Building Innovation News, Issue 6
In this issue: a look back at 2019, predictions for 2020 portfolio company updates, and our commentary on PropTech's role in the low carbon economy
GBIF’s Year in Review
Looking Back at 2019
As we wrap up another year in the fund, we proudly consider the progress we’ve made in 2019. Among our greatest successes: our first exit, another investment added to our portfolio, and a new member of the GBIF team!
This year, we were delighted to announce the acquisition of Honest Buildings, one of our earliest investments, by Procore. We were able to return a portion of the original investment to our LPs, and we’re very excited to be a part of Procore’s continued growth as shareholders!
We’ve grown in other ways, too—in March 2019, we welcomed Dealpath, a deal management platform tailored to real estate investment, to our portfolio. We believe in Dealpath’s value to the real estate investors among our LPs, and we're excited to be a part of their growth trajectory.
In July, our team grew a little more. David Harris Kolada joins us from a strong background in venture capital investing, and brings to the firm his expertise in PropTech, IT, and Cleantech. We’re thrilled to have him on board!
Our Predictions for 2020
This year has been a huge one for PropTech news as building-related technologies go mainstream. Here are some of the year's biggest trends that we expect to see grow in 2020:
Tech giants were scrutinized for their possession and use of sensitive user data. In 2020, data privacy and information security will be major talking points as the effects of GDPR in Europe reverberate.
Cybersecurity will become a major issue for building owners once California's new Internet of Things (IoT) Security Law goes into effect on January 1, 2020.
This year, the urgency of the climate change challenge went mainstream, coinciding with a rising demand for sustainable technologies for the built world.
The market sharply corrected valuations of several high-profile unicorns in 2019, most notably WeWork, which may cause investors to be more cautious and to focus on profitability over growth.
Are we on the right track? Send us your thoughts and predictions for 2020!
Fund Update
GBIF Honoured by the Clean50
The Canadian Clean50 added GBIF team members to the list of 2020 honourees recognized for outstanding leadership in sustainability and clean capitalism. GBIF was identified as a leader in cleantech investing and for contributing to a more sustainable built environment.
Familiar faces among this year's honourees from the real estate and infrastructure industry were: Jennifer Wagner from Carbon Cure, Enwave's Carlyle Coutinho, ArcTern Ventures' Murray McCaig, and representatives from ParityGo, Riocan, and BentallGreenOak.
The 2020 awards mark the third time that GBIF team members have been recognized by Clean50.
Bottom Line: GBIF is delighted to be among the 2020 cohort, and we will continue to invest in and promote technology solutions that improve the performance of the built world.
Portfolio Company News
CarbonCure Awarded $5M Grand Carbon Challenge by Emission Reduction Alberta
ERA awarded $5 million each to Mangrove Water Technologies and CarbonCure Technologies to support commercialization of their technologies in Alberta. The two companies were the last ones standing after a five-year, three-round funding competition that began with 24 successful round one projects. The goal of the competition was to identify innovative commercial carbon uses that will contribute to the Alberta economy. (Video: Grand Challenge: Innovative Carbon Uses)
Bottom Line: Congratulations, CarbonCure! We're happy to see the company continuing to attract attention (and non-dilutive funding!) to expand the reach of a technology that will play an important role in reducing the carbon footprint of the built environment.
Electriq Power Announces Volume Agreement with Large International Manufacturer
Electriq’s PowerPod home energy storage system
Electriq Power has announced an important white label production agreement with one of the world’s largest consumer electronics and solar product brands. The deal calls for Electriq to ship thousands of their behind-the-meter home energy storage systems over the next 18 to 24 months. The customer will then market and service the systems for the homeowner market under their brand, leveraging an extensive U.S. distribution network. The first 50+ systems have already been shipped, and the next 50 are on their way. Meanwhile, the Bay Area company has seen an uptick in direct sales following the horrible wildfires and region-wide safety power blackouts across northern California.
“Electriq has established itself as a very high value choice based on our flexibility to deliver both retrofit and new solar installations,” said Frank Magnotti, CEO of Electriq. “We have now transitioned from a start-up to a scale-up organization."
The company also announced the addition of talented engineers with highly relevant backgrounds in software and manufacturing, and the appointment of a new director to the board from Google.
Bottom Line: Electriq's team and directors believe this will be a turning point for the company and are very excited to watch them execute on their first volume partnership.
Kaarta Tech Featured in Two National Geographic Documentaries
Kaarta's technology was featured in two National Geographic documentary series which are now airing globally.
