July 2024 - No rest for the hot and weary: continued strength in early stage funding and innovative product launches.
Smart Building Insight - July 2024 from Aamidor Consulting
Letter from the Editor
We hope everyone had a good 4th of July, and you are ready for the second half of the year to begin. We have one more event this week, and then should be at the office until September. Despite the summer usually being pretty slow, we have a large update for you on a number of fronts: continued strength among early stage firms raising rounds (a key trend in 2023 and 2024), a lot of new products being launched, and some other noteworthy features.
In addition, we have some updates from last month’s initial analysis of enterprise decarbonization analytics (EDA) solutions and also take a look at Q1 2024 revenue data from public firms.
We also are just back from Realcomm, which was held in the middle of June, in Tampa, FL. A few key takeaways:
There still is a lot of stress in real estate among the owners and operators.
Technology continues to move ahead (both development and adoption), and product launches appear to still be outpacing buyer adoption.
True differentiation among vendors in many categories is how those firms deploy, support customers, and generally help deliver project success. It’s less of a technology question. So, true solution differentiation is the people and process; how you deploy, how you support clients, how you set expectations with them.
The weather was great (though someone did tell Joe that it was relatively cool for this time of year!), and we had time for a short run with some friends before the first day kicked off.
Also, Lewis Martin and Joe Aamidor have started to do a weekly LinkedIn Live called “The Down Low with Joe” - focused on many of the key news items in this newsletter. Learn more and watch future episodes here.
After a busy start to the year, the rest of our conference schedule is starting to come together for 2024, too.
IMN’s 3rd Annual ESG & Decarbonizing Real Estate Forum (Summer) in Dana Point, California (THIS WEEK!) on July 10 and 11.
For those who wish to attend, we can offer a 10% discount using code: AC24
And, see below for a summary of the AI in Real Estate event held last month
Blueprint, the largest, most global gathering of industry leaders and innovators leading the charge in changing the built world - from construction to transaction will be September 17-19 in Las Vegas. The team recently released the agenda for the event. Friends of Aamidor Consulting save an extra $300 off the current registration price by clicking here.
Our friend and fellow Boulderite James Dice and his team at Nexus Labs have been convening the changemakers in smart buildings for 4 years. In September they are hosting a in-person event—the very first NexusCon. Expect in-depth education on best practices and shortcomings—not fluff stories or pay to play panels. Learn more and register here.
If you are trying to get through this post quickly, here are a few key takeaways:
A range of funding rounds, but continued focus on early-stage firms.
We did a wrap up of selected public OEMs in the industry, with a focus on overall financial performance and what (if anything) they are saying about technology solutions. Future issues will focus on their view of the market opportunity and how the are positioning their businesses for more technology in the future.
Like other recent issues, we wrap up all the product launches towards the end of the issue.
We received some great feedback about last month’s article on enterprise decarbonization analytics solutions - see below for some of the most interested feedback we received.
And, we wrote an article summarizing our time at the IMN AI in Real Estate event, taking the place of our Q and A.
Finally, a housekeeping item: our project calendar is full for the coming months, but reach out if you think you will need support in Q4. We’d be happy to talk, but please get in touch soon!
About Aamidor Consulting
Aamidor Consulting works exclusively in the smart building landscape with all key stakeholders. See these project summaries and detailed testimonials from some of our clients that exemplify the strategic value we provide.
Our work usually falls into one of these categories:
Fractional product management for vendors. Projects include competitive analysis, market sizing, voice of customer interviews, pricing / packaging / positioning, and go-to-market strategy.
Initial product/market strategy for early stage companies or small teams within large organizations: we develop or review your market requirements document (MRD).
Strategic advisory relationships with small and large real estate owners/operators focused on vendor selection/technology scouting for sustainability, energy, and facilities leaders.
Working with investors to identify opportunities in the market and conduct commercial due diligence of potential deals and acquisitions. We have worked with leading VC and PE firms, in addition to firms acquiring startups.
Please reach out if you want to learn more. You can work with us in a variety of ways:
Send us details on a product/market strategy need - or schedule a time to chat about it.
This monthly newsletter is provided as a resource to our industry. If the email was forwarded to you, sign up to receive it directly.
Investment News
New funding rounds and investments:
Parity, which provides HVAC optimization solutions to the multi-family and hospitality sectors, announced a $19M series B round, led by Idealist Capital, with participation from existing investors. Propmodo also covers Parity in an article on HVAC optimization.
Rendesco, which makes ground source heat pumps for district heating applications, raised 6M GBP with participation from Clean Growth Fund, Eurazeo’s Smart City Fund, Aviva Ventures and existing vendor Copley Point Capital.
