Herbert Dwyer, MBA ’19, and Derek LaClair, MBA ’14, were working for a commercial energy design-build company when they noticed an intriguing pattern.
It was easy for the company’s clients to get financing to make their energy equipment more environmentally friendly – but only if the project cost more than $2 million. When projects cost less, and especially less than $500,000, those clients – often small businesses – were stuck with no way to finance them without damaging their bottom lines.
“A lack of financing was the biggest reason people would say no to the upgrade,” LaClair said. “It seemed silly that so many of these were going by the wayside.”
Dwyer, LaClair and their partners are filling that gap with their company, Empower Equity (EMPEQ),with offices in Ithaca and New York City. Thanks to the strong start it gained incubating in Cornell’s entrepreneurial ecosystem, EMPEQ now offers a new kind of financing, so small- and medium-sized companies, schools and municipalities can deploy significantly more energy efficiency than before.
The company sells a subscription service through which a business can switch out its old oil- or gas-fired burners for high-efficiency boilers or air-source heat pumps. EMPEQ also offers LED lighting, controls and variable frequency drives (VFDs). The reduction in their customers’ utility bill often covers the cost, so the subscription usually pays for itself. A software component automates the project feasibility and, more importantly, the credit underwriting.
It’s similar to how waste management companies provide dumpsters and trash hauling services for a monthly fee, LaClair said.
“We’re providing the boilers, the air-source heat pumps, the LED lighting and the servicing on the equipment as part of the subscription,” he said. “Essentially the customer is buying an outcome, which is becoming more energy efficient, and we provide both the equipment and the servicing to make it happen.”
Those outcomes will also have significant economic impact on New York state. EMPEQ’s $50 million investment in the state over three years could potentially mean 250 new jobs in clean tech, beyond the 30 to 40 they plan to create internally. “These jobs are not temporary like they are in many new construction projects,” Dwyer said. “Many of the energy assets we invest in and install require regular ongoing maintenance provided by local plumbers and electricians.”
They are also launching a commercial/industrial energy efficiency pilot with a $10 billion company, which has committed to providing EMPEQ with $20 million in projects over the next two years from its national network of contractors. Although the company operates in all 50 states and around the world, it has agreed to start the investment pilot in New York state this month.
EMPEQ now has regular monthly earnings, which means its business model has traction in the marketplace. And in February, it received $25,000 in seed capital from Launch NY, which provides mentoring and financing to high-potential startups in New York.
EMPEQ’s many Cornell connections have set them up for this success, Dwyer and LaClair said.
“It’s helped us to grow quicker, faster, but in a way that’s really risk mitigated,” Dwyer said. “We’re getting good advice. We’re being introduced to great resources. I couldn’t imagine getting this company off the ground without the access to the resources that we have here in Ithaca.”
“It would have been very, very difficult for us to do this anywhere else,” LaClair added.
The company has just been accepted as a member of the Cornell Life Changing Labs startup incubator. Four of the company’s co-founders have Cornell ties: Dwyer is half-way through the executive MBA program at the Samuel Curtis Johnson Graduate School of Management; LaClair earned an MBA from Johnson in 2014; Sarah Johnson ’07 is director of operations and digital marketing; and Edward Wilson, vice president of energy systems, managed Cornell’s power plant 2001-10, was Cornell’s sustainable energy team manager and is a guest lecturer for sustainability courses at Cornell. All but one of their investors are alumni or have another Big Red connection.
The team founded the company in 2016 and six months later joined Ithaca’s business incubator, Rev: Ithaca Startup Works, which is partially funded by Cornell. They are also a member of Rev’s partner program at the Southern Tier Clean Energy Incubator in Binghamton. Entrepreneur-in-residence Brian Bauer ’85, program director with Cornell’s Center for Regional Economic Advancement, helped them think through their business model. Entrepreneur-in-residence Brad Treat, MBA ’02, visiting lecturer at Johnson, provided guidance too.
“We have a pretty complex business model, with a lot of moving parts, and Brian and Brad have been critical to helping us to reframe that story,” LaClair said.
As an executive MBA student, Dwyer has sought out assistance for the startup with Pam Silverstein at eHub Collegetown, Cornell’s entrepreneurship coworking space, and Felix Litvinsky at Blackstone LaunchPad at Cornell, which provides entrepreneurship mentoring, coaching and resources. And he’s is leveraging material he’s being taught at Johnson. “You’re learning things in real time that you can bring back on Monday morning to solve problems,” he said. “We’re definitely directly applying every single iota of information we possibly can. It has helped us in a few binds to rethink a few assumptions.”
When EMPEQ needed to hit some important accounting metrics, LaClair called on his former accounting professor, Mark Nelson, now Johnson dean, who referred LaClair to an expert in the field: the co-author of Nelson’s accounting textbook.
“Cornell’s entrepreneurship ecosystem is so many levels deep. We’ve barely begun to scratch the surface of opportunity,” Dwyer said.