On the Up: Power pricing start-up Factor secures $3m, signs first customer across the Tasman
'Simon and I have been working together for a decade. We were part of the founding team at Flick Electric,' Venning-Bryan says, name-checking the upstart electricity retailer that began its life selling power at wholesale rates plus a margin.
Flick was sold to Z in 2018 for $46m. Z, in turn, sold Flick to Meridian in May for $70m.
'I was CMO [chief marketing officer] there and Simon was CTO [chief technology officer].'
After Flick was sold to Z, Venning-Bryan and Pohlen left to help scale up Flux Federation, Meridian's in-house effort to create billing software (last month, Meridian announced plans to cull 53 jobs from Flux as it entered an outsourcing deal with British firm Kraken).
'In the course of that work, we got to understand the commercial and industrial sector more deeply. We could see there was an opportunity in forecasting and pricing.
'The crux of the problem is that when a utility – and this is globally true – has to provide a price for a commercial customer, which could be anyone from an office building through to a factory through to a farm, those prices are bespoke. They don't come off a generic price book like they might for residential.
'So what happens is they go to a back office pricing team, who almost always use a combination of SQL [database] queries and spreadsheets to come up with a price. It can take a few days or even a few weeks.'
And things are getting more complicated as corporate power customers add solar panels to some of their rooftops, and maybe install EV chargers – and in Fonterra's case, electric milk truck chargers – and other points of complexity amid greater electrification.
The rise of AI offered the opportunity to quickly gather pricing from legacy systems without power companies having to rip them out.
'We interviewed 30 utilities in 15 markets to validate our own thinking about that opportunity,' Venning-Bryan says.
Max Factor
To outsiders, coming from a tiny market might seem a disadvantage. But Venning-Bryan says offshore utilities are gobsmacked by the lengths the start-up has had to go to grapple with New Zealand's multi-player market, which has 27 networks. Their pitch: if they can make it work here, they can make it work anywhere.
'We cut our teeth in New Zealand, one of the world's most complex energy markets, with dozens of distribution networks and no standardised meter data format. We built Factor to handle that, and in doing so we built something market-agnostic. That's why we're ready to scale globally,' Venning-Bryan says.
Pohlen says Factor can be set up using natural language queries, thanks to technology that builds on Amazon Web Service's Chronos LLM (large language model).
Factor has 10 staff, mostly AI experts and data scientists. The new funding will be used in part to expand the team, including sales and marketing roles.
Icehouse Ventures chief executive Robbie Paul says Factor's ability to apply modern software design and AI to deeply entrenched industry problems is what drew his attention.
'Just when you think software and AI has eliminated all inefficiencies, in walk great entrepreneurs like Jessica Venning-Bryan and Simon Pohlen optimising a colossal industry like energy,' Paul says.
Factor is Icehouse's second early-stage investment announced this week. The firm has raised $16m toward its target $30m for its new Seed Fund IV.
Chris Keall is an Auckland-based member of the Herald's business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
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