Buried Secrets of WWII - Kaarta is featured in 5 of the 6 episodes of this series. View a segment of episode 2.
Lost Cities with Albert Lin - Kaarta is featured in the first 2 episodes of this series. View a segment of episode 2.
Bottom Line: Kaarta's tech is perfectly suited to scanning sensitive areas, making it a great solution for creating 3D models of the ancient world. But its real value is in rapid building scans of the indoors for BIM models or digital twins.
SensorSuite Appoints New CEO
SensorSuite Inc. announced the appointment of Glen Spry as the company's new CEO and President. Glen will be replacing Robert Platek, the company co-founder, who will be moving so he can focus on strategy and continuing to develop pioneer wireless IoT devices for HVAC management in buildings. For his new role, Glen brings decades of experience in leadership roles, foremost at New Zealand's Genesis Energy.
Bottom Line: Glen's appointment reflects the evaluation of the company from a technology development company to a sales and marketing growth company. With some of Canada's leading REITs as customers, there are lots of opportunities now to expand the business with a suite of wireless cloud based HVAC control devices.
Network News
Grosvenor Commits to Net Zero Carbon across International Real Estate Portfolio
GBIF's lead investor has announced that they have signed up to the World Green Building Council's Net Zero Carbon Buildings Commitment, which means that all of the firm's directly managed properties will be operationally net zero by 2030. To meet this goal, Grosvenor's new buildings will be designed and constructed to deliver net zero operating emissions by 2030; and their standing investments will be adapted to be operationally net zero carbon by 2030. By 2050, the firm hopes that all properties, including those managed by third parties, will be both operationally net zero, and will also have net zero embodied carbon.
In the words of Mark Preston, Grosvenor Group Chief Executive: “We don’t take this responsibility lightly and believe that it is incumbent on everyone to inform themselves with real evidence, pursuing solutions that can make a meaningful difference. We must act now and decisively, encouraging others to do likewise.”
Bottom Line: Grosvenor's commitment should inspire everyone in the property industry to strive for a low carbon built environment. It has inspired GBIF, and we will continue to work hard to find the technologies that will enable property owners to reduce their assets' carbon impacts.
NetZED Wins Inspiring Home of the Year at CaGBC Award Night
Left: Adrian Wang, Director Innovation and Sustainability, Tridel
Right: Jamie James, GBIF Managing Partner and Tower Labs Founder
Tridel and Hines were awarded the Inspired Home of the Year by the Canada Green Building Council for the Net Zero Energy Dwelling (NetZED) Suite designed by GBIF's non-profit partner Tower Labs. NetZED is an aspirational zero carbon all electric penthouse condominium in the East Bayside district of the Toronto Waterfront redevelopment. During the day, any surplus power that is generated by the PV installation on the roof is fed into the building power distribution, so that at night, the home can draw power back from the building. The flow of energy is tracked with a bi-directional meter so that the homeowner and condominium corporation can reconcile monthly charges.
The suite was held off the market for well over 12 months, so the developer could gather energy use data to tweak systems in order to optimize energy performance and balance. It also gave Tower Labs and Tridel an opportunity to test new technologies, such as the ElectrIQ home energy storage system and advanced cold climate electric heat pump systems from Mitsubishi (HVAC) and GE (hot water).
Commentary
PropTech in a Low Carbon Economy
Anyone working in the property industry must be aware by now of the magnitude of the built environment’s contribution to climate change. Nearly a third of all global anthropogenic greenhouse gas emissions can be attributed to the construction and operation of buildings. Reducing that impact is a huge challenge that we all have a duty to address if we want to think of ourselves as responsible citizens (and parents and grandparents).
Over the last decade, most leaders in the real estate industry have taken some form of action to address their properties’ environmental impacts. In many cases, their actions have made business sense: lower energy consumption reduces operating costs, and improved indoor environmental quality contributes to productivity. There is a measurable ROI attached to adopting carbon reduction technologies—up to a point. In other cases, publication of investments in sustainability measures can be an important indicator of a real estate firm’s commitment to values that resonate with tenants/customers, shareholders, and employees (i.e. environmental, social and governance accountability, or ESG). As a result of either motivation—ROI or ESG—important actions have been taken, and a large and growing number of buildings can be said to be performing better than ever in this respect.
