November 2021 Newsletter

Letter from the Editor

It's time for another roundup of the smart building market: and what an update we have! There continues to be an elevated level of activity, from early stage financings to later stage acquisitions. There are a few more mature tie ups to report in this issue. Moreover, the event calendar has been very full. It seems like there has been a big industry event every week for the past 4-6 weeks, with a few more weeks of events to go. 

We are just off from a trip to Realcomm, which continues to be among the best events in our industry. They even had a great hybrid panel with virtual and in-person attendees. And, Joe Aamidor also moderated a panel at Verge (virtual for this year). There clearly is a lot of pent-up demand on the conference front. 



In addition to all the key industry news, we feature an interview with Alex Rangel, CEO and Founder of Ravti, which recently was acquired by Building Engines (which itself was just acquired - see below). We also have some input from Scott Sidman, VP of Corporate Development at Building Engines. 

If you are trying to get through this issue quickly, here are a few key themes:

• Lots of financings at the early stage, across real estate, climate and health/wellness. 
• A few big acquisitions (JLL and Building Engines, plus VTS and HqO growing their workplace experience platforms). 
• An interview with Ravti's founder, which was acquired by Building Engines. Really insightful, and Ravti was a very innovative idea in a relatively conservative and staid industry.  

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. Of particular note, we've been focused on a number of commercial due diligence projects with investors and acquirers: we're seeing the elevated deal activity from multiple angels. There's a lot of interest in this industry, as we dig into below. Our schedule is mostly full for 2021, but we'd be happy to chat about working together in early 2022!

A few quick updates before we get into the newsletter: Joe Aamidor moderated a panel at Verge...


And also participated in a well-attended CoreNet discussion about return to work and space utilization sensors. 


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:
  • Digital twin provider Willow raised $43M from existing investors and new firms such as VGI Partners. This follows their $40M round in 2019.
  • Brainbox AI raises $24M from ABB and other investors (here and here). ABB has been stepping up its presence in the US, with new product launches and acquisitions (such as of Cylon). 
  • Autogrid, which sells software to utilities to deploy grid flexibility and demand management, raised $85M in its series  D-2. 
  • Machine health startup Augury raises $180M and achieves unicorn status. Baker Hughes led the round, along with SE Ventures (Schneider Electric) and existing investors such as Qualcomm and Munich Re. 
  • Smart building provider InSite raised growth capital from GEF Capital Partners.
  • Digital tokens for EV charging (and maybe other applications in the future)? Xeal raises $11M.  
  • Leap, which has a market access platform for demand flexibility, raised $33.5M in its series B. 
  • Greenwork, which provides workforce training for green jobs, raised $2.4M in its seed round from a number of well known investors. 
  • Convex, which digitizes commercial services in real estate, raised $39M from leading investors such as Fifth Wall and Emergence. 
  • In the ESG space, a new entrant launches with $8.5M in seed funding.
  • R Zero, which recently acquired CoWorkr and joined us on stage at Blueprint, received an investment from and announced a partnership with the Mayo Clinic. 
  • On a related topic, it seems like there continues to be a surge of activity in carbon accounting, with Persefoni raising $110M and Plan A raising $10M. Joe Aamidor worked for a carbon accounting startup 10+ years ago, and has seen the industry go full circle. We can't help but mention Clear Standards, over 10 years ago, which was bought by SAP and then was quickly shut down. We'll be interested in seeing how these new firms differentiate from those in the past.
  • On the home front, Good Leap, which operates a digital marketplace for sustainable home solutions, has raised $800M.  
  • News on VCs and funds:
    • Industry vet Navitas raises its third fund at $160M. 
    • World Fund launched, with a focus on sustainability and carbon, with 350M Euro.
    • Shell has launched a $1.4B sustainable energy venture fund. 
    • And, BlackRock has launched a $673M fund for climate infrastructure in emerging markets. 

• Acquisitions:
  • Building Engines, an operational technology platform for CRE and commercial buildings, was acquired by JLL Technologies. for $300M. 
  • It has been a big month for tenant and workplace experience. HqO, which makes a software platform to manage tenant experience, made a European acquisition, buying Office App. Then, just a few days later, VTS acquired Lane for $200M, a key HqO competitor, to expand its presence in workplace experience. VTS had earlier bought Rise Buildings. VTS claims that it is the largest provider of workplace experience software. 
    • This article about the HqO transaction provides some great metrics on the growth in that business: "HqO’s growth had already been rapid, rising from 90m sq ft under management to 150m sq ft in less than a year. Revenue had tripled in 12 months, while its headcount doubled – all during the pandemic."
    • And, a great Q and A with the CEO of Office App. 
  • This sounds a bit like an attempt to compete with Honeywell Forge and JCI Open Blue: Daikin acquires Dynamic Controls, which sounds a bit like a systems integrator delivering more holistic smart buildings solutions. (We're going to dig into the systems integration space in a future issue.) 
  • BP is acquiring Blueprint Power to expand its offerings in commercial buildings, specifically around demand flexibility. 
  • Generac, which has acquired Enbala and Neurio to create a fairly interesting home energy management and demand flexibility firm, has acquired Ecobee for $770M. 

