Intelligent Buildings and the Enterprise

A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY

INTELLIGENT BUILDINGS &

ENTERPRISE

JANUARY 2014

ABOUT THE AUTHOR

NAVITAS CAPITAL IS A VENTURE CAPITAL FIRM AT THE INTERSECTION OF THE IT AND ENERGY SECTORS WITH A UNIQUE FOCUS ON THE INTELLIGENT BUILDINGS & ENTERPRISE SPACE. OUR MISSION IS TO IDENTIFY, INVEST IN, AND HELP BUILD THE NEXT GENERATION OF DEFINING COMPANIES IN OUR SPACE.

WE WOULD LIKE TO THANK THE INCREDIBLE FOUNDERS AND LEADERS FROM OUR PORTFOLIO COMPANIES FOR GIVING US THEIR FEEDBACK ON THIS REPORT AND HELPING US PULL THE CASE STUDIES TOGETHER. SPECIAL THANKS GOES OUT TO ADAM STEIN AND TOM ARNOLD FROM GRIDIUM, RAO MULPURI AND ERIC KLAWUHN FROM VIEW, RYAN SUTTON-GEE AND TRACY YOUNG FROM PLANGRID, MATT FREY AND MARTY HESS FROM OPTIMUM ENERGY AND SIMON LEBLOND FROM SCL ELEMENTS.

THANK YOU.

AUTHORS:

Jim Pettit

Navitas Capital

Travis Putnam

Navitas Capital

William Busch

Navitas Capital

NORTHERN CALIFORNIA

1751 Harbor Bay Parkway, Suite 200

Alameda, CA 94502

SOUTHERN CALIFORNIA

11990 San Vicente Blvd., Suite 350

Los Angeles, CA 90049

www.navitascap.com

© 2014 NAVITAS CAPITAL. ALL RIGHTS RESERVED.

http://www.navitascap.com/

1

CONTENTS

INTRODUCTION _________________________________________________________ 2

NAVITAS INVESTMENT THESIS ______________________________________________ 4

MARKET & GROWTH DRIVERS _______________________________________________ 5

TECHNOLOGY ENABLERS __________________________________________________ 9

CHALLENGES TO DRIVING INVESTMENT RETURNS ________________________________ 13

CONCLUSION __________________________________________________________ 18

APPENDIX A: CASE STUDIES ________________________________________________ 19

GRIDIUM ___________________________________________________________ 19

VIEW ____________________________________________________________ 22

PLANGRID _________________________________________________________ 25

OPTIMUM ENERGY ___________________________________________________ 28

SCL ELEMENTS ______________________________________________________ 31

APPENDIX B: 50 INTELLIGENT BUILDINGS & ENTERPRISE STARTUPS TO WATCH ___________ 34

INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY

2

INTRODUCTION

http://www.ibm.com/smarterplanet/us/en/green_buildings/nextsteps/index.html

http://www.cisco.com/web/about/citizenship/environment/buildings_and_workspaces.html

http://www.accenture.com/us-en/Pages/service-smart-solutions-overview.aspx


3

http://www.idc.com/getdoc.jsp?containerId=EI240573


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NAVITAS INVESTMENT THESIS


5

MARKET & GROWTH DRIVERS

SIZE & IMPACT

o

o

o

o

o

o

o

o

o

o

INTELLIGENT BUILDINGS & ENTERPRISE GROWTH DRIVERS


6

PROVEN TECHNOLOGIES & AFFORDABLE COST POINTS

IT DRIVING REAL-TIME UNDERSTANDING OF BUILDINGS

BUILDING ENERGY CODES


7

GREEN BUILDING MOVEMENT

ENERGY VOLATILITY & RELIABILITY

ENERGY EFFICIENCY FINANCING SOLUTIONS


8

CORPORATE SUSTAINABILITY INITIATIVES

UTILITY DEMAND SIDE MANAGEMENT PROGRAMS

INCREASED EDUCATION & ENERGY EFFICIENCY AWARENESS


9

TECHNOLOGY ENABLERS

o CLOUD AND BIG DATA

o INTERNET OF THINGS

o MOBILE

o SOCIAL BUSINESS

o 3D MODELING/IMAGING

CLOUD AND BIG DATA


10

INTERNET OF THINGS

MOBILE

SOCIAL BUSINESS

http://www.businesswire.com/news/home/20120627005360/en/Worldwide-Enterprise-Social-Software-Forecast-Grow-4.5

http://www.businesswire.com/news/home/20120627005360/en/Worldwide-Enterprise-Social-Software-Forecast-Grow-4.5


