Cloover , the Berlin-based energy sector start-up, will today announce it has raised a new $100 million funding facility, taking the total size of its financing capacity to more than $1.3 billion. The company, which provides financing to households looking to install green energy equipment such as solar panels and heat pumps, is also planning a major expansion into new markets, including the UK, France and Poland.

Cloover’s growth comes amid growing concern about how European homeowners will finance the transition to more energy-efficient properties. Recent research from the European Commission estimates that residential homeowners across the continent may need to spend as much as $282 billion (€242 billion) each year on efficiency improvements if countries are to hit their carbon emission reduction targets; while limited public grants are available to cover the cost of such improvements, estimates of the funding gap are as high as $185 billion a year.

Private sector providers of finance are therefore stepping into the breach, but while mainstream lenders such as high-street banks have started to offer products such as green mortgages and eco-loans, many struggle with the specialist requirements of green finance. That has created an opportunity for start-ups such as Cloover.

Cloover works directly with the small and medium-sized enterprises (SMEs) that do the lion’s share of the work to make green home improvements in the residential sector. It’s a highly-fragmented market, but Cloover’s funding enables small installers to offer financing packages alongside the green energy equipment they sell.

“These SMEs are doing more than 85% of all the installations in people’s homes,” explains Cloover CEO Jodok Betschart. “They’re doing a great job, but they’re often held back by limited working capital.” The high cost of energy efficiency equipment means SMEs struggle to hold significant amounts of inventory, he points out, and householders often can’t pay the full cost of renovations upfront.

I first interviewed Cloover at the beginning of this year, as it announced a $22 million Series A funding round. Since then, the company’s revenues have increased four-fold, says Betschart, who co-founded Cloover with Peder Broms and Valentin Gönczy in 2023. The business has recently broken into profit and now boasts a revenue run rate of around $350 million.

The company’s increased funding capacity will ensure it can continue to grow as it pursues new markets, with the new facility backed by guarantees from the European Investment Fund. Those guarantees are particularly helpful in enabling Cloover to offer finance to homeowners who might otherwise struggle to secure lending, such as self-employed workers and those aged over 60.

The company has also developed a new software product that installers can supply to householders, making it easier for these customers to manage the way they consume energy in their homes, as well as to sell unused electricity back into the grid.

“Many countries have phased out incentives such as feed-in tariffs and are instead encouraging homeowners to become active participants in the energy market,” Betschart explains. “In theory, homeowners can buy and sell energy at the times of the day when it’s cheaper or more expensive, but they need help to manage that on a daily basis; our energy management system can be included in their installation to look after that automatically.”

Cloover’s growth is impressive, with the company averaging around 20,000 installations a year so far. The size of the market means there is plenty of room for further expansion, though competitors are also alert to the opportunity. Many of Europe’s largest energy providers now offer their own energy efficiency products, as well as financing options for homeowners. And fintech businesses such as Kandoo in the UK are also targeting the market.

Still, Cloover believes its focus on SME installers provides it with a particular point of competitive advantage. Its financing packages can help these smaller firms increase their revenues by as much as a third, the German company claims.