“The best way to get people to reduce their carbon footprint is by giving them incentives”

Sebastián Ruales, co-founder of the Colombian startup Bia Energy, has extensive experience as an entrepreneur and investor: he played a key role in the deployment of the Colombian delivery superapp Rappi and has been part of the venture capital fund Opera Ventures. He recounts the birth of Bia Energy at a birthday dinner with his partner and co-founder Leonardo Velázquez, an energy expert. “We asked ourselves why people don’t know they can switch providers, and we concluded it’s because traditional suppliers aren’t interested,” he explains. This realization led them to see a significant business opportunity for an alternative energy provider that could offer added value to customers.

How did the idea behind Bia Energy come about? How were the company’s early days? 

The founding moment was in November 2021, when my partner Leo [Leonardo Velázquez] and I were talking about the energy sector in Colombia and the laws that have been transforming it in recent years. The energy sector in Latin America is open and free to competition in generation and commercialization, but innovation has only focused on generation, leaving the end user neglected. We users are like zombies who pay the bill without much transparency and without demanding anything. This, obviously, is convenient for traditional incumbents.

We asked ourselves what would happen if people knew they could choose their provider and what they would demand. The answer was that experience and customer service would become important, and we defined a series of attributes that would add value to the customer in this context, such as operability, transparency in measurement, tools to analyze consumption and improve energy efficiency… All this was fundamentally different from what existed, so there was an incredible business opportunity to create a company and grow very quickly.

Bia Energy presents itself as an intelligent marketer for companies. Is this your main differentiating factor? How do you seek to distinguish yourself from traditional energy providers? 

What sets us apart from other marketers is that we have a digital proposition. We have developed hardware to replace the old analog meter that can detect up to 34 variables per second about the customer’s consumption and transmit them in real-time to our servers. We apply machine learning to monitor these variables and detect anomalies and inefficient behaviors with great precision.

We offer the customer an attractive platform where they can monitor and analyze all their types of energy and points of sale and talk to a bot named Eva that tells them how to save on their consumption.

Why did you decide to focus on business customers? What specific needs do companies have when contracting their energy supply? What challenges did you identify and how does your platform help solve them? 

We chose to focus on companies for two main reasons: economic fundamentals and product and technology. Although capturing households would be easier and more massive, we opted for companies because they represent more demanding and sophisticated clients and would provide us with valuable feedback to improve our platform.

Additionally, companies with large disbursements offer better profitability. Installing a meter for a company that bills $300,000 makes more economic sense than for one that bills $10,000. This approach allows us to build a solid business base, continually improving our product and technology thanks to demanding feedback, and establishing a sustainable model from the start. We started with the most difficult clients to ensure that if it works for them, it will work for others.

This does not mean that Bia Energy will not enter homes in the future, but we will do it in an organized way. First, we will offer good service to higher average ticket clients and progressively serve lower ticket clients until we reach homes.

Do you plan to expand to new markets? 

In the next 9 months, we should already be landing in our second country, but we want to do it right. Peru, Chile, or Brazil are markets we could target, but we have not yet decided which will be first. Fortunately, we have a very large market in Colombia, and no one is forcing us to expand too quickly. It is an industry worth $14 billion, and we, with monthly billing of 8 million, are just getting started.

Bia Energy can be encompassed in the concept of cleantech, as it uses digitalization to optimize and reduce energy consumption. What role does sustainability play in the company’s value proposition? 

We believe that the best way to get people to reduce their carbon footprint is not necessarily by talking to them about their carbon footprint but by giving incentives that are more financial but lead to reducing their energy consumption. There is a percentage of early adopters who are willing to pay a premium to be green, but the reality is that the vast majority of people do not have that level of awareness.

In Latin America, we have a very nice energy generation mix. In Colombia, for example, 80% of generation is hydroelectric. We prioritize energy purchase negotiations from renewable sources and maintain a proportion very similar to the energy mix.

Additionally, we offer our clients a renewable energy certificate (REC) via blockchain that guarantees that the same amount of energy they consumed has been generated in their name by a sustainable energy generation project from one of our partners.

The company started its journey in 2022 when it launched a seed round worth $6 million. How have you managed access to funding to boost the growth of your company to its current level? Have you recently carried out new strategic alliances and capital rounds? 

We set out to make this big from the beginning: hire a talented team and build good technology from the start. We went to call investment funds, and by February 2022, we were already starting to get formal proposals from those who would be our partners. This $6 million seed round included the participation of the Brazilian fund Canary; Global Founders Capital, one of the most important funds in Europe; 8VC, from the United States, and Nazca, the most important fund in Mexico. Later, at the end of 2023, we raised a Series A of $16.5 million, led by the fund Kaszek, the most important fund in Latin America, behind Nu Bank, Mercadolibre, Kavak, among others.

In 2023, Colombia received $373 million in venture capital investment, recovering pre-pandemic levels and standing out as one of the five countries with the most investment in startups in the region. How do you anticipate the entrepreneurial landscape in Colombia will evolve throughout 2024? And the specific field of cleantech? 

The capital is there, but the bar has been raised. Many companies that were previously funded are not now, not because there is no capital, but because the companies do not reach the minimum bar from which investors are starting to make decisions, as they seek more sustainable business models.

We are lucky in our sector because, in a more restrictive context than before the pandemic, cleantech is developing very quickly and has high premiums. The energy sector has a lot of potential. It is a sector that can only grow because consumption will increasingly be higher: computing and machine learning increasingly consume more energy; transport will consist of batteries on wheels…

You plan to close the year with million-dollar billing. Could you share your estimates and the main indicators of the company’s growth? 

We are in 134 cities in Colombia and in 2,500 businesses. We expand to a new city every three days. At this moment, we bill about $8 million per month with the contracts we have signed, and we estimate that we should be closing the year with monthly billing between $15 and $20 million. We have achieved these results in 18 months. We have built a growth machine while keeping the financial fundamentals very well-oiled, making us very attractive to investors.

What advice would you give to an entrepreneur who wants to launch or scale their business project in 2024, especially in the cleantech field? 

Choose a problem that is significant and large-scale. Solving a significant problem throughout Latin America requires the same personal effort as a small one, so it is better to aim for the largest and with the greatest growth potential. It is crucial that the first users love your product, which will help expand it exponentially, and that you and your team are the right ones to solve the problem.

What does collaboration with an entity like BBVA Spark bring to a startup like Bia Energy? 

The BBVA Spark team has deeply understood our business, the local context, and the dynamic needs of the region. Their collaboration has been essential for us, as they have identified opportunities to contribute to our model and have given us the confidence to access new financing structures with higher-risk policies that fit the reality of the business and the entrepreneurial ecosystem.