YouSolar has a pre-money valuation of $50 million. The company generated $546 in revenue in 2020 and sold around $1 million worth of systems to early customers in the last year. But this progress does not justify its valuation. In March 2020, YouSolar closed a round on StartEngine at a $10 million valuation. In the last two years, YouSolar patented a new technology, sold a few systems to customers, and raised $3 million from institutional investors. None of this justifies a 5x valuation increase. Overall, YouSolar is overpriced in this funding round.

YouSolar sells battery and solar energy solutions for homeowners and businesses, so it operates within the global solar energy market. The market was worth $52.5 billion in 2018. It is expected to grow rapidly at an annual rate of 20.5% and reach $223.3 billion in 2026. YouSolar currently operates in the US, the second-largest market in the world after China, but wants to expand to countries with unreliable or poorly developed power grid systems. 

The global solar energy market is large and growing thanks to widespread efforts to reduce carbon emissions linked to electricity production and consumption. YouSolar’s battery and solar systems will also benefit from the future California ban of gas-powered generator sales starting in 2028. Regulation changes and the increasing cost of gasoline might impact the millions of homeowners relying on generators during power outages. YouSolar’s system is a solution that can provide electricity through solar panels or be connected with other sources of energy, both on and off the grid.

Overall, YouSolar has large market potential. Its product can address multiple needs from homeowners and businesses in various states and countries. 

Arnold Leitner is YouSolar’s founder and CEO. He leads the development of the company’s solar and battery system, PowerBloc. Before YouSolar, he founded SkyFuel, where he developed concentrating solar power technologies. SkyFuel owned ReflecTech, a company selling a film used in concentrating power systems, and was sold after a few years of operation. Leitner has also been a consultant for S&P Global Platts and reported on solar power’s energy potential for the US Department of Energy. Leitner has a PhD in physics from the University of Colorado Boulder and an MBA from Columbia Business School. Leitner’s extensive experience in the solar energy market should serve YouSolar well.

YouSolar’s team is rather small, but its members have the skills needed to grow the business. Galen Torneby is the vice president and COO of the company. He brings executive experience as the former CEO of SolarCraft, a company selling solar electric and battery solutions in Northern California. Overall, Torneby has more than 15 years of experience in the energy sector at senior or executive levels.

Baxter Smith is the system and support specialist at YouSolar. He previously    supported the donation of a YouSolar battery and solar system to a school in Bali. He then joined YouSolar and quickly became a key part of the development of the PowerBloc. He holds a master’s degree in environmental design from UC Berkeley.

YouSolar is led by a serial entrepreneur experienced in the solar energy field. He has been able to build a well-balanced team of business people and engineers to develop its product further and set up a go-to-market strategy. Overall, the YouSolar team is strong.

YouSolar’s PowerBloc is a scalable battery and solar system that allows homeowners and businesses to produce and use electricity off the grid. The first installations have started in a few Californian houses and in a clinic in Florida. The main advantage PowerBloc has over its competitors is its unique solar forecast. The PowerBloc comes with a tablet to help homeowners manage their electricity consumption and extend their battery life. The tablet receives solar forecasts from NASA satellites and automatically adapts the electricity consumption based on the homeowners’ settings. 

A few competitors are already in the clean energy generators field. Tesla’s Powerwall generators sell for an average of $15,250 each, installation costs included. The Powerwall stores solar energy to be used regularly during the day or during outages. Each Powerwall has a capacity of 13.5 kilowatt-hours (kWh), which isn’t enough to operate a house fully off-grid. Tesla has installed more than 200,000 Powerwalls around the world. Generac is a company known for selling natural gas and gasoline generators. Its new PWRcell system is a battery storage system using solar energy. Generac’s PWRcell is made to be connected to the grid. Initial installation costs between $11,000 and $18,000. The initial cabinets can store batteries for an energy capacity of 9 to 18 kWh, depending on customer needs.This product is meant to operate during power outages or energy peak hours. Generac focuses solely on selling the batteries, so homeowners must purchase their solar panels separately. So it is less comprehensive than YouSolar, which provides every item needed for its PowerBloc system, including solar panels, batteries, cabinets, and inverters. 

YouSolar’s PowerBloc nano-grid installations are often larger and more expensive than Tesla and Generac solutions. According to YouSolar CEO Arnold Leitner, a PowerBloc for one house could cost $35,000 to $50,000. YouSolar is designed to be used as a primary power supply instead of a back-up generator, so it has stronger power capabilities than Powerwall and PWRcell. It also allows homeowners in the US to send power back to the grid and earn bill credits.

Typical installations are two-cabinet systems holding 15 to 50 kWh of energy storage. Installations come with a tablet and are not necessarily connected to the grid. Like its competitors, PowerBloc is scalable. And its new stackable system allows for greater flexibility. The system can be integrated into existing solar panels, other generators, and the grid.

YouSolar’s PowerBloc is more powerful, independent, and expensive than its competitors. Its competitors are renowned and have solutions with proven product-market fit, but PowerBloc is differentiated enough to find customers in a large and growing market.

