This article was written by Daphne Tomlinson, Senior Research Associate at Memoori.
Memoori has been tracking deals in the global smart buildings space since the beginning of the COVID-19 pandemic to assess the impact on funding of startups. Compared with H2-2019, deal volume in H1-2020 was only 3% down while total US$ investment was down 19%. We recorded 150 funding rounds amounting to around $2.37 billion up to the end of June, compared with 154 funding rounds in H2-2019 amounting to $2.93 billion.
We conclude that VC firms, private equity and strategic investors have not reduced their support for the smart buildings sector during the crisis, although dollar values have reduced. The decrease is not that dramatic, bearing in mind the high annual funding levels of the past two years.
COVID-19 had limited impact on Q1-2020 activities as many deals had already closed or were in the process of being closed prior to the outbreak of the pandemic in Europe and the Americas. We are also seeing that funding is being directed at specific types of building automation and digital transformation solutions adapted to the “new normal” that has been established in the wake of the COVID-19 epidemic.
Solutions focused on occupancy and usage monitoring, indoor air quality metrics, biometric identification and contactless access control are accelerating as real estate investors recognize the value that digital solutions can bring to occupants, tenants and owners of commercial buildings.
We have identified a number of areas which have attracted funding during the pandemic.
Occupancy Analytics Platforms and Workplace Sensor Technology: Workspace management technology to measure space utilization and provide occupancy analytics, is being seen as an important contributor to worker health and safety in office buildings, amid the COVID-19 return to work restrictions after the lockdown. Such solutions enable organizations to think about how to use their office spaces more efficiently and effectively, to help enforce social distancing regulations and support organizations in transitioning to new ways of working. Sensor technology for real-time people counting and indoor air quality metrics is also experiencing increased customer demand.
Indoor Mapping and Location Services: Bluetooth-powered indoor location services — which track the locations of people or things as they move around indoors, where GPS systems cannot penetrate, is attracting intense interest as a tool to build workplace safety and wellbeing in a post-COVID-19 world.
Occupant Engagement Platforms providing workplace communication technology between landlords, property managers, tenants and employees have also seen growth, as the move to remote working has been significantly accelerated by recent events. Use cases include enabling a safe return to work by allowing employees to plan staggered days in the office and book specific arrival times using a centralized calendar in keeping with physical distancing recommendations.
Emergency Communication and Mass Notification Software have gained funding this year in the US to support first responders and 911 centers accelerate their response to emergencies in the pandemic.
Indoor Air Purification and Surface Disinfection Solutions are in high demand due to COVID-19. These tools are currently being used in all types of commercial buildings, including hospitals, hotels, schools, stadiums and factories. Solutions range from the use of ultraviolet light for surface and air germ elimination to the use of autonomous robots for cleaning in large commercial buildings.
Visitor Management Systems are adapting to support office re-entry and refocusing to address safety concerns in offices of the post-coronavirus world.
Contactless Access Control Solutions which support the screening of individuals at entry points to ensure workplace health and safety through touchless biometric solutions, mobile apps and software analytics are also experiencing a surge in demand. Solutions for access control in office buildings, as well as across factories and warehouses are being funded to ensure frictionless and secure operation of time clocks, doors and turnstiles without the need of touching any communal surfaces.
Solutions to address the digital transformation of buildings are seeing signs of increased interest as building owners and operators seek ways to reduce overheads in a challenging economy. Data-driven solutions can be used to improve efficiency, operational performance and workplace safety.
While COVID-19 is undoubtedly having a negative impact on many firms, Memoori believes that the pandemic is set to accelerate the adoption of smart building innovation, with businesses using technology as a means to an end to protect their customers, employees and workplaces.