2018 has proved to be a record year for investment in the global building technology sector, with over US$2.4 billion invested in startup companies, says
Memoori, a research organization offering smart building technology-related advices.
The finding demonstrates increased confidence by investors in the sector and indicates the positive response companies are receiving for their products and services in the market, Memoori says.
Adjacent markets are heavily impacting the core smart buildings market, particularly the PropTech phenomenon, which refers to real estate-related technologies, in the commercial real estate sector. “Smart developments” in the grid, the home and cities are also at play.
Memoori identifies 482 companies founded between 2009 and 2018 in the smart building sector. In addition, it identifies 109 startups that been acquired and 13 firms that filed for an IPO since 2009, amounting to over 600 active new entrants in the smart commercial buildings sector.
Of all the acquisitions of startup companies over the past seven years, 2018 accounted for over 37% of these deals, confirming the consolidation trend and increasing recognition by potential acquirers of the benefits of closer collaboration with startups. It demonstrates the critical contribution that startups are making to the introduction of innovation in the smart buildings space.
More BIoT platform startups
According to Memoori’s definition, a startup is a private company formed no earlier than 2009 that is focused on the commercial and industrial buildings market, is not a subsidiary or an acquisition of a larger company is and often financed by venture capital of private equity funding.
BIoT Platform is the top segment with the largest number of startups (202), followed by Building Energy Management (64), Indoor Mapping & Location Services (55), Workplace Management Platform (42) and BIoT Enablement Hardware (31).
Exits have also increased significantly, with 41 acquisitions identified in 2018 alone. “Indeed the last two years accounted for almost 60% of all startup acquisitions tracked since 2012, showing a clear trend towards consolidation,” Memoori says.
Interactions between major players and early stage startups have continued to increase in the past two years, through accelerator and incubator programs and also direct collaboration. Utility companies and energy services providers have been particularly focused on building relationships with new entrants in the energy sector.
Major real estate investments
Over the course of the last seven years, Memoori has tracked a total of 824 venture funding investments relating to startup companies in the smart buildings space. The investments range from seed and angel investments to debt financing and Series A to Series E rounds. Funding ranged in value from under US$1 million to US$1.1 billion.
The first unicorn, according to Memoori, in the smart building space was created by the US$1.1 billion investment in View Glass by Softbank Vision Fund.
Even discounting the View investment, 2018 attracted total funding of over US$1.3 billion in the commercial and industrial buildings space, still a record level of investment to date.
The number of funding rounds has risen to 184 in 2018. The capital invested in the global smart buildings sector has increased more than six times since 2012 with the sector attracting around US$6.8 billion during this period.