by Jeff St. John
March 23, 2018

Buildings are arguably as important a part of the grid edge as the grid itself. Building HVAC and lighting can be controlled and dispatched to serve as flexible load, to help balance local or systemwide energy imbalances, or even to integrate on-site distributed energy resources and provide always-on backup power as microgrids, with the right combination of readily available technology. 

Whether it’s worth it to building owners, operators and behind-the-meter energy services providers to invest in that kind of building energy control is another matter. Most commercial buildings lack the budget for on-the-ground staff to manage complex building energy management system (BEMS) implementations, or turn the flood of resulting data into better and more cost-effective decisions.  

GTM Research issued an authoritative report on the BEMS space last year, as we covered at GTM Squared at the time. Since then, we’ve seen a flurry of investment, acquisitions and expansions in the space, including a few worth diving into in depth. 

Acquisitions: Lucid and Acuity, Agilis and Ingersoll-Rand 

Lucid Design Group has gone through several iterations since its 2004 founding, from building energy dashboard to energy social networking platform to would-be building operating system. The idea was to collect and provide access to data from a multiplicity of building automation system platforms, wireless sensors, occupant complaint and resolution records, and other smart building networks and devices. 

Last month, Lucid was acquired by Acuity Brands, the LED lighting provider that’s gobbled up a number of smart building startups in recent years. “Lucid will leverage Acuity Brands’ extensive investments in building sensor networks, integration, and controls to extend the capabilities of the platform” and will “continue to grow BuildingOS as an independent and open platform,” led by current executives including CEO Will Coleman and co-founder Vladi Shunturov, Acuity announced. 

Terms of the deal weren’t disclosed, leaving unclear how investors in the San Francisco-based company fared. Lucid has raised about $16 million, including a $1.6 million Series A in 2009 and a Series B round that closed with $14.2 million in 2015, with investors including GE Ventures, Formation 8 Partners and Zetta Venture Partners. 

Lucid’s early BuildingOS customers included buildings owned and operated by Sony, Google, Stanford University and the city of Washington, D.C.; it was being used by about 500 organizations across 15,000 buildings and 1.5 billion square feet of commercial space as of last month’s acquisition. 

In the past year, Lucid has announced partnerships with global real estate firm Cushman & Wakefield and United Technologies Corp. firm Automated Logic Corp., as well as a building benchmarking data partnership with the U.S. Department of Energy

While it hasn’t disclosed any previous work with Agilis, it’s likely that technologies owned by the Atlanta-based lighting and building controls provider have integrated with Lucid’s platform. 

A short list of Acuity’s acquisitions in the space includes networked lighting startup Adura in 2013, LED driver maker eldoLED in 2013, and indoor LED lighting software maker ByteLight and lighting fixtures maker Juno Lighting in 2015. 

More building controls-focused acquisitions include lighting and building controls startup Distech Controls for $252 million in 2015, and IOT software startup DGLogik, as well as mapping, navigation and analytics software startup GeoMetri in 2016.

Lucid built its BuildingOS approach on integrating data from the breadth of available building systems, but its acquisition indicates that its value may largely lie in the fold of a larger, more entrenched player in the space. Pure-play building energy software startups with significant VC funding, such as Serious Energy and SCIenergy (now Flywheel), have struggled to gain traction, and demand response provider EnerNOC’s investment in energy management software-as-a-service failed to pay off, leading to the company’s acquisition last year by Enel for $250 million. 

GTM Research has tracked the most successful exits from startups that have focused on solving particular challenges in ways that enable tight integration with existing BMS platforms. Last week brought one example of this pathway with the acquisition of Agilis, a building efficiency data analytics software vendor we’ve profiled, by long-time partner Ingersoll Rand. 

The Raleigh, N.C.-based startup has been working with IR’s Trane HVAC subsidiary since 2013, using its data collection and analytics to power its Trane Energy Optics tool for assessing energy efficiency potential for customers. Agilis CEO Joseph Hirl, who founded and self-funded the company with private investors, will become IR’s vice president of HVAC energy services and controls. 

Investments: Enertiv for submetering, Verdigris for disaggregation, Simple Energy for utility-customer connection

Looking at the roster of recent venture capital investments in the building energy space highlights how property owners are seeking out solutions to problems they’ve been trying to solve in-house as well. Take January’s $4.25 million seed round raised by Enertiv. The New York-based company makes sensors for submetering loads within buildings, as well as software to analyze and report on building HVAC equipment malfunctions and maintenance needs, which are big drivers of energy waste, and automating subtenant metering systems. 

The investment was led by Fifth Wall Ventures, an investment firm with partners including some of the country’s largest property developers, including Hines, Lennar, Macerich and Rudin Management. The New York-based company raised a $700,000 seed round in 2014, and has deployed its technology for customers including Related Companies and Colliers International, with an average 10 to 15 percent decrease in energy and maintenance-related operating expenses.

Energy disaggregation startup Verdigris also brought in money in January, raising $5 million from long-time investors contract manufacturing giant Jabil, which planned to use Verdigris’ technology for its sites, and Verizon, which supplies the wireless connectivity for the startup’s sensors. Verdigris previously raised $6.75 million in 2016 from both companies, and about $16 million in investment prior to that. 

And in January, Boulder, Colo.-based startup Simple Energy raised $6.1 million from investor Westly Group, which also led its previous $6 million round in 2014. Simple Energy has built a roster of more than 50 utilities using its mobile and web-based applications to secure rebates and rewards for engaging in energy efficiency.