OEMs making moves; early stage fundraising continues; product launches accelerate
Smart Building Insight - August 2024 from Aamidor Consulting
Letter from the Editor
We’re back with another large update (relatively speaking, usually the summer months are slow on the news front). Specifically, Johnson Controls and Bosch announced a very significant transaction, in which JCI has sold off a large part of its HVAC business (and now is nearly exclusively focused on solutions for large, complex commercial buildings). There are many more updates below - we hope you enjoy!
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!
And, next month we are speaking on a AEE webinar, specifically focused on AI and decarbonization technologies - register here! And, as a bit of a preview, in July Joe Aamidor was a guest on EnergyCAP’s monthly webinar, discussing some of the concepts behind our recent write up on enterprise decarbonization analytics (EDA) solutions.
After a busy start to the year, our fall 2024 conference schedule is starting to come together, too.
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. 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. And, use promo code AAMIDOR150 to receive $150 off per ticket.
If you are trying to get through this post quickly, here are a few key highlights:
Our detailed analysis of the JCI-Bosch transaction as our special feature for the month.
A number of new fundraising rounds, with more early stage rounds (as we’ve seen for the past 1+ years).
Continued strength on the product launch front - we continue to see many firms innovating and launching new products.
All the M+A, partnerships, and industry news you expect!
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 head of product for vendors. Projects include competitive analysis, market sizing, voice of customer interviews, pricing / packaging / positioning, and go-to-market strategy.
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.
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.
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.
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Investment News
New funding rounds and investments:
Cove, a property operations and tenant experience platform, secured a $6 million post-Series A funding round led by Nuveen Real Estate, with participation from ORG Portfolio Management and O’Shaughnessy Ventures.
Seattle-based LevelTen Energy has secured a $65 million Series D round from tech giants Microsoft and Google, aiming to expand its clean energy marketplace globally and advance hydrogen power initiatives.
eLstar Dynamics has secured a two-million-euro investment from Panthea to complete the development of its dynamic glass product, aimed at sustainable and energy-efficient solutions for buildings and vehicles.
Austrian company Ecop has secured €8.5 million from the European Innovation Council (EIC) Accelerator to scale the production of its innovative rotation heat pump.
And, Quatt, a Netherlands-based heat pump OEM raised 25M euros in growth equity, led by Blue Earth Capital, with Impact Equity Fund participating.
New Zealand-based proptech startup Tether has raised NZ$655,000 to expand into Australia and Europe, enhancing its global presence.
Splight, an AI startup focused on grid operations, has secured $12M in seed funding led by Noa and joined by notable investors like EDP Ventures and the UC Berkeley Foundation.
Paces, a Brooklyn-based GIS and data platform, has secured $11 million in Series A funding led by Navitas Capital to accelerate clean energy project development.
Scaler has raised $10 million in Series A funding led by Plural to advance its platform for decarbonizing real estate.
Onyx Renewable Partners has upsized its corporate revolving credit facility to $100 million with new lending partners Siemens Financial Services and Mitsubishi HC Capital America.
LevelTen Energy announced it has secured approximately $65 million in a Series D funding round led by B Capital.
osapiens, an ESG data management platform, raised a $120M series B led by Growth Equity at Goldman Sachs Alternatives. This follows a $27M series A last year.
News on VCs and funds:
Breakthrough Energy Ventures raised a new $839M fund.
Nuveen announced the first close of its second fund focused on its private equity climate inclusion strategy, with $200M including funds from Danish investor Velliv.
Acquisitions:
Bosch has agreed to acquire Johnson Controls' and Hitachi's residential and light commercial HVAC business for $8 billion, marking its largest takeover to date. Johnson Controls expects to receive $6.7 billion in cash from the transaction, with net proceeds of about $5 billion after tax. Lennox International, and Samsung Electronics were two other bidders on the asset. Prior to this announcement, Hitachi had been exploring a sale of its portion of the JV.
And, JCI also is selling Air Distribution Technologies (ADTI) to Truelink Capital.
In Germany, Bosch also announced that it is acquiring DMS Digitale Mess- und Steuersysteme, a service provider focused on system installation and integration. This is another move to beef up its building automation system capabilities.
LG Electronics has acquired an 80% stake in Athom, a leading smart home platform company, to enhance its AI-enabled intelligent space business.
Nemetschek Group has completed the acquisition of GoCanvas Holdings, Inc., enhancing its Build & Construct Division with GoCanvas’s leading cloud and mobile SaaS solutions for field data digitization and integration.
Sciens Building Solutions has acquired Low Voltage Integrated Systems (LVIS) of Vista, California, further expanding its presence in the state.
Partners Group has agreed to acquire Eteck, a leading provider of sustainable decentralized heating and cooling solutions in the Netherlands, from Infracapital and other minority shareholders.
Billed as a partnership, Schneider Electric has increased its stake in Planon to 80 percent. This is very similar to the acquisitions that Siemens (Brightly), JCI (FM:Systems) and Trane (Nuvolo) have made recently.
