September 2021 Newsletter

Letter from the Editor

What a summer it has been for proptech. JLL reports a 300 percent growth rate over the past 10 years for number of startups in the market. They also report $9.7B in funding raised just this year (specifically, the first half of 2021), which is an impressive share of the $97B raised over the past 10 years. Our friends at Climate Tech VC published their own funding roundup, with $16B raised across 250 cleantech deals just this year. While it's somewhat nebulous, smart buildings live in between these two markets - a topic we might dig into more in a future newsletter. We hope this newsletter continues to give you the pulse of this market, sitting between these two broad categories.

In other updates, Joe Aamidor shared a thread on twitter with some of the key barriers and challenges to scaling smart building technology. There are a number of key market barriers - in some cases, a startup hits many of them, and in other cases, one or two barriers are significant enough to act as a headwind. This remains an area of interest for us!

Our roster of projects continues to grow, including work with new clients and old. Our project breadth continues to include engagements with large enterprises, startups, investors and acquirers. There's a lot of interest in this industry, as we dig into below. 

If you are trying to get through the newsletter quickly, here are a few high level takeaways:

1. There continues to be an increased level of M&A, plus a number of new fundraisings and even a few strategic partnerships. We continue to be pleasantly surprised on this month - and through our consulting work, see more deals coming in the future. 
2. Our section on return to the office is larger than the past few months, given the various developments on that front. 
3. And, sustainability continues to be in the news, given the capital flowing to these solutions and heightened awareness on the part of owners, operators and occupants of commercial real estate. 
4. Finally, see the new "Industry Expert Q and A" section for a quick discussion with Simon Davis, Senior VP at Impec Group. We worked with Simon and his team on a study of occupancy sensor vendors - resulting in a complimentary report available for download (see below for link). 

We didn't publish any new articles but spoke at a few events: 

• We moderated a panel for Realcomm on digital twins. There were a number of good points, but Emmanuel Daniel of Microsoft shared one that resonated: technology in buildings should be invisible to the occupants and visible to the operators. We would add that even when visible to the operators, the solutions should be seamless to use. 
• We conducted a market review of the occupancy sensor space for Impec Group and participated in a short webinar to discuss this research. The research report is available for anyone who is interested. 
• We also spoke at CoreNet Carolinas, which was in-person! The most fascinating part of the event was talking to corporate real estate leaders about their plans for getting employees back to the office, and the steps they are taking to prepare.
• Keep in mind that Blueprint and Realcomm are both coming up. We'd love to meet if you are attending!
• For any of the events noted above, please reach out if you want to hear more about what we discussed. 

From last week's trip to the CoreNet Carolinas Tech Symposium. 


And, never worry about reaching out to have a chat or talk about a potential project - busy or not, we'd be happy to talk! Please reach out if you want to chat!
 

As always, we look forward to hearing from you about how we might help with your product and market strategy needs. We also hope you enjoy this issue of Smart Building Insight.

Investment News

• New funding rounds and investments:
  • Within the automated system optimization (ASO) category of smart building software, Enerbrain raised 5.2M Euro from EDF and others. 
  • On the indoor air quality front, Wynd raised $10M from DBL Partners and Greensoil PropTech Ventures to deploy its air quality solutions to commercial buildings. 
  • Basking.IO raised a new round from a number of leading names in PropTech. The firm offers an occupancy data and analytics platform. 
  • SINAI Technologies, a decarbonization platform, raised $10M in seed funding. This reminds us of many of the carbon management platforms from the late 2000s. 
  • Similarly, Supercritical raised 2M GBP. There are a lot of climate-related deals, and while we'll profile some of them, they do get a bit outside of our core focus in this newsletter. 
  • New funds:
    • Moderne Ventures raised its second fund at $200M (4x the first fund).
    • Energy Capital Ventures, with a focus on the natural gas industry, had an initial close of $45M for its new venture fund. 
    • Trimble is creating a $200M corporate venture capital fund.
    • Chris Sacca's Lowercarbon Capital announced that it has another $800M to "unf**k the planet". 

• As noted above, JLL published great data on the growth in proptech funding. Similarly, Climate Tech VC published comparable data on funding in the cleantech space. 

• Acquisitions:
  • SpaceIQ and iOffice are merging. 
  • Conservice is acquiring Goby to grow its ESG reporting capabilities. This appears to be a great home - congrats to the Goby team!
  • We cover many PE- and private market-backed rollups, and it looks like Gryphon Investors, which acquired Southeast US-based Wittichen Supply Company, is doing the same thing.
  • Albireo Energy is growing again, with two acquisitions of branch businesses: Stellar Building Technologies and Communications Controls Services.
  • ServiceNow has acquired Mapwize to add indoor mapping capabilities. 
  • It's not the first time they have said it, but Siemens announced that it is considering more smart buildings acquisitions out of its Smart Infrastructure unit. 
  • As we've shared over the past few months, here are some updates around relevant SPACs (note: generally the pace here has slowed significantly): 
    • CBRE's SPAC has merged with Altus Power - this article features some great insights from our friends at Atlas Energy Intelligence. 