Octopus Energy, now the largest power supplier in the UK, raised $800M to accelerate its worldwide growth. The round included Origin Energy, Tokyo Gas, Canada Pension Plan Investment Board (CPP Investments), and Generation Investment Management.
In the enterprise decarb analytics space, new entrant Sesame Sustainability raised a $2.4M seed round from Flybridge and Powerhouse Ventures. The firm focuses on heavy industry. Powerhouse wrote a “why we invested” blog post.
Frore Systems, which makes cooling solutions for AI chips, raised a series C of $80M from Fidelity, Prosperity7, and existing investors.
Focused on residential heat pump acquisitions in Germany, Aira raised 200M euro from BNP Paribas.
And, also in the home, Heatio, a home energy management solution provider, raised 2M GBP led by Ascension with participation from a variety of firms including Conduit Connect, The Syndicate Room, Baltic Ventures, LYVA Labs.
And, a founder of Dandelion Energy launched Balto Energy, with seed funding of $1M from KDX and Leap Forward Ventures, among others. The firm is focused on broad residential electrification.
Estonian smart building solution Bisly raised 6.2M euro in its series A, with a focus on expanding to the UK and Germany. Investors include Aconterra, SmartCap Green Fund, and Pinorena Capital.
Hometree, which provides green energy retrofits for homes, raised 297M euro of debt from Barclays to finance projects.
On the sustainability data and ESG reporting side, forward earth in Germany raised 3.2M euro, led by Speedinvest, which investors such as Revent and Lucid Capital participating.
It’s grid focused, with a solution to predict power outages - Eneryield raised a seed round from ABB and Chalmers Ventures.
And, also on the grid side, ThinkLabs AI spins out from GE Vernova (the grid/energy business from GE’s three-way split), raising $5M in seed funding, co-led by Powerhouse and Active Impact Investments, with Amplify Capital, Blackhorn Ventures, and Mercuria Energy participating.
On the potential M+A front, Sidara (formerly DAR Group, owner of Coppertree Analytics), is looking to buy John Wood Group.
News on VCs and funds:
Westly Group raised a $100M seed fund.
Ironspring Ventures, focused on industrial sectors, raised a second fund at $100M.
Energy Capital Partners raised $6.7B for an energy transition infrastructure buyout fund.
Blackhorn Ventures raised $150M fund, with a “$1.7 trillion opportunity as new manufacturing and AI “super cycles” kick off and economies are rejiggered for a low-carbon future”.
Collaborative Fund raised a $125M fund focused on climate, health and food.
Brookfield and ALTERRA launched a $5B emerging markets climate transition fund.
Ameresco secured a $100M debt facility from Nuveen Energy Infrastructure Credit.
Engine Ventures raised a third fund at $398M.
Acquisitions:
Wesco International acquired entroCIM for better building data software, including for data centers, for $30M.
On the residential side, LG acquired Athom to expand its smart home capabilities.
In related news, Propmodo published a good piece on Honeywell’s acquisition of Carrier’s access control business.
And, this article provides a good overview of the M+A taking place in the refrigeration industry.
New partnerships:
CBRE is partnering with Climate X for climate risk assessment.
Measurabl is partnering with Susteco (part of Bosch) focused on ESG data management.
Measurabl also announced a partnership with Preqin to provide ESG data to private markets.
Our friends at LMC (check out our weekly LinkedIn Live videos) are partnering exclusively with Realcomm on talent and recruiting.
Public firms: financial results and technology news/plans
Building on this new section, we have a few more useful data points and comps. And, as this is a newer section of the newsletter, please let us know if you have more feedback on how to make it better!
Duke Energy announced an agreement with Amazon, Google, Microsoft and Nucor, focused on clean energy development to satisfy increased power demand in the future.
As for the public OEMs focused on buildings, there are a number of interesting data points to share from Q1 2024 earnings (mostly published in late April/May; Q2 earnings should be released later this month).
Carrier provided a number of interesting data points about growth in Abound (the firm’s cloud-based platform):
“1.2+ billion sq ft of building space monitored, up ~10% sequentially” and “secured key wins with scale customers”
Moreover, 75K chillers are under a long-term agreement (for remote monitoring), with 5K new chillers signed in Q1 2024.
Johnson Controls provided much less detail on revenue or progress on the technology side, but has seen growth in services revenue and a slight decline it products (generally a trend across the industry).
Trane’s report also was less focused on technology investments and deployments, but does highlight its overall market position, noting that it has the “leading systems & services portfolio, direct salesforce, best-in-class execution through BOS; customers’ partner of choice for decarb, energy efficiency/healthy spaces.“ In reality, we do not see this as a significant differentiator than peers, as they all have fairly strong product portfolios.
Honeywell also reported a sharp decline in product sales but strength in solutions (see pages 11 and 12). Missing from the report is any mention of Forge, the firm’s cloud-based analytics platform.