New partnerships:
Tesla and Samsung have teamed up to integrate Tesla Energy products with the SmartThings Energy platform, enabling users to monitor and control Tesla Powerwall, Solar Inverter, and Wall Connector through the SmartThings app.
IBM and JLL have launched a global sustainability solution for commercial real estate, leveraging IBM's Envizi ESG Suite and JLL’s sustainability services.
KNETCO and Johnson Controls have announced a partnership focused on smart building solutions in Kuwait through the OpenBlue platform.
Public firms: financial results and technology news/plans
Building on this new section, we have a few more useful news items. Please let us know if you have more feedback on how to make it better!
Lineage Logistics, the world's largest cold-storage warehouse operator, has raised $4.44 billion in its U.S. IPO, marking the largest stock market debut globally in 2024.
And, the big news of the month is JCI selling a significant part of its HVAC business to Bosch. We want to use this section to dig into it more. As noted in the M+A section of the newsletter, JCI sold its residential and light commercial (e.g., rooftop units) HVAC business, along with the Hitachi JV (heat pumps) to Bosch. The overall transaction value is $8B - Reuters reported on multiples: “Johnson Controls' North America ducted business was valued at a multiple of 16.7 times its 2023 earnings before interest, taxes, depreciation and amortization (EBITDA), the company said. Its stake in the air-conditioning joint-venture with Hitachi was valued at a multiple of 7.5 times its 2023 EBITDA.”
Interestingly, JCI also is selling ADTI (see above), Bosch is beefing up its BAS services through another acquisition (also above), and - shortly after the Bosch transaction was announced, JCI’s CEO stated that he plans to retire once a successor is found. This appears to be related to pressure from activist investor Elliott Management, which also pushed JCI to ‘simplify’ its portfolio.
Back to the actual transaction - this is very good for Bosch, which already is a maker of HVAC equipment, and now gains a much more well-known brand in the US (plus the channel relationships that will help move product), a much stronger position in light commercial HVAC, and also has an equipment business that could, in some cases, align with Climatec (which Bosch acquired in 2013).
JCI’s shares have risen on these developments, though the poor performance across all markets this past week appear to have tampered those gains.
JCI certainly has simplified its business, but it now looks very different than many of its peers. For example, its HVAC peers - Trane and Carrier - produce and sell HVAC equipment across all key building types and equipment categories. These two firms also have quality building controls businesses, but neither has the same market share as the “Big 4” (of which JCI is one of the strongest players - Siemens, Honeywell and Schneider being the other three). And, those controls peers do not sell any HVAC equipment (though Honeywell is a major supplier to HVAC OEMs).
These graphics we developed show that breakdown, at a high level (and this is illustrative).
Exhibit 1: JCI pre-spin
Exhibit 2: Other peers
The standard model for the “Big 4” has been heavy controls with some other base building systems (eg access control, fire/life safety) with direct and indirect sales channels. They also are making heavy technology investments to deliver more enterprise-grade, cloud based solutions. For the HVAC OEM leaders, the model has been unrivaled innovation and product breadth in HVAC, with some controls (Trane and Carrier, with Daikin making acquisitions across service and controls - e.g., Venstar - to have more controls offerings). The HVAC firms have channels to market that map to the types of HVAC equipment being sold (direct for applied, and indirect for residential). Lennox, a bidder for the JCI unit, is very similar to these HVAC peers, but only plays in residential and light commercial (thus the JCI acquisition would have given them more market share in their existing areas of focus).
Exhibit 3: JCI post-spin
JCI used to be a strong competitor, holistically, to both groups of peers. Now, it is not a direct competitor in either category, but a hybrid between those categories. It’s simplified by who it sells to, but NOT what it sells to them. (And, in fairness, JCI still likely could compete effectively in most cases with the BAS/controls OEMs, but also adds HVAC equipment for larger buildings).
Industry-wide, all of these businesses are highlighting some of the same key areas of focus - they all want to sell more lifecycle services, technology will play an increasingly large role in everything they do, and given the amount of energy consumed by buildings-and the HVAC systems specifically-all can make a strong case for being “climate innovators”. But, they all have slightly different areas of focus.
Given the complexity of applied HVAC systems found in large buildings, such as hospitals, large office buildings, and universities, having HVAC and controls bundled together makes sense. And, bundling other systems, such as access control, fire/life safety, and even enterprise software platforms is compelling. Moreover, other firms in this category have made similarly significant spinoffs. For example:
Honeywell exited the residential market via the Resideo spin, which markets its thermostats under the “Honeywell Home” brand.
Carrier recently sold a few business units, such as access control/security, fire/life safety, and commercial refrigeration. While Carrier is primarily an HVAC company with a strong, but smaller share controls business (Automated Logic), it viewed access control/security and fire/life safety as less strategic.
