NETTHINGS, a provider of energy monitoring systems for homes, is eyeing a move into the commercial sector after successfully closing a £1.2 million funding round.

The Edinburgh-based firm will use the financing to sell monitoring and control systems into commercial properties that are too small for building energy management systems (BEMS).

Chief executive George McGhee said the company has built a prototype and is already in trials, with one retail company seeing a return on investment payback within four months.

“That £1.2m is to help us accelerate, get that through development and into the market,” he said.

“If you speak to Boots or Marks & Spencer, Tesco and so on, a building energy management system is too expensive. The energy consumed doesn’t justify spending £10,000, so what we’re doing is trying to bring some of the capability into a smaller system that is much easier to install, so if a BEMS system costs £5,000 to £10,000 we can get a core unit in there that can do the main monitoring and control for less than £3,000.”

The theory is that by monitoring usage, bills can quickly and permanently be cut by 10 to 20 per cent.

Mr McGhee said Netthings has had a good response from businesses and business groups it has discussed the solution with. “There are a lot of opportunities that we want to explore and the extra funding will help us to do that,” he said.

The company also plans to work with resellers for the first time as it looks to break into this market.

“The commercial sector has a higher average ticket value and we can get to the market faster with resellers – they will have their own set of customers,” he said.

David Ovens, chief operating officer at Archangels, said the company was poised for significant growth in the commercial market.

“The Archangels membership continue to be impressed with the progress of the business and this latest round of fundraising, alongside the Scottish Investment Bank, is evidence of our commitment to providing follow on funding to enable our invested businesses to grow.”

Currently, Netthings’ revenue is derived from the residential sector – including being fitted into new homes through contracts with housebuilders, and with district heating schemes, where a single source supplies energy to multiple buildings or flats.

Netthings has teamed up with German energy monitoring firm Ista on this, and Mr McGhee said this relationship could see the company break into international markets.

Its products are designed and manufactured in Edinburgh and have been installed in 14,000 properties in the UK.

Revenue is currently around £2m and Mr McGhee said the company would break into profitability as a result of this latest funding round.

Having initially been founded in 2007 as Ewgeco, multiple investment rounds have left angel syndicate Archangels and Scottish Enterprise controlling 75 per cent of shares. In 2014 the company name was changed to Netthings to reflect a move into ‘the internet of things’, which uses technology to enable residents to control heating, lighting and electronics from their phones.

“We have a healthy revenue stream from the new build market,” said George McGhee, chief executive officer. “The big national developers, in order to meet Building Standards sustainability requirements, employ real-time energy monitoring. A lot of what goes through planning has our products specified into it.”

Mr McGhee, who was brought in to manage the company’s expansion in 2011, said the plan was now to re-imagine the platform into one that provides hardware, software and data services.

“On the surface [energy monitoring] can appear a crowded place; there are a lot of software-only solutions, but not many turnkey system that can do physical connections to the meter, bring the data to the cloud, provide the analytics, the apps on the smartphone,” said Mr McGhee.

“There are lot of companies that do bits of that but few that can do the end-to-end piece. We think we’re quite well-positioned in terms of technology, the channels to market and our track record.”