This article was written by Daphne Tomlinson, Senior Research Associate at Memoori.
Startups in the building automation space are being cultivated by commercial building stakeholders to bring agility and speed to their innovation initiatives. In addition to in-house venture capital funding of startups, the major players in the commercial building space are setting up or engaging with 3rd party incubators and accelerators to advance their respective positions in the digital transformation of the commercial real estate sector.
The main stakeholders in the commercial building space include building technology vendors, energy service companies and real estate service firms looking to complement their expertise in software and solution development with innovative solutions developed by startups, as digital transformation of the built environment takes hold. The energy firms, are also looking beyond the present horizon of their core business at future business models which startups are promulgating as early adopters.
For new entrants, the opportunity to develop ideas, run trials, and pilot proof-of-concepts with an established player and its customers is attractive. While not necessarily wishing to be acquired, startups can gain insight via accelerator programs into their chosen market, which may result in open-ended partnerships or strategic alliances. Accelerators can also play a role in boosting a startup’s chances of success, according to a recent Forbes article, which analyses the number of successful exits the top 10 accelerators have achieved.
While there are numerous accelerator programs in place across the globe, we have identified some recent examples of smart building focused accelerators backed by major commercial building stakeholders:
In July 2019, JLL, Swire Properties and Ping An Urban Tech jointly announced the official launch of the Chinese mainland’s first corporate accelerator programme that focuses on property technology. Run by the Ping An Cloud accelerator team, UrbanLab will select six to 12 mature proptech startups for the three-month program. Participants will have an opportunity to test and refine their products in a real-world environment, namely at Swire Properties' two large-scale developments in Shanghai - HKRI Taikoo Hui and Taikoo Li Qiantanas as well as at JLL and Ping An Urban Tech's projects in Shanghai. The program's targeted technology areas are automation, analytics, smart buildings, AI, facilities management, construction, tenant experience, customer engagement and sustainability.
In September 2019, Honeywell Building Technologies in Australia announced a partnership with YBF Ventures to establish an innovation hub in Sydney for startups working in the property space. Two innovation cycles will take place per year with four property-focused startups. The hub is seeking companies in areas including Building Automation, Predictive Analytics / AI, Internet of Things, Lifecycle & Asset Management and Space Utilisation.
In Europe, the energy sector is leading the way in developing in-house accelerators as part of their increased focus on digitization, decentralization and decarbonization of energy. For example, E.ON and Innogy have both established in-house accelerators, which include building automation startups as participants.
Innogy Innovation Hub is aggressively pursuing a hybrid approach combining traditional corporate venture capital with accelerator and angel investing. The hub is focused on startups with four key themes: machine economy, digital disruption, cybersecurity and smart buildings. By the end of December last year, it had grown its portfolio to €162m ($183m) by investing in 90 startups, including 61 in 2018. Recent smart building investments include ShieldIoT (Israel); GreenCom Networks (Germany); Calipsa (UK); Oriient (Israel) and SkenarioLabs (Finland).
In August 2019, Skanska, a developer and general contractor for office building investments announced a partnership with Innogy Innovation Hub. Skanska will work with startups in Innogy’s portfolio, and carry out proof of concept projects in Skanska buildings in Poland, Czech Republic, Romania and Hungary. The partnership will focus on several key areas eg, increasing the efficiency of space use, optimizing building productivity and safety, and enhancing the wellbeing of building users.
In North America, Metaprop NYC have recently announced its fifth accelerator cohort at New York’s Columbia University and seventh overall. With an impressive network of partners and sponsors in the commercial real estate sector including Cushman & Wakefield, the accelerator offers each of the seven companies in the cohort a minimum investment of $50,000, scaling up to $250,000. Switch Automation is one of the selected companies in 2019, offering a smart building platform which integrates with traditional building systems as well as Internet of Things technologies to analyse, automate and control assets in real-time such as lighting and HVAC systems.
The Colliers Proptech Accelerator 2018 program run by TechStars in Toronto, Canada included three startups focused on smart buildings.
- Basking Automation (Berlin, Germany) – an IoT-based building automation platform for coworking and flexible office space market.
- Lane (Toronto, Canada) – a tenant platform to increase community, connectivity and
engagement in office buildings.
- Raybased (Goteborg, Sweden) – a smart building control platform that uses wireless technology to help commercial building owners enable predictive maintenance of key building systems
Colliers International subsequently announced in March 2019 that it was partnering with Basking Automation to provide occupiers in EMEA and North America access to real-time occupancy analytics technology. Working with Basking through the accelerator program, Colliers had the opportunity to test and customize Basking’s offering by combining a new AI-based occupancy analytics capability with Colliers’ market knowledge and global real estate platform.
While startups continue to generate value for corporate organizations, investments in the startup ecosystem in the commercial buildings space, whether through venture capital, partnerships or corporate accelerator programs, are not likely to diminish in the foreseeable future.