• Nice summary here from Memoori, noting that Schneider leads venture investment in the smart building space. 
• And, despite our skepticism for some climate related investments (such as those carbon management firms noted above), Axios reports a surge in climate tech funding. Though, we'd argue that 2010, when their graphs start, represents the trough - this would be more interesting if it showed 2008, 2009, and prior. 

• New partnerships:
  • Prescriptive Data announced that it is part of Microsoft for Startups, which provides support to growing startups that use Azure. (Microsoft has one of the more robust smart building partnership ecosystems, powered by Azure.) 
  • On top of its recently announced partnership with Daikin, enVerid is partnering with Trane to add its sorbent ventilation technology to the firm's Wellsphere indoor air quality solutions portfolio.

Noteworthy Articles, Reports and News

• Return to the office: Our monthly summary of relevant news. 
  • Really good points from Amazon on its embrace of hybrid work. From CEO Andy Jassy, and sent to all employees: "First, none of us know the definitive answers to these questions, especially long term. Second, at a company of our size, there is no one-size-fits-all approach for how every team works best. And third, we’re going to be in a stage of experimenting, learning, and adjusting for a while as we emerge from this pandemic. All of this led us to change course a bit."
  • From Barron's: NYC office buildings decline by 17 percent in value. 
  • This is interesting - Uber's new HQ in SF has windows that open to provide natural ventilation. This works well in SF due to the mild climate and the abundance of free cooling. 
  • Thoughtful LinkedIn post from a CBRE thought leader, predicting some trends in offices in the future. 
  • A deep dive on how seat-tracking can be used in office buildings (pandemic or no pandemic). 
  • Interesting summary of the big trend of the city coming to the suburbs. 

• We always enjoy these quarterly market updates from Harris Williams, this one focused on energy services for Q3. Also, the firm published a report about renewables and distributed energy.
• ULI typically takes an insightful approach on the adoption of tech in real estate - and they just published their "Emerging Trends 2020" report. One good point: "It remains to be seen whether that buoyancy is a “sugar high” bounce-back fueled by the massive federal stimulus pumped into the U.S. economy, noted Andrew Warren, director of real estate research at PwC. In addition, potential headwinds still loom regarding issues such as inflation, labor, supply-chain disruption, geopolitics, and potential tax changes."
• Our friends at Enertiv published a great piece on the talent shortage for building operators. This is a topic we continue to monitor - and one we wrote about a year ago in our article about a smart building stimulus in Propmodo. 
• MIT's Real Estate Innovation Lab published a good piece on the financial impact of healthy buildings; finding that "healthy building effective rents transact between 4.4 and 7.7% more per square foot than their nearby non-certified and non-registered peers".
• The Department of Energy is putting its money where its mouth is, with $61M in project financing for smart buildings. 
• On that front, Project Haystack was awarded funding from DOE. 
• Related, the US General Services Administration published a guide to help buildings deploy grid-interactive efficient building (GEB) technologies. 
• Pitchbook has two new climate tech reports (here and here) as part of its elevated focus on the industry. 
• And, the DOE announced a partnership with six of the largest US-based HVAC firms (or, the "Big 4+"?) to work on cold-climate heat pump technology. This seems to be heavily emphasized by the Administration, with VP Harris joining Sec. Granholm at the announcement. 
• We enjoyed this podcast from BMO Capital Markets about proptech - a bit high level but still insightful. 

• Sustainability in focus, as it relates to real estate:
  • Brattle put together a good piece for Oracle on the "Customer Action Pathway to National Decarbonization". 
  • After a number of mainstream media covered HVAC as it relates to the pandemic, Bloomberg takes a look at insulation and its impact on climate change. 
  • A bit of marketing collateral here, but Igor (smart lighting controls) on its net-zero hotel project. 

• Product launches:
  • Turntide launches a software solution for building management. This looks to be the result of the Riptide acquisition. They clearly want to be a bigger player in building ops. 
  • Span, focused on smart home energy management, launches a new product focused on EV charging. 

• More broadly a tech-focus here, but Pete Flint does not believe we are in a tech bubble. 
• In case you are interesting, here are the final pitches from Cleantech Open - congrats to our friends at InfiSense, among the other participants. 
• Greentown Labs and Saint-Gobain announced participants in their healthy buildings challenge. 
• Verdantix, in concert with Schneider Electric, published a "ten predictions" for smart buildings in 2021 and beyond. This one looks to be a bit old, but we just came across it a few weeks ago.