Our Investment in Lun
Decarbonizing homes in Europe by making heat pump installation seamless
It is estimated that 25% of Europe’s emissions come from the built environment. While the continent has made meaningful strides in reducing emissions — by 35% from 2005 to 2020 — associated with energy use from buildings, homes remain a major source of emissions. This is in large part due to the use of oil and natural gas for home heating. Over the past year, geopolitical tensions, brought on by the war in Ukraine, have catalyzed action to wean the continent’s reliance off Russian natural gas. To that end, there has been a big push to promote the adoption of heat pumps, an appliance that heats and cools homes using electricity instead of fossil fuels, as an energy efficient way to reduce emissions stemming from buildings. The confluence of fear over the war-caused energy crisis along with regulation phasing out gas boilers across EU member states has resulted in 2022 being a record year for heat pump adoption in Europe.
While sales for heat pumps have reached new levels, the HVAC installers tasked with the installation often have to wrestle with a manual, time-consuming process to qualify and manage interested homeowners. Enter Copenhagen-based Lun which aims to simplify the sales and installation process for heat pump installers, ensuring they save time, grow revenue, and ultimately can retrofit more homes. MCJ Collective is excited to announce its investment in Lun, which recently raised a €10.3MM seed round, led by Norrsken VC, with participation from Lowercarbon Capital, Partech, and Foundamental. Lun was founded by Martin Collignon and Anders Valentin, seasoned founders and entrepreneurs, whose vision is to build Lun into a platform that can decarbonize homes in Europe starting with heat pumps.
What is Lun?
In Danish, lun means “cozy” or “snug,” and the company chose that moniker as it believes homeowners should enjoy comfort without contributing to their carbon footprint. The company started by helping homeowners in Denmark connect with heat pump installers. It soon learned that there was a more acute pain point felt by the installers themselves, who must contend with a growing number of customer inquiries and time spent qualifying them often through onsite visits and with pen and paper. Lun has found that, on average, installers spend more than 10 hours before and after each heat pump installation on sales, design, documentation, and other paperwork. This inefficient administrative overhead results in homeowners paying more and installers earning less. Lun’s software tools take care of these data-heavy and repetitive tasks so that installers can focus on running their business and retrofitting more homes with heat pumps. With an alpha version live in Denmark, Lun aims to expand the number of installer partners it works with across Europe.
Why Did We Invest?
Compelling Founder-Market Fit
Lun’s team has been described by its other investors as “A+” and one of the top performers in their portfolio. Building this capable team is a credit to the two founders, Martin and Anders. Friends since their time at Copenhagen Business School, each has honed their entrepreneurial and operational talents through a range of prior leadership experiences.
Before founding Lun, Martin spent the formative part of his career at Google where he worked as an analyst and the youngest full-time hire in the Nordics. He then worked at Uber, managing logistics and operations as the company sought to launch the ride-hailing service in Denmark. His first opportunity in climate was at Electricity Maps, an open-source project that provided insights into regional carbon intensity related to electricity use. At Electricity Maps, Martin started as the Head of Partnerships and Sustainability eventually becoming the company’s COO. Before starting Lun with Anders in 2022, Martin spent time as a climate activist in which he worked to galvanize support among youth groups, nonprofits, politicians, and scientists around a Danish carbon tax.
After graduating from university, Anders spent several years as a consultant at QVARTZ, a strategy firm that eventually merged with Bain & Company. He would go on to found Undo, a Danish consumer app that connected users with AI-tailored insurance. After nearly 5 years at the helm of Undo, he joined Martin in 2022 and founded Lun to work on decarbonizing homes.
Commercial & Regulatory Tailwinds
Timing plays an important role in the success of any company. Lun is capitalizing on opportune commercial and regulatory tailwinds that we believe will propel it to capture significant portions of the €60B per year EU heat pump market expected to emerge by 2030. With heat pump market penetration most dominant in Norway, other European regions represent a ripe opportunity for expanding adoption. With a lot of room to grow its heat pump market, Europe is expected to install 45 million residential heat pumps by 2030.
In addition to the high cost of fossil fuels, policy is another primary factor spurring adoption. Governments throughout the region have enacted regulations that have phased out the installation of new gas boilers.
MCJ looks for opportunities that line up exceptional talent, market timing, and disruptive technology, and we see all of those qualities with Lun. While the factors enabling heat pumps to proliferate are coming into place, Lun is primed to accelerate the transition when it could not arrive sooner.
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