Despite our progress, when you look at the overall magnitude of the challenge in front of us, we should acknowledge that our efforts don’t really amount to much more than tinkering at the margins of the problem. According to estimates from the Architecture 2030 Challenge, between now and 2060, the world will add 230 million square metres of new floor area. That’s roughly the equivalent of the entire floor area of Manhattan every month for 40 years (!). Meanwhile, two thirds of the buildings standing today will still be around in 2030, and we are currently only upgrading about 1% of them on an annual basis (see Global Alliance for Building and Construction). That rate needs to triple or quadruple quickly for the built environment to achieve carbon neutrality by 2060. Another way to frame how far behind we are: out of the tens of millions of grid-connected buildings in the world, today there are approximately only one thousand that are net zero energy. We’ve made progress lately, but we have a long way to go in a short time. We need to step up our game and get more aggressive about how we construct, manage, and upgrade our properties.
What we’ve been waiting for is a sign of real leadership from the property industry itself (apologies to our friends in the industry who have been announcing their commitments to sustainability in annual reports in recent years, but it’s not enough). We need a signal that the industry is at last prepared to match a formal commercial commitment to the actual magnitude of the challenge—with no more tinkering around the margins.
Happily, with the announcement that Grosvenor has just committed to net zero across their entire global portfolio, we may have seen the first major owner do just that (disclosure: Grosvenor’s Indirect Investments division is GBIF’s lead investor). I encourage everyone to read the statement issued by the Grosvenor Group’s CEO Mark Preston, which outlines the details of their commitment. The most extraordinary line, which clearly demonstrates Grosvenor’s understanding of the stakes involved, is the following: “We would not typically commit to any real targets without a clear plan of how to achieve them. Yet, unless we make this a top priority and pursue innovation, we won’t build the necessary momentum to make it happen fast enough.” In other words: we acknowledge that the significance of the problem requires us to act now, even if it means figuring it out as we go. Thank you, Grosvenor. Really.
Achieving a low carbon economy for the built environment at scale—and, importantly, profiting in it—will be complex and multifaceted. There are still too few universal, clearly discernible, and non-regulatory commercial mechanisms to account for environmental externalities in a real estate transaction. Fortunately, there are also technological innovation tailwinds that are starting to enable the transition that leaders like Grosvernor are now undertaking.
Three macro-level technology trends are underway that are enabling the low carbon evolution of the built environment:
The commodification of energy efficiency and renewable energy equipment;
The widespread penetration of wireless technologies and internet-connected devices; and
Migration of asset management processes to the cloud and/or smart devices.
A fourth innovation area—building materials—is also advancing quickly. Added together, the innovations and trends in these segments will help leaders like Grosvenor live up to their exemplary commitment, and PropTech innovators must help them navigate their way.
Conferences
Solar Power International: September 23–26, 2019
The Electriq Power team with Jamie James and Malcolm Cameron of GBIF
GBIF joined the Electriq Power team at Solar Power International in Salt Lake City. Electriq had an exciting conference as their tech was featured in several booths in addition to their own, including CATL, the world's largest EV battery manufacturer.
We spent some time exploring and learning more about the rapidly evolving energy storage market.
The Proptech Society Joint Venture Conference: October 29
Anvesh joined the VC Panel at the Proptech Society Joint Venture Conference put on by Sidewalk Labs. The panel included VCs from Panache Ventures, Groundbreak Ventures and Plaza Ventures and was moderated by Eugene Bomba from PWC.
MIPIM Proptech: November 12-13
The GBIF Team attended the MIPIM Proptech conference in NYC. We were impressed by the breadth of the exhibitors and attended several great sessions including a very interesting demonstration of an augmented reality technology. Check it out here!
CoRETech: November 13-15
The GBIF Team attended the CoRETech Conference in San Jose. The conference had a focus on space utilization and analytics for CRE.
What we’re reading
6 Uses for CO₂ That Could Cut Emissions and Make Money –Vox
"From concrete to fuels, CO₂ from the air can replace CO₂ from the ground."
The Gap Between and Airbnb and a Hotel is Shrinking –The Week
"This week Airbnb took a big step towards operating more like the traditional hotel business."
‘She Build’: Creating an All-Women Real Estate Development Team –New York Times
"Women are pushing to establish more senior roles for themselves in commercial real estate, an area where they are severely underrepresented."
Forced or Not? Why US Says China Steals Technology –Bloomberg
"It’s been one of the most contentious fronts in the U.S.-China trade war: so-called forced technology transfers"
How Hackers Could Break into the Smart City –WSJ
"The more connected a city is, the more it may be vulnerable to cyberattacks."
Drastic falls in cost are powering another computer revolution –The Economist
"The Internet of Things is the next big idea in computing."
Like Restaurants, Buildings Will Get Grades (D’s for Energy Guzzlers) –The New York Times
"Next year, New York City buildings will be required to display their marks on energy efficiency."