported us as an investor active on the board and also supported us in the mid-stage development where we needed more support on some of the artificial intelligence algorithms and we were able to tap into their resources.
And of course, the sustainable and scaleable business model; as you ramp up and need working capital, you need the bank’s support. One quick point is, we looked to a loan for £750,000 and we were offered it by the bank, as long as we deposited the exact same amount into a bonded account for the duration of the loan – not quite what I would call a loan, though it was true.
And obviously, user-focused design; you know, unless we’re making a change and consumers can engage with it, we’re not going to get anywhere. And finally, the point I would raise is sharing best practise. What a great opportunity it is today and I thank, very much, the Design Council for the opportunity to be able to share our experiences and to continue that sharing because all companies bringing new technology will have similar challenges to overcome and by sharing this we can make British innovation and growing that through start-up companies more and more successful.
So with that, thank you very much and we’ve got a demonstration so please, in the breaks, do come and have a look. Thank you.