How Switch Automation Preserved Equity and Extended Runway
TL;DR
Proptech innovator Switch Automation used non-dilutive growth financing from Efficient Capital Labs to preserve founder equity, stabilize cash flow amid market downturn, extend runway, and sustain scalable operations without further dilution in a tightening funding environment.
Highlights
Equity preserved with non-dilutive capital
Runway extended during a challenging market
Operational stability without additional venture rounds
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About the company
Switch Automation is a technology-driven company transforming the real estate sector - helping property owners reduce operating costs and improve energy efficiency. Real estate is the largest asset class globally but to date, has seen minimal digital transformation. Launched into the U.S. in 2016, and with a presence in the US, Australia and UK, Switch Automation has a mission to bring data-driven management to building operations.
- Founded: 2006
- Headquarters: UK
- Team Size: 150
Challenges
After a decade of growth, market conditions for startups shifted dramatically.
Changing Market Environment
In 2022, the fundraising environment for startups changed rapidly and Proptech had additional challenges from the headwinds faced by the real estate sector.. Switch needed to rethink its path to growth without investor capital and while watching the real estate sector recover.
Maintaining Growth Without Further Dilution
Switch Automation had to determine which financing path to take, to sustain operations and for future growth.. Having already raised $17 million, and established an iconic group of customers, the founders were looking for growth without further dilution.
ECL Solution
In 2023, Switch Automation turned to Efficient Capital Labs (ECL) for non-dilutive financing. This provided a crucial buffer that allowed the company to weather market changes and reposition itself for organic growth.
Switch Automation took its first tranche of $500K of financing in early 2023 - and rolled over a new tranche of $300K in 2024.
Agile Response to Market Changes: As the startup funding market reversed from rapid growth to contraction, Switch Automation quickly shifted from a more aggressive, venture-backed model to a bootstrapped, organic growth approach. The funding from ECL enabled this transition, giving the company the operational flexibility it needed.
Operational Stability: The financing was used primarily for operational expenses, ensuring that Switch Automation could continue to grow. This allowed the company to maintain operations without the need for further dilution, preserving ownership and strategic control.
Before Efficient Capital Labs
- Recotap was growing but facing cash flow constraints due to delayed customer payments.
- Product rebuild and innovation plans were at risk due to lack of ready capital.
- Equity fundraising pressure amid scaling operations.
After Efficient Capital Labs
- Cash flow stabilized through non-dilutive financing, allowing smoother day-to-day operations.
- The engineering team expanded by 50%, accelerating product development.
- Maintained ownership and delayed traditional VC fundraising.
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ECL Impact
Switch Automation’s decision to leverage non-dilutive financing through ECL resulted in several key outcomes:
Preserved Ownership and Strategic Vision
By choosing ECL, Switch Automation avoided further dilution of ownership, which was crucial after having already raised $17 million in previous rounds. The founders felt confident in their product-market fit and customer base, and ECL's financing allowed them to maintain control over their long-term vision.
Flexible Funding Strategy
ECL stood out to the team at Switch Automation for its fast and responsive process. Switch Automation's CEO, Deb Noller, was able to provide the necessary documents for application within hours, and ECL’s funding decision was made within days. This quick turnaround ensured that the company had the capital it needed to continue operations smoothly - as well as take further tranches of financing when they were needed.
By securing non-dilutive financing from ECL, Switch Automation successfully navigated a challenging market environment and positioned itself for continued growth in the evolving real estate tech sector.
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The Invitation
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