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3D MODELING/IMAGING

“Beyond BIM as we know it today, we believe there will be a new generation of exciting 3D imaging and analytical modeling technologies that will make a big difference in the facility’s long-term health and management.”


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THE “SMART BUILDING”


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CHALLENGES TO DRIVING INVESTMENT RETURNS

SCALABILITY

COMPETING VS. PARTNERING WITH LARGE CORPORATE PLAYERS


14

REAL BUSINESS METRICS VS. “VANITY METRICS”

CAPITAL INTENSITY OF FINANCING REQUIREMENTS

GETTING THE BUSINESS MODEL RIGHT

WHAT WE LOOK FOR & KEYS TO SUCCESS


15

TABLE 1

WORLD-CLASS TEAMS

SCALABLE GO-TO-MARKET STRATEGY

OPTIMUM ENERGY: ROI & PAYBACK CASE STUDY

OPTIMUM ENERGY CUSTOMER – NEW YORK

PREDICTED ANNUAL SAVINGS:

ACTUAL 1ST YEAR SAVINGS:

> 1,662,000 KWH PER YEAR

> 1,725,000 KWH PER YEAR

> $174,500/YR. > $180,820/YR.

> 15.4% SAVINGS > 17% SAVINGS

> $506K COST > $506K COST WITH A $100K REBATE

> 2.9 YEAR PAYBACK + 34% IRR

> 2.8 YEAR PAYBACK + 35% IRR


16

“CAPITAL LIGHT” APPROACH

FLEXIBLE BUSINESS MODELS

INTELLIGENT IP STRATEGY

HIGH GROSS MARGINS

“Generally speaking (there are always exceptions to the rule), we believe funding startups with limited amounts of capital to demonstrate product-market fit and a compelling growth story is a better venture capital investment strategy, particularly for Navitas Capital, which is not conflicted by large VC politics (e.g. the propensity to over-capitalize a startup in an attempt to “move the return needle” of an investment bet in a big fund.)”


17

TABLE 2


18

CONCLUSION


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APPENDIX A: CASE STUDIES

GRIDIUM, INC.

BUSINESS OVERVIEW

BUSINESS OPPORTUNITY

THEME(S)

BUSINESS MODEL

PRODUCT(S)

GO-TO-MARKET STRATEGY

CUSTOMER TRACTION

CAPITAL RAISED


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PRODUCTS & SOLUTIONS

CUSTOMER VALUE PROPOSITION

KEYS TO SUCCESS

CAPITAL EFFICIENCY

HIGH GROSS MARGINS

CHANNEL PARTNERSHIPS


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CONCLUSIONS

STRONG FOUNDING

TEAM

O

O

O


22

VIEW, INC.

BUSINESS OVERVIEW


THEME(S)

BUSINESS MODEL

PRODUCT(S)


CUSTOMER TRACTION

CAPITAL RAISED


23



o

o

o

o


24

KEYS TO SUCCESS

CONCLUSIONS

GO-TO-MARKET

STRATEGY

IP STRATEGY

WORLD-CLASS TEAM

O

O


25

PLANGRID

BUSINESS OVERVIEW

tools

.


THEME(S)

BUSINESS MODEL

PRODUCT(S)


CUSTOMER TRACTION

CAPITAL RAISED


26



o

o

o

o

KEYS TO SUCCESS

CAPITAL EFFICIENCY

HIGH GROSS MARGINS

STRONG FOUNDING TEAM



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CONCLUSIONS

O

PlanGrid was able to deliver its first product into its customer’s hands on a very thin budget, thus establishing

“product-market-fit” without burning through large amounts of capital. Capital efficiency creates a healthy scenario

for founders and early investors.

