BuildTech…oh no, another one of my technology acronyms. Well, yes, I am attending the Canada Green Building Conference in beautiful Vancouver BC. The building I am writing this from Vancouver Convention Centre, was the first convention centre in the world to earn a LEED platinum rating, among its features there is a six acre “living roof” houses thousands of indigenous species and recovers rainwater for irrigation and brown water treatment and even a fish habitat built into its foundations.
The so-called Green Building revolution is being pushed along by the recognition that the built environment plays a huge role in our carbon foot print and energy use and as the world increasingly urbanizes the impact is magnified. Secondly, the building environment is a highly regulated sector (think building codes, planning permissions and the like) so, it is an area that governments (through regulations) can force outcomes.
Is “Green Building” a form of CleanTech? In one way, yes; but, in other I would argue it’s a more holistic approach to a product design to achieve certain outcomes. Some green building ideas, are decidedly low tech such as orientation of buildings to minimize solar gain. The Masdar City project in Abu Dhabi is a great of example of how some very old fashioned Arab city design (narrow streets for solar shading, orientation to create natural breezes, etc.) are being integrated with the high technology to create a vision of the cities of the future.
[Full disclosure: We at the White Lake Group have been involved with the broader MASDAR initiative for many years and were instrumental in the Masdar Clean Tech Fund]
However, technology does play a part in both new buildings going up and the retrofit of existing structures. So the question of adoption arises - one that we often talk about with technology companies. In this case, how do you drive new technology adoption into the construction and facilities management business which is fairly conservative, notoriously risk averse and that where the end clients are usually highly cost sensitive?
One of the companies I met here, Radiance Energy has an interesting approach. They design whole building intelligent LED lighting solutions. What is novel in that, one might ask? LED lighting has been around for awhile and could now even be considered a mature technology. I think there are three things that are interesting in their business approach.
Firstly, the Radiance’s IP is tied up with the whole systems integration – they rely largely on parts that others parties have spent significant sums developing. Secondly, while some of the LEDs, motion sensors and are other lighting component, are mature off the shelf components, they do incorporate numerous leading edge and even bleeding edge components into their solutions (but the end user doesn’t even know). Lastly and most importantly, they sell a total solution to the customer (facilities management and construction mangers) that is solely built around 1) a lighting solution and 2) ROI – in a language the customer already speaks. They are not trying to talk to the end user customer in terms of “please try a new technology.”
Depending upon the installation, payback period can be as short as 4 months and for longer term paybacks the company can put together financing solution that involves no capital outlay but immediate cost savings. This company struggled to get traction in the market and have found that changing the whole nature of the conversation with their customers has completely changed the velocity of their business.
By Ashok Parekh, Director of Investment Services