“Destroying rainforest for economic gain is like burning a Renaissance painting to cook a meal.”
― E. O. Wilson
Our mission at Building Ventures is to invest in and support entrepreneurs harnessing technology and innovation to deliver a better built world. Our approach begins by looking at the built environment as a system and, more specifically, a system for living.
When we consider the built environment this way, one thing is immediately clear: The current system we have is lacking in so many ways. This includes affordability, liveability, and, perhaps most urgent today, sustainability. Unfortunately, this makes sense. Our built environment was never designed to be a “sustainable” system of living, and it is rarely operated to be so.
That is why one of our core investment theses is that we need to focus on solutions that move our built environment forward on the path to sustainability.
Our approach to investing in sustainable solutions
As a thesis-driven investment firm we start with the question: What would a sustainable built environment look like? In this case, the answer is rather simple. A sustainable built environment is one that will never exhaust the resources required to create, maintain, or improve it.
As with most things, achieving this is easier said than done. Embedded in the design of our current built environment is something we at Building Ventures refer to as the 40% problem. In short, the processes of constructing, operating, and maintaining our buildings:
- Consume ~40% of the energy produced.
- Produce 40% of GHG emissions.
- Create ~40% of all raw materials.
- Contribute ~40% of all landfill materials.
With a performance track record like this, one reality becomes crystal clear: All paths to creating a sustainable built environment, a sustainable planet, and a sustainable civilization for future generations run directly through transforming how we design, build, and operate the built world by embedding sustainability in every aspect of the system.
We must reduce the built environment’s consumption of finite resources, and we must act quickly.
Why is sustainability in the built environment crucial now?
Sustainability in the built environment is crucial now because, as the recent IPCC report indicates, our world is warming and our current climate solutions aren’t working as quickly as we need them to. For the built environment, this urgency is doubled—we not only need more sustainable buildings, we also need more buildings, period.
Over the next 40 years, the world’s building stock will need to double to over 5 trillion square feet of space to accommodate our growing population and rising demand for warehouse and data center space. This is the equivalent of building a New York City every six weeks. What’s more, two-thirds of the countries where we’ll need the most new construction don’t have mandatory building codes.
And new buildings are only a small fraction of the problem. Here in the United States, half of our commercial buildings are over 40 years old and built to performance standards far less than today’s buildings and energy codes. By 2030, the current building stock will make up 80% of the built environment in developed countries, and only a tiny proportion of buildings—about 1-2%–is currently renovated in any given year.
While the need to create a sustainable built environment is now apparent, the scale and the scope of the problem is huge, and that’s overwhelming. But as venture capitalists, we see such challenges as investment opportunities, and this may be the biggest one of our lifetimes.
The entrepreneurs we work with at Building Ventures have seized this essential opportunity to radically rethink every aspect to the system and apply innovative technology and business models to not only reduce the negative impacts of the built environment on our climate and our society but to also deliver a better experience for us as users and occupants of the built environment. And their timing could not be better, global bodies such as the UN and World Bank, national governments, and even local cities and towns are creating incentives and penalties to encourage our built environment to tread with a smaller footprint. Our friend and Building Ventures Innovator, Ben Myers, who is Boston Properties’ Vice President of Sustainability, has called the 2020s the decisive decade for the built environment where the solutions we deploy now can have a real impact of staving off catastrophic climate consequences.
So with key players across the ecosystem ready to act—regulators providing guiding frameworks, investors deploying innovation capital, AEC and real estate incumbents looking to buy and deploy solutions—there is a tremendous opportunity for entrepreneurs to bring new solutions to the market to deliver the sustainable built environment we wish for and desperately need.
What does a sustainable built environment look like?
A sustainable built environment is, above all, one that doesn’t accelerate the warming of our climate. This is important, but it’s also broad. It’s helpful to again consider the built environment as a system when we’re thinking about solutions and improvements. A sustainable system will never exhaust the resources required to create or maintain it. By taking a systems level approach, we can evaluate all of the inputs and outputs of the system to see what resources we need to consume and how to minimize and optimize our utilization of them in the creation and maintenance of the system.
At Building Ventures, we have a framework for how we believe the built environment’s energy utilization must be transformed: decarbonize, localize, electrify, optimize. We are fortunate to have a number of companies in the portfolio who are accelerating the shift by embracing these critical steps.
If you are going to improve something, you have to start by understanding where you are and how to make it better. This was the founding vision for Measurabl, the world’s leader in ESG performance measurement software for real estate assets. When the company was founded in 2013, most investors couldn’t spell ESG, let alone understand its critical importance to their future operations. But fast forward to today, and Measurabl tracks the sustainability performance of over 12 Billion square feet of commercial real estate in 90 countries. With this data set, Measurabl stands at the forefront of being able to operationalize the decarbonization efforts of the commercial real estate industry.
We know that buildings consume approximately 40% of global energy production and too much of that energy is supplied by finite sources like fuel oil, propane, and natural gas. Dandelion Energy re-imagined the delivery and distribution model of geothermal heat pumps to provide a more affordable, more dependable source of heating and cooling for homeowners. As a result, Dandelion is now the country’s leading provider and more importantly is reducing the carbon emissions of their customers’ homes by 60-80%. (That’s the equivalent of planting 250 acres of trees!)
We are a long way from transitioning our energy production to reliable (and local) decarbonized sources, and that means the fastest path to net zero is through more efficient (read: reduced) utilization of energy to lower GHG footprint of our built environment. 75F uses inexpensive and ubiquitous IOT sensors to understand a building’s environment conditions and then applies its machine learning and artificial intelligence control systems overlay to balance and optimize the interior comfort, indoor air quality, and energy efficiency. In practice, this means that when the CDC recommends more outside air to deal with pandemic conditions (and in so doing increases everyone’s energy use and bills), 75F customers can deliver the exact same objectives with decreased energy consumption and costs.
And while optimizing the performance of existing HVAC systems is critical, in commercial settings we are refreshing a building’s volume of air 12 – 20 times a day. No wonder heating and cooling account for 35% of a buildings energy consumption as all that outside air needs to be heated or cooled, humidified or dehumidified, and then filtered. What if we could clean and recycle the air with no loss of air quality instead? enVerid’s products can remove CO2 and 15 other pollutants from a building’s environment, reducing the need for outside air by 2-3x. According to ASHRAE, the leading HVAC engineering consortium, they are the only product that can. Talk about space age technology (in fact a similar system is used on the International Space Station).
With technologies like those from 75F and enVerid, building operators can optimize performance while dramatically reducing the cost to condition indoor air. However, even the most efficiently run system is wasting