JCI’s new focus is large and complex commercial buildings, however, the complexity is that the firm is selling a range of solutions, sometimes to different buyers at different stages of the lifecycle. And, while bundling HVAC and controls makes a lot of sense, adding access control and other base building systems may be viewed as a peripheral opportunity to bundle. JCI and Carrier are making different hypotheses on these other base building systems.
So, where do these firms go from here?
Bosch will likely spend some time integrating its existing HVAC assets with the newly acquired York assets (it said it will be busy for about a year). But, like peers, it may simply sell these as different brands (but similar components and built in the same factories). Moreover, Bosch, which does have controls products (but does not sell them as much in the US market) , gains light commercial building controls, which could be a base for growth in the future.
JCI likely will make more acquisitions to beef up its share of wallet in these larger commercial buildings. Just as the firm recently acquired FM:Systems, which makes workplace and asset management software, other enterprise software purchases could be on the horizon.
Other HVAC and controls OEMs will be watching closely (both in the market and on Wall Street) to see the impact of this move - and may make their own moves in response.
Other news
Despite the rise in unicorn valuations during 2021/2022, nearly 50% of these companies, dubbed "ZIRPicorns," have since lost their unicorn status, now valued at less than $1 billion.
Despite a challenging VC landscape, carbon & emissions tech startups are thriving, with $2.7 billion invested in Q1 2024. This still is down from 2023.
It’s more focused on construction tech, but BuiltWorlds published its Q2 2024 Venture Report.
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.
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:
Gensler's Global Workplace Survey 2024 reveals that high-performing workplaces are now defined by employee experience and engagement rather than mere efficiency.
CBRE published a mid-year report on office attendance policies, covering 340 organizations.
Capital markets update: (across the market and in proptech specifically)
Our friends at Random Walk wrote a detailed piece on the CRE market, optimistically noting that we may have hit the bottom.
Sustainability in focus, as it relates to real estate:
Nantum and Brainbox AI were profiled in Fast Company’s article about AI-optimized building technology. For Brainbox, the case study was Loyola University; the technology from cut energy bills by 10% and reduced CO2 emissions by 15%, in a LEED Gold-certified building. Nantum shared its work with Carr Properties, among others.
And, similarly, Wired published a piece about the HVAC-focused opportunity for efficiency gains.
Additionally, AI-equipped air conditioners, which can enhance energy efficiency and user comfort, are becoming increasingly popular.
Smart building product launches and related announcements:
Measurabl has launched its next-generation real estate sustainability platform, Measurabl Navigate, designed to help real estate owners, operators, and investors achieve net zero and improve financial results from ESG investments.
Siemens Smart Infrastructure has launched Desigo Optic, a scalable building management software powered by the FIN framework (from their acquisition of J2 Innovations).
The Global Reporting Initiative (GRI) has launched the GRI-ESRS Linkage Service to help companies align their sustainability reports with the European Sustainability Reporting Standards (ESRS) under the EU’s Corporate Sustainable Reporting Directive (CSRD).
Brightly Software, a Siemens company, has launched Targets, a new carbon planning module within its Stream ESG and sustainability platform, to support decarbonization for commercial buildings.
Carrier has launched Carrier Cooling-as-a-Service, offering commercial customers a subscription-based model for HVAC and energy solutions, eliminating upfront capital costs.
Schneider Electric launched a variety of features to its Resource Advisor product.
WattCarbon expanded the WEATS marketplace to include branded storefronts.
Longevity Partners launched a decarbonization dashboard for real estate.
Tango launched an occupancy solution, which appears to be based on the recent Locatee acquisition.
And, similarly, Accruent launched a space intelligence solution.
HelixIntel, which recently launched a CMMS product, introduced a mobile app.
ManWinWin introduced a predictive maintenance solution - based on data from CMMS offerings. This is another example of various data sources being integrated for better prediction and modeling, similar to our enterprise decarbonization analytics concept.
Lastly, Realcomm posted a summary of all the products that were launched at its annual event in June.
Other news that caught our eyes this month:
LBNL’s Smarter Small Buildings campaign recognized a number of participants in a few categories - such as innovation and and operations/maintenance.
We've been digging into data centers in the past few issues, and a few relevant articles caught our eyes:
As AI advances, the demand for data centers is skyrocketing - tech giants such as Amazon and Meta are investing billions.
Thales Alenia Space published a study, funded by the European Union, that confirmed that deploying data centers into space could offer a more sustainable and economically viable solution for hosting and processing data, potentially generating billions in returns by 2050.
Google's greenhouse gas emissions have surged 48% over the past five years, primarily due to increased electricity consumption by data centers needed for its AI products.
More broadly, this article is a good overview that highlights market drivers, demand, various policy responses and other nuances on the topic.
Also, Goldman Sachs published a research note on generative AI, focusing on the current spend and realized benefit.
From the NY Times: Smart meters can be a gateway to a cleaner energy future and lower power bills by providing real-time data.
Follow us on LinkedIn for more content - and, if you are interested, here are all the articles we've published.