O

From a platform standpoint PlanGrid has clearly benefitted initially from the “halo” effect of Apple and its iPad

product, creating a very trusted and highly innovative platform in the construction sector, from which to launch its

workflow management solutions. While early, PlanGrid has had strong success in selling directly to tier-1 general

contractors to gain a critical mass of market acceptance and credibility by all relevant constituents. Clearly, the

scalable, “viral” opportunity is to build a standardized field platform that is trusted in the construction space,

broadly accepted by general contractors, subcontractors, engineers, architects and owners.

O

PlanGrid’s co-founding team is well balanced (industry domain expertise, and technically strong) and thrives

working in an extremely fast-paced environment. This has proven to be a powerful recipe as the team has been

able to deliver product to customers early in the development cycle, get feedback, and continuously update the

software with new features. In addition to the founding team, PlanGrid benefitted from the technical, business, and

investor networks of its early investors and advisors, including the Y Combinator incubation program.


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OPTIMUM ENERGY, LLC

BUSINESS OVERVIEW



THEME(S)

BUSINESS MODEL

PRODUCT(S)


CUSTOMER TRACTION

CAPITAL RAISED


29


o

o

o

o

KEYS TO SUCCESS


BUSINESS MODEL

IP STRATEGY

WORLD-CLASS TEAM

http://optimumenergyco.com/solutions/solutions/software-solutions/optimumloop/

http://optimumenergyco.com/solutions/solutions/software-solutions/optimumtrav/


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CONCLUSIONS

O

O


31

SCL ELEMENTS INC.

BUSINESS OVERVIEW


THEME(S)

BUSINESS MODEL

PRODUCT(S)


CUSTOMER TRACTION

CAPITAL RAISED

EXIT

http://www.eia.gov/emeu/cbecs/


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o

o

o

o

o

o

KEYS TO SUCCESS

“CAPITAL LIGHT” APPROACH


STRONG IP STRATEGY


33

CONCLUSIONS

STRONG TEAM

O

O

O


34

APPENDIX B: 50 INTELLIGENT BUILDINGS & ENTERPRISE STARTUPS TO WATCH


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36


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http://www.redbooks.ibm.com/redpapers/pdfs/redp4735.pdf

http://www.cisco.com/en/US/prod/collateral/ps6712/ps10447/ps10454/brochure_c02-424448.pdf

http://www.accenture.com/us-en/Pages/service-smart-solutions-overview.aspx

http://www.forbes.com/sites/ciocentral/2011/11/23/the-industrial-internet-like-facebook-for-things/

http://www.cisco.com/web/about/ac79/docs/innov/IoE_Economy_FAQ.pdf

http://www.rockefellerfoundation.org/uploads/files/791d15ac-90e1-4998-8932-5379bcd654c9-building.pdf

http://www.rockefellerfoundation.org/uploads/files/791d15ac-90e1-4998-8932-5379bcd654c9-building.pdf

http://www.navigantresearch.com/research/global-building-stock-database

http://www.idc.com/getdoc.jsp?containerId=EI240573

http://www.johnsoncontrols.com/content/dam/WWW/jci/be/global_workplace_solutions/workplace_now_e-zine/June%202013/061213_IBE_Energy_Efficiency_Indicator_Survey.pdf

http://www.johnsoncontrols.com/content/dam/WWW/jci/be/global_workplace_solutions/workplace_now_e-zine/June%202013/061213_IBE_Energy_Efficiency_Indicator_Survey.pdf

http://www.joneslanglasalle.com/MediaResources/AM/Email/Chicago/Corporate%20Solutions%20Marketing/EIUJLLSmartBldgsFINALhires.pdf

http://www.joneslanglasalle.com/MediaResources/AM/Email/Chicago/Corporate%20Solutions%20Marketing/EIUJLLSmartBldgsFINALhires.pdf


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Intelligent Buildings and the Enterprise

Business

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