After the clean tech boom went bust, the industry seemed to disappear from the tech world’s focus as quickly as the billions of dollars that had been invested.
But one sector — energy efficiency — has made a quick comeback with a little help from the Internet of Things. And the same investors that got burned before are rushing back to try their hand in a new version of the old game.
Veteran Silicon Valley firm Kleiner Perkins Caufield & Byers took a particularly hard hit in the clean tech crash, when portfolio companies such as Fisker Automotive and MiaSolé went belly up and lost the firm hundreds of millions of dollars. But partner Trae Vassallo has not been deterred — instead, she’s leading a second pass at energy tech that has already spawned winners such as Nest, acquired by Google for $3.2 billion, and Opower, which went public in April of last year.
It’s really been made possible only recently just by the incredible proliferation of mobile devices, our ability to do mesh networking intelligently, and to have a really inexpensive microchip that can do the processing.
“The first wave, which in many cases didn’t work out so well, was about funding development of core physics around energy generation,” says Scott Harmon, CEO of Noesis, a lending marketplace that provides capital to energy-saving commercial building projects. This time around, however, “most of the VC money is flowing to things like financing and automation systems and digital software — things that frankly venture people know better and are more comfortable with,” Harmon says.
According to CrunchBase data, this second wave of energy tech is gaining traction in the venture community. Venture investments in Internet of Things and smart building startups have risen steadily over the past few years, accounting for nearly 40% of all clean energy rounds in 2014 compared to 20% in 2012. Connected device startups and SaaS companies like Nest and Opower are the new leaders of the venture-backed pack, seeing broad adoption with a vastly smaller burn rate than the Solyndra’s of the past decade.
In the home, Nest is a clear winner. But a winner in commercial buildings has been slower to emerge.
“If you look at who dominates technology in buildings today, it’s these old industrial companies, the Honeywells and the Siemens,” says Vassallo. “Those guys don’t know cloud, they don’t know data, it’s not like they’ve got platforms with APIs and things like that.”
It’s clear there’s a lot of money at stake here — the global building automation and controls market is going to reach $55 billion by 2020. Yet the financing challenges have been a major blocker for widespread adoption so far.
“Your average control system or lighting system might cost hundreds of thousands of dollars, and one of the big impediments to a building owner is that they don’t have that budget reserved to pay for it all at once,” says Harmon, “especially if the system isn’t worn out and the lights and the air conditioning still come on every day.”
The financing issue is also being tackled by Noesis, a company that’s taken a page out of the SolarCity playbook to fund the energy efficiency projects of its customers. Noesis is working with over 150 companies to provide financing for commercial energy efficiency and solar projects, ranging from commercial HVAC company Trane to private LED lighting system provider Titan LED. These companies represent about $10 million weekly and $1.1 billion annually in proposed projects.
Once facilities departments are financially able to integrate new technology into commercial spaces, startups will have a major opportunity to innovate in a largely untouched sector and the applications of these systems are only going to get more interesting.
This is just the tip of the iceberg. Imagine a world filled with connected buildings, where when an earthquake hits one building, alarms go off in buildings ten miles away to warn people before the shaking begins. And when first responders arrive on the scene, they can pull up an image with the precise location of every occupant in the building.
Original post: Techcrunch