Kreos Capital IV portfolio company SolarEdge Technologies was founded in 2006 and is the global leader in providing solar power optimisation and monitoring systems for residential, commercial and utility scale solar photovoltaic installations. SolarEdge began trading on Nasdaq in March 2015.
Kreos Capital committed $8m of growth debt financing to SolarEdge in Q4 2012. What‚Äôs the biggest driver of growth in your business?
SolarEdge is a global leader in PV inverters, power optimisers, and module-level monitoring services for the PV solar energy generation market. SolarEdge developed a new power harvesting architecture that allows higher energy yield, flexible system design, per-module monitoring and enhanced safety which in turn allow the solar installation owner to increase its lifetime income from the system and shorten its return on investment. The company is active in some of the largest and the fastest growing solar markets in the world such as the US, Germany, Netherlands, UK and Australia and sells its product to market leaders in each of those markets. The company‚Äôs advanced technology and innovative products have been adopted around the world and have enabled it to quickly grow its revenues and turn profitable.
What‚Äôs the biggest challenge for your business?
The biggest challenge is how to grow the company in a balanced way. SolarEdge is a hardware manufacturer and as such maintains a complex supply chain, mass production through contract manufacturing, a worldwide logistics network and customer support. In addition the company is constantly engaged in R&D activities and growing its geographic presence to further increase its revenues.
What have been your key learning experiences so far?
To become profitable as quickly as possible. The ability to grow market share on account of profitability may be appealing, and when funding is easily available this strategy is appealing to investors in that environment. However conditions change, and when they do there is no better insurance than standing on your own two feet and being independent of outside capital injections.
As a public company, do you find it easier to raise funds, and how?
In general, public companies with financial reports that are publicly available to track their progress have better access to capital in the form of bank loans, publicly issued debt instruments and the ability to raise capital by selling equity. Since its IPO, SolarEdge has not needed¬† to raise any other funds so I cannot share of my own direct experience.
Has anything changed since becoming a public company?
The main change is that we are more visible now and as such investor relations and reporting requirements are much more intense. At the end of the day the basic tasks of managing a company and increasing revenues and profitability are unchanged.
What advice would you offer other growth companies about how they finance their business?
The old clich√© ‚Äúraise money when you can and not when you need‚Äù is painfully true. When funding is available you can try to optimise the financing tools to achieve the lowest cost of capital through the selection of debt, equity offerings or any other instruments, however always remember that circumstances change, and sometimes rapidly. Do not over-optimise. The price of not having enough capital is always greater than a non-optimised structure