Acuity Brands, which has a cloud-based software solution in Atrius (listed as part of the Intelligent Spaces Group ISG, in this report), has reached $68M in revenue for the quarter, up 17 percent from the same quarter in 2023. The firm also expects growth in this business in the mid teens for 2024.
More generally, all of these firms are talking a lot about services - their ability to provide aftermarket capabilities to keep equipment running. In reality, these offerings have been available for years, but with more technology, it is more efficient to deliver them to a wider number of clients.
Market Analysis: Feedback and updates on EDA solutions
Last month, we wrote about a new technology category of solution that is highly relevant and topical to our readers. We’ve received a number of good insights from readers - Keep the feedback coming!
A few key points that we’ve heard from readers:
Our friends at Nexus Labs also are also covering this space, with two white papers on the broader technology market and a focused paper on software and services for decarbonization retrofits.
Our write-up in June focused on a few of the software solutions, but larger players also are investing here. For example, last year JLL Technologies announced a software + services offering focused on decarbonization. JLL research indicates that the US needs to triple the rate of retrofits to meet current net zero and decarbonization targets.
We also found an industry piece that includes a summary of “decarbonization navigators”, another term for this category.
Other feedback:
One reader noted that asset data could be split into two subcategories: (1) the equipment data (static, but typically unorganized) and the (2) streaming, ongoing data that is coming off of those assets. For example, some solutions focus on identifying what kind of chiller is in the building, and others seek to collect all the operational data (historic, real time) to monitor performance. Both are important for decarb.
There are more companies than we expected that touch parts of the EDA solution tech stack. In some cases, these capabilities serve as an on- or off-ramp for the technology. We had been tracking about 20 firms that are squarely within EDA, but that now seems to be a longer list.
Future articles on EDA solutions will likely touch on specific categories of technology and how existing vendors are starting to invest in this nascent category. Moreover, we will continue to cover the buyer/user point of view for this offering.
Other news
Proptech funding is down 4 percent in FY2024. Another source notes that it is down 14 percent in the first half of 2024.
And, climatetech funding for the first half of 2024, which includes a wide range of industries and categories, is also down - significantly from both the first and second halves of 2023.
PitchBook published an IPO watchlist for climate tech, which includes Arcadia (which owns Urjanet and Genability).
More generally, a proptech overview and outlook after the first half of 2024.
And, on a related note, PitchBook reports that 13 percent of VCs are not planning to raise another fund.
Pi Labs announced that its 12th Growth Programme Cohort raised $7.5M.
Industry Resources
Aamidor Consulting offers a few up-to-date resources to help smart building stakeholders monitor the market:
M&A Tracker: A list of relevant transactions.
Partnership Tracker: A summary of all the partnerships and alliances announced.
See our homepage to learn more about our the full breadth of our offerings.
Industry Insights
IMN AI Event Summary
The IMN “AI in Real Estate” event took place in mid June in New York. Beyond a number of Skynet jokes, there are many talks with real estate leaders and good networking in between these session. The attendees included a great mix of innovators, asset owners (from various asset classes) and other thought leaders. The conversations across panels did align on some key trends, such as:
A current focus on learning/training, and working internally to “demystify” the value of AI. This aligns with what we covered months back from Accenture’s financials - 2024 will be a year of trial and learning for AI. Many of the anecdotes shared by event speakers focused on narrow use cases and limited pilot deployments.
Despite an open question about how long AI adoption will take, a few speakers noted that the engineering/developer efficiencies (e.g., Copilot) alone will drive acceleration in innovation.
Key use cases mentioned were deeper analyses of investment opportunities (e.g., office may be struggling generally, but there are some office markets that will outperform - and a deeper analysis of local performance will help to identify this), fraud detection and lease verification for renters, stronger data and user links between point solutions (which are prevalent in the industry) and anomaly detection in building operations.
And, there are a number of discussions about the build vs buy analysis - how to determine what to develop in house and what to buy. One speaker noted that his firm was a “taker” but wanted to be a “maker” in the future (or, a buyer of tech today, but a builder in the future). While not mentioned as part of this calculus, we did hear a few speakers note that with energy capacity constraints, it may be harder to catch up in the future if compute becomes more scarce (though, this may not be so different than the scarcity of chips today). Overall, there is a view that there may be more bifurcation between sophisticated and less sophisticated users of AI. And, those starting to buy or build AI solutions today will be better positioned as leaders in the future.
Moreover, for those firms just starting to consider AI deployments, speakers recommended the following approaches:
Start with a site - not a full (or partial) portfolio
Focus on data naming, tagging and organization, so that there is a clean data set in which to begin an AI deployment.
Find vendors that are flexible AND dependable. In these early days of AI deployments, these characteristics may be more impactful than technological prowess.