• New partnerships:
  • Semtech and IQnexus are partnering to deploy LoRaWAN-based indoor air quality solutions. We are fairly bullish on LoRa's opportunities in buildings. 
  • Energy efficiency as a service (EEAAS) continues to see a wave of demand. JCI and Apollo Infrastructure are partnering for a turnkey performance-based financing and upgrade offering. These offerings look a lot like performance contracting 2.0, and we are seeing them pop up everywhere.
  • WeWork and Cushman and Wakefield are partnering. 
  • WeWork also is opening some locations in Saks Fifth Avenue locations. Office Depot launched a similar program a few years ago.

Noteworthy Articles, Reports and News

• Return to the office: A few months ago, we reported of some "normalization" at the office. At least for now, it seems that most of those plans have been delayed until 2022. There's a lot of news on this topic - here are a few pieces that we found particularly insightful. 
  • Good data here: Office rents are down. Green St. has a similarly bearish view. And, the Wall St. Journal wrote about what may end up being be a 2-year work from home experience. 
  • That said, our friends at Eden published a new survey, noting that people are happier than they expected since returning to the office, and that, in general, the majority of workers want to come back to the office for some part of their working weeks.
  • We continue to think of hybrid as many different types of working (not just one), and this Bloomberg piece provides a good overview on hybrid working.
  • And, Crunchbase published a look at various startups that are focused on repurposing office space. 
  • Somewhat related, office technology vendor Robin noted new customers and 320 percent YoY growth for its hybrid workplace platform. There are a number of firms competing in this space, with a few firms that could emerge as winners.
  • Competitor Envoy has its own return to work metrics, though we found this to lack some context and detail on their methodology. Kastle Systems seems to have more reliable data. 
  • The US General Services Administration (GSA) is partnering with LiquidSpace - another sign of the likely hybrid office future for many organizations. 
  • The Guardian had a thoughtful piece about Britain's return to the office. 
  • TechCrunch on remote work; we agree that startups seem to be embracing remote work more than their larger peers, but we are not sure that this is a indication of remote work for ALL firms. The savings on office space rent appears to be more significant for smaller firms. That said, the opinion here is worth considering. 
• As we've noted in the past, we are most interested in remote work and return to work as it relates to the (1) technology required to operate offices and the (2) interest/ability of building owners and operators to deploy smart building technology. We continue to have discussions with workplace and real estate leaders to better understand their plans and observations. Here are a few quick thoughts:
  1. There's recognition that our use and interaction with offices will change, but most are unclear exactly what that means for their firms (yet).
  2. A number of firms continue to survey their employees (e.g., how often do you want to come into the office?) but find that most survey data overestimates how frequent workers actually will use their office space. 
  3. As Simon Davis noted above, it does appear that some firms are investing in pilot/trial office concepts - a renovated office space of 25K square feet, to see how it may better serve employees. These "little bets" seem like a good approach. 
  4. Aamidor Consulting is happy to have discussions about how technology could be developed to serve corporate workplace needs. And, we have strong relationships with vendors in this market, should their be opportunities to connect firms with mutual interests and needs.   

• As noted above, we provided some of the background research for the Impec Group report on space utilitization sensors. 
• Guidehouse (formerly Navigant) published a report on energy as a service (EAAS) microgrids. As noted above, EAAS, or energy efficiency as a service (EEAAS) is attracting significant interest from investors. For more on the model, we wrote a high level summary a few years ago.  
• EAAS is similar to performance contracts, and this NREL report highlights opportunities for Monitoring-Based Commissioning (MBCx) under such contracts. Key finding: "Median whole-building MBCx energy savings from the study were 9% and the median simple payback period for MBCx was 3.2 years."
• On a similar note, the CEO of Generac (maker of generators and acquirer of Neurio and Enbala) was interviewed on the Barron's Streetwise podcast. 
• Another market research report on smart buildings estimates that it will be a $20B market in North America by 2027. These estimates are hard to compare firm-to-firm, as they sometimes include different elements of the stack. 
• More great mainstream coverage about smart buildings, this one from the BBC. 

• Sustainability in focus, as it relates to real estate:
  • The big news is the IPCC's report, and this article summarizes 5 key takeaways for commercial real estate. 
  • There have been a few deals like this: Moody's is acquiring RMS, a risk assessment firm focused on climate and natural resources. 
  • Saul Griffith's write up on sources of energy consumption and pathways to decarbonization was fascinating. Great write up. 
  • Boston Consulting Group is launching BCG Green Ventures, which is "a new offering with a dedicated team focused on partnering with corporates to invest in, co-build, and scale sustainable businesses,"
  • Bill Gates is committing another $1.5B towards climate projects. 
  • Finally, a contrarian opinion from Bloomberg on the $35T in climate-related and sustainability funds. 

• Product launches:
  • GridPoint has launched an electric vehicle charging solution for small/medium commercial buildings. 

• It's smart home related, but Harbor Research published a good look at this emerging market. 
• When Equal Ventures invested in David Energy, they shared a great presentation on their interest in the market. This follow-up blog post is equally interesting. 
• We've highlighted reports that quantify the need to upgrade HVAC systems within buildings (especially schools), and this ACEEE blog post dives in a bit deeper. 
• Great report from RMI about decarbonizing heavy transport and industrial heat - not directly relevant, but worth a browse. 
• There are a number of industry standards efforts, and a new one focused on digital twins just launched. 
• To conclude: A bit out of the target, but certainly hitting home: California is building temporary natural gas peaker plants.