This Research Note highlights our analysis of funding levels raised by smart building established players and startups in 2022 from venture capital firms, private equity and strategic investors. Memoori has seen an 11% decrease in investment values compared to the record level of over $12 billion in 2021.
Investment in the smart buildings space in 2022 amounted to over $10.6 billion spread over 350 funding rounds.
Funding levels remained at the second highest level since 2017, demonstrating the continued attractiveness of investments in the smart buildings space. This is in contrast to the PropTech sector overall, which saw a 38% decrease in venture capital investments in real estate technology companies, according to CRETI, the Center for Real Estate Technology & Innovation.
Funding in Energy Management
One area that has benefited companies in the smart buildings space is the tremendous interest in climate-related real estate technology applied to Building Energy Management, which is the most heavily funded area in 2022, with over $3 billion invested. Innovations to address energy efficiency services, HVAC optimization software in commercial and industrial buildings, the reduction of carbon emissions and the implementation of on-site distributed energy sources have attracted both financial and strategic investors. Notable funding rounds were:
- $200 million investment in Redaptive, a provider of commercial Energy-Efficiency-as-a-Service
- $200 million Series E round for Arcadia, a clean energy platform provider for residential and commercial businesses
- $167.4 million Series C round for Deepki, a provider of an ESG data management and reporting SaaS platform
- $80 million funding for Turntide Technologies, a developer of high-efficiency internet-enabled motors for the decarbonization of buildings
Funding in Physical Security & Life Safety
Physical Security and Life Safety technologies have also attracted investors in 2022, with around $2.9 billion from venture capital, private equity and strategic investors. Notable funding rounds were:
- $1.65 billion strategic investment in ADT by State Farm and Google
- $205 million Series D funding for Verkada, the US provider of enterprise video security systems
- $150 million Series E funding for Flock Safety, the US provider of license plate recognition security for neighbourhoods
- S111 million Series C round for Envoy, the developer of visitor check-in software
Funding in Building Internet of Things
Notable Building Internet of Things funding rounds included;
- 3 funding rounds totalling $64 million for PassiveLogic, the creators of an “autonomous building controls platform” incorporating digital twin software
- $105 million Series C round for R-Zero, a provider of an IoT-enabled whole-room UV disinfection solution
Funding in Proptech, Facilities & Real Estate Management
The Proptech, Facilities & Real Estate Management segment raised over $2.2 billion, highlighted by strategic investments in commercial real estate platforms, workplace management software and occupancy analytics technology. Notable funding rounds in this category were;
- $185 million Series C funding for Mews Systems, a provider of cloud-based property management software for the hospitality sector
- $150 million private equity investment in OfficeSpace Software, a provider of workplace management solutions
- $125 million Series E round for VTS, a commercial real estate platform for asset management and tenant experience software
Funding in Smart Homes
The Smart Home segment attracted over $2 billion in funding, highlighted by notable investments including;
- $105 million Series C round for Sense, the energy intelligence platform and device installed in an electrical panel that interprets the power usage and activity of devices in the home
- $400 million Series D round for Veev, the developer of a proprietary panelized approach to produce fully clad walls, complete with mechanical, electrical and plumbing for technology-enabled housebuilding
While investment in the smart buildings space in 2022 continued at a relatively high level, we do not expect the same in 2023. With a tightening investment landscape and continuing economic slowdown, a decline in funding will be inevitable.