This article was written by Daphne Tomlinson, Senior Research Associate at Memoori

Predictions of a pandemic-triggered slowdown in funding for the smart buildings space have proved to be unfounded. Q3-2020 has seen a 32% increase in the number of funding rounds and a 69% increase in dollar values, compared to Q3-2019.

Memoori’s definition of investments in the smart buildings space includes venture capital funding, private equity and strategic investments in technologies for commercial and industrial real estate, smart homes and building-related solutions for smart cities. Funding for both established players and startups is included.

We have identified 99 funding rounds in Q3-2020, up 2% on deal count for Q2-2020. Investment $ values amounted to $3.58 billion for the quarter; this is an exceptionally high total due to one debt financing round of €1.85 Billion.

Investment in startups has accelerated around the world in a number of key areas which address pandemic-focused building technologies. Solutions such as contactless access control and visitor management, indoor air quality sensors, social distancing compliance measures, indoor location-based systems, occupancy analytics platforms and other use cases to enable the safe reopening of buildings are driving the digital transformation of commercial real estate out of necessity.

Attractive Investment Areas in the Q3 Smart Buildings Space

ista Group, based in Essen, Germany, is a global provider of energy measuring solutions for apartment buildings and commercial properties by metering, visualizing, billing and managing individual energy and water consumption. The group recorded sales of €909 million in 2019. Their core product, data-based heat cost allocation, helps residents of multi-family buildings to save an average 20% on their annual heat consumption and costs. In August 2020, the energy service provider linked its financing structure to the company's sustainability successes. The new ESG-linked syndicated loan of up to €1.85 billion was signed with an international consortium of banks. The rationale was to further strengthen the company’s strategic orientation as a sustainable service and technology partner to the real estate industry.

People-counting company, Density, based in San Francisco, CA, USA in 2014, announced a $51 million Series C round led by Kleiner Perkins. Organizations use the Density platform to improve efficiency and enhance occupant experience in buildings, workplaces and real estate. The coronavirus pandemic and the need for awareness of the number of people in each room has vastly accelerated the demand for Density’s products, according to a recent Forbes article.

Singapore-based uHoo, provider of an indoor air quality device, has seen an almost fivefold increase in units deployed in the last twelve months driven by strong “healthy home” and “healthy building” demand by governments, schools, hospitals, hotels, malls, kitchens and offices in North America, Europe and Asia.

US-based Hygienica secured $1M in seed funding led by Impala Ventures, fueling the startup’s ability to meet market demand for its Electro-Hygiene disinfecting system. Dozens of facility management groups, real estate groups, universities, hotels, casinos and distribution platforms have purchased large volumes of Hygienica HX Pro sprayers since March.

Shenzhen-based robotics R&D startup Pudu Technology announced a $15 million round. The company claims over 2,000 hotel, restaurant, and hospital customers — including Sheraton and JD.com — across 20 countries. PuduTech, founded in 2016, has rolled out two robots called PuduBot and BellaBot, which all work in restaurants delivering food to diners, in addition to HolaBot, a dish-returning robot. The firm has also developed a series of robots to distribute food, drinks, and even cosmetics inside office buildings, hotels, and airport duty-free shops.The pandemic has accelerated the demand for robotic solutions, as they are inherently contactless. Because customers and delivery workers are exposed to disinfected robots rather than each other, robots promise to limit the spread of infection while addressing gaps in on-demand delivery capacity.

Quuppa, a global provider of Real-Time Locating Systems (RTLS) with headquarters in Espoo, Finland, completed its first ever round of funding, worth €20 million from the private equity fund Bocap and Tech Consulting Group TCG Oy. Since its establishment in 2012, Quuppa has enjoyed a healthy run of growth and cashflow, reaching a revenue of €10 million.

The COVID-19 pandemic has increased the demand for location-based technologies in healthcare and more broadly as companies across industries are trying to find ways of safely reopening factories, construction sites, sports stadiums and offices. Quuppa is helping to combat the spread of viruses through its applications for social distancing, contact tracing and process monitoring.

ButterflyMX, a New York-based creator of the smart intercom, a secure and convenient smartphone-based technology for residents and tenants to access their buildings, closed a $35M growth equity funding round to meet surging demand for contactless entry in multi-tenanted buildings. The round, led by Volition Capital, will enable ButterflyMX to develop additional products and tap new verticals, including commercial real estate.

While COVID-19 and the economic downturn is undoubtedly having a negative impact on many firms, funding for digital solutions in the smart buildings space is accelerating, as demand increases for technologies to mitigate the spread of coronavirus throughout commercial real estate.