Determine the solutions you will focus on by mapping to actual use cases that have business value - this is a superior approach to just finding the “best technology”.
One excellent idea, to select pilot sites for initial deployments: Try a technology on both the “strongest and weakest asset” in the portfolio, to test the core capabilities AND easy of implementation and adoption.
Finally, what is holding adoption back? Based on speakers at this event, we heard the following points:
Data readiness and cleanliness, as noted above.
New vendors with AI capabilities may overlap existing vendors, making it hard to prove out a unique value proposition. A better approach may be to work with current vendors to add AI capabilities into their products.
There are two sides to the labor angle - on one hand, there may be limited adoption by longer tenured employees, but as those staff retire, there will be greater demands for AI and technology solutions to augment the remaining staff. But, overall, the aging out in our industry did not come up that often.
Overall, the IMN AI in Real Estate event brought together a number of key thought leaders and provided actionable next steps for those real estate firms seeking to develop strategies to use AI. We’ll also be attending the July ESG Event, and IMN has a number of other relevant events on the upcoming calendar.
Aamidor Consulting provides product and GTM expertise to RE tech leaders. We work with innovators who focus on decarbonizing and digitizing commercial buildings. Our typical clients are startups, capital allocators, and industry incumbents - elevating the product and GTM approach and helping to make educated investment decisions. In addition this leading newsletter, we have an unrivaled network of owners and operators and a deep bench of consulting partners. See a summary of our past projects and also a description of our consulting services for more details on how we can help.
Job Seeker Resources
We've heard from individuals who either have used these links to find a job, or who seek a bit of advice on potential roles. While we aren't in the business of recruiting, we are happy to help informally connect talent and good jobs. Feel free to reach out if you are trying to find a job in this industry.
For job seekers, we’re big fans of LMC, which is quickly becoming the go-to recruiting firm for the built world. Not only do they have a track record of placing the best candidates in companies poised to make a serious change to our industry, but they are also one of the only recruitment firms that consistently support initiatives that remove barriers for anyone to join our industry.
And, here are a few great job boards that may be helpful, too:
and, New Energy Nexus has a slack group with a job board.
We are sure that there are more, but this is a good start. And, again, please reach out if you are a job seeker!
Noteworthy Articles, Reports and News
Future of office and commercial buildings / Impact on commercial real estate:
Bloomberg reports that the US office vacancy rate will peak at 24 percent in 2026.
While office buildings may be struggling, things are looking better among hospitality real estate assets. This article digs into the role proptech is playing.
We’re been impressed by Jamestown’s tech and sustainability strategy for a long time, and this article provides a very detailed and informative deep dive on their approach.
Smart building product launches and related announcements:
JLL announced an AI-powered facility management app.
Kode Labs announced another set of integrations in late May. And, the firm announced TJX as a new enterprise customer.
Lumen Energy announced that it has worked with Nuveen to conduct initial site assessments across 1,400 sites.
Prescriptive Data has announced a rebrand to “Nantum AI”, the name of the firm’s main product. This is not an uncommon move, as other vendors have rebranded the company to a leading product offering.
Schneider Electric launched a smart building division in Canada. And, in the UK, the University of Birmingham is working with the vendor.
R-Zero launched a short term lease option for its workplace sensors.
EnVerid launched a new-zone based HLR module - with a focus on smaller spaces and decentralized HVAC systems.
Cohesion launched Savvy, an AI-powered app.
NZero launched an AI-powered benchmarking and forecasting tool for emissions, called Rapid Emissions Profile.
Hubstar, which recently acquired Relogix, launched a new occupancy solution for hybrid workplaces.
This appears to be a late 2023 announcement, but we just learned of Here by Hines, the firm’s tenant amenity app.
Other news that caught our eyes this month:
We’ve been covering the growth of HVAC and energy needs for data centers (due to AI), but this interesting post from HFS Research takes a look at how SaaS revenue way may give way to AI-driven revenue. This may be a longer term story in our industry but still relevant.
Lux Research tackles geothermal energy.
An interesting article on proptech firms focusing on asset class niches (e.g., student housing) - a strategy that we’ve advocated for, and one that provides a beachhead.
Harris Williams published its Q2 sector brief on renewables and distributed energy.
And, FTI Consulting published its own review of trends in data centers - including power demands and energy projects in development.
Smart buildings today, autonomous buildings coming in the future?
PitchBook published its Q1 2024 Global Assets Report.
Our friends at Random Walk covered energy consumption, which already has peaked in the US (for now). But, not so for some firms - Google reports that emissions are up 13 percent due to AI demand.
Guggenheim published a nice white paper on their leading private companies in industrial and energy technology.
Follow us on LinkedIn for more content - and, if you are interested, here are all the articles we've published.