4 Practical Tips For Startups Getting Off The Ground

Written by Tom Fairey

8 March, 2022

Switchd Started With 2 Guys And A Spreadsheet — And Great Insight On How To Get Funded

Switchd bills itself as a hassle-free energy switching service that seeks to lower your utility bills.

Switching service? Here’s how the company works:

  • You say whether you want to favor clean energy or low-cost energy.
  • Switchd finds the deal that best meets your needs.
  • Switchd changes your utility provider for you, just like that.

According to the company, with their service, the average household switches utility providers every 6 to 9 months and saves more than £400 a year.

Switchd is the brainchild of Llewellyn Kinch and Thomas Rogers. Kinch is a Cambridge grad who was a professional cyclist before working as a consultant at Newton Europe and then founding Switchd. Rogers is a Durham economics grad who taught in Shanghai before becoming a software developer at Floxx. He then developed software at IBM and landed in a similar consultant role at Newton Europe as Kinch before Switchd arrived.

They had each always wanted to start a company, not because of any problem with their current job but instead out of the drive to have ownership in something — a stake.

Switchd literally began on a spreadsheet — an idea, one they took to friends and family and got some good feedback on. The spreadsheet showed that people could save money on their utility bills by switching whenever the price (or their preference for green energy) dropped and that they could make money by offering the switching service.

Kinch and Rogers recently talked to me about how they started Switchd for an episode of my podcast, the Back Yourself Show.

They set a goal of raising £150,000, and figured if they could get it, then the idea would be good enough to quit their jobs for. Raised money from investors would show that the idea was good enough — investors served double duty as idea validators at that stage.

But raising money is a complicated affair.

1. How do you value a company?

When they started Swtichd, all they had was an idea on a spreadsheet. To get going, they needed funds, but without an actual product, how did they value their company?

That was more trial and error than anything. They talked to other startups seeking funds, as well as investors who might have funds. The founder, of course, wants their valuation as high as possible in order to generate more money. The investor, meanwhile, wants that value to be lower, so their stake will be high.

For Kinch and Rogers, they pushed the number as high as they could. The bottom line? You should always have people who say “I’m out, the value is too high,” because if you don’t, the value will be too low.

How did they even find those investors? They started with friends of friends, then talked to other investors.

2. What one thing convinced your investors to back you?

Switchd’s pitch deck had one slide in particular that seemed to motivate investors.

There are 26 million households in the U.K. About 10% keep their own spreadsheets (metaphorically, perhaps) to find the best utility providers and switch their provider every year. A larger percentage never switches at all — those are the people on loyalty programs.

Who Switchd went after was the person who last changed utility providers 3 to 5 years ago and knows they should again but think (rightfully so) that it’s too complicated. 

When presenting to investors, Kinch and Rogers described the person who their product was best for, which was a person who each of these investors could easily relate to, because chances were they were probably in the same situation.

3. Don’t Start Big — Build Lean And Get To Know Your Customers

It’s quickly apparent to founders that a company is many moving parts that require many different kinds of expertise. Rogers and Kinch resisted the urge to go out immediately and hire a team of experts to help them along, such as a head of marketing and a head of tech.

Instead, they did what they could by themselves, including IT, then gradually added customers and waited to see exactly what services were needed — true customer-led product development. What is it your customers are asking for? Figure that out and build your team that way.

4. How Do You Know When You Are Ready For The Second Stage Of Fundraising?

The first round of fundraising for Switchd was all about if there was a problem and if Kinch and Rogers could solve it. The second was about figuring out what the cost of acquisitions was, if they could scale their solution and if they could deliver on their promise.

It was obvious that the market was there — Kinch and Rogers knew that there were hundreds of thousands of Google searches every month about switching and lowering utility bills. Soon they had their first 1,000 customers. They knew they were ready for their second valuation when they had a product that was ready to be justified to the larger population.

The takeaway: Kinch and Rogers had an idea, a spreadsheet, and a target market — people who know they should switch their utility provider but think that it’s too hard. They turned their idea into action by clearly describing who their customer would be, finding the sweet spot when it came to investment needs, building lean, and knowing when it was time to seek their second round of investing.

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