One of the pillars of the USV investment thesis is “trusted brands”, and a core component of brand trust is structural alignment. Structural alignment means that from a fundamental business model perspective, the company’s economics and incentives are aligned with the interests of its users/customers.
Looking at the energy market, one area of existing structural misalignment is that most energy retailers charge a margin on energy delivered, creating an incentive to deliver more energy. This means that for the business to succeed and grow, customers must consume more.
Ostrom is an energy company structurally aligned to help its customers manage their energy consumption. Ostrom’s subscription-based business model means that the company is not only aligned with their customers consuming less, but can actively help their customers manage their consumption in ways that are beneficial both to them and the grid.
Based in Berlin and initially serving German consumers, Ostrom is bringing this model to market at an important time. With the Russian invasion of Ukraine, energy consumption is more in focus than ever, and there is a societal imperative to both reduce consumption and transition to renewable sources. Ostrom assists with both of these, through its aligned business model and its portfolio of renewable energy sources.
Another, more subtle but equally important prong of the USV investment thesis is something we call “Butter” – apps and tools that just feel so good and work so well that you immediately fall in love with them. Ostrom fits this bill as well – their app is a modern consumer experience that customers love, which sets them apart in a market dominated by legacy players.
We are excited to welcome Matthias, Karl and the rest of the Ostrom team to the Union Square Ventures portfolio, and are looking forward to partnering with our co-lead in the Series A, Adjacent, on supporting the next phase of the company’s growth.