YouSolar raised more than $5 million over its lifespan, both from crowdfunders and institutional investors. The company has developed a complete nano-grid based on a solar and battery system called PowerBloc. YouSolar achieved its first off-grid pilot installation in 2019. Since then, the company has signed contracts with homeowners in California and a clinic in Florida for a total of $1 million worth of systems. These systems will be fully installed in early 2022. Therefore, YouSolar is generating minimal revenue despite customer deposits. Since the PowerBloc is so expensive, the sale of $1 million worth of systems in the last year still amounted to a low number of systems. YouSolar had significant short-term debt of more than $900,000 in 2020, and it has a high monthly burn rate of more than $125,000. It also still relies heavily on investments. Such a development pace is typical of hardware companies, but it might put the company at financial risk.

The company is updating its batteries to a patented stackable PowerBloc, allowing for more flexible uses and global shipments. This could give the company a much-needed boost in both sales and revenue. The stackable PowerBloc is in the prototype stage and is slated to hit the market next year.

YouSolar has achieved a few important milestones. However, its sales are still just beginning to increase, and its financial performance hasn’t been impressive so far.  Compared to strong competitors selling cheaper products, YouSolar has yet to prove product-market fit.

YouSolar is currently a medium-risk investment. The main risk concerns the company’s financials. YouSolar is barely generating revenue and loses more than $1 million every year. Additionally, its 2020 short-term debt was higher than $900,000. YouSolar still relies heavily on investments. The company sold $1 million worth of systems last year, but given the high cost of goods sold, YouSolar will need to increase its sales to start seeing a better gross profit. If its product launch doesn’t show strong results, the company might go bankrupt.

YouSolar’s last round closed in August 2020. It was previously rated a Deal To Watch by the KingsCrowd’s Analyst team. In the last year and a half, YouSolar’s team grew, and a few key hires like Galen Torneby added value to the company. The global solar energy market has also grown since 2020. Recent natural disasters in the US, including California wildfires and Texas winter storms, likely raised awareness about the harmful impact of climate change on power grid reliability. 

But while YouSolar had a $10 million valuation in 2020, the company’s valuation is now five times higher. In 2020, YouSolar raised $1 million through StartEngine and $3 million in 2021 through institutional investors. Recently, YouSolar sold $1 million of its PowerBloc systems and developed a patented stackable system. The company developed its product line and started installing PowerBloc systems in a few houses. However, revenue has not increased since 2020 and is still close to zero. The company’s higher valuation at this round is a good sign for previous investors, but it isn’t justified. YouSolar’s performance is not up to  KingsCrowd’s Deal To Watch standards.

So while YouSolar still has opportunities for further development, the company has made limited sales progress in the last two years. That’s why it has been downgraded to a Neutral Deal.

YouSolar’s current valuation is overpriced. The company’s valuation is five times higher than it was during its last raise in 2020, but its revenue is still close to zero. YouSolar is burning more than $125,000 every month and still relies heavily on investments. The company sold $1 million worth of PowerBloc battery and solar systems, but given the high cost of goods sold, its traction is quite low. There’s a risk that the market isn’t responding to the launch, or it could be that YouSolar’s small team didn’t invest enough into marketing efforts yet. This slow start also presents a financial risk. PowerBloc’s product-market fit might not be proven in the next year.

YouSolar operates in the global solar energy market, which is large and expanding in various regions of the world — including in the US, the second-largest market in the world after China. YouSolar is led by Arnold Leitner, a serial entrepreneur experienced in the solar energy industry. The company’s team is well-balanced and includes business-focused employees and engineers. YouSolar’s solar and battery system, PowerBloc, has received some interest from the market, and its new version offers a patented stackable option. This format allows YouSolar to be more defensible and more easily expand its product on a global scale. While a few competitors have considerable market share, YouSolar’s PowerBloc is quite differentiated thanks to its ability to run completely off-grid and adapt to solar forecasts.

YouSolar sells a combined solar and battery energy system to allow homes and businesses to operate off-grid in frequent power outage areas. Its PowerBloc system is scalable, intelligently designed, and compatible with various electricity sources.YouSolar operates in a large and quickly growing market. Its product is well differentiated from competitors, and its team is small but skilled. Leaders in the field offer smaller and cheaper solutions mostly designed to be used as backup solutions during power outages. YouSolar’s PowerBloc system is a full solar and battery system capable of operating completely off-grid and can function as a primary power source. The company recently started to deliver its systems to its first customers and sold more than $1 million worth.

Despite YouSolar’s promising sales, the company still has little revenue and has not yet proven product-market fit. The company is overvalued and relies heavily on investments. YouSolar is burning more than $125,000 every month and has more than $900,000 in short-term debt. As a result, this investment involves risks related to the company’s financials. Overall, YouSolar’s current raise has been rated a Neutral Deal.

For questions regarding the KingsCrowd analyst report or ratings for this company, please reach out to support@kingscrowd.com.

Analysis written by Léa Bouhelier-Gautreau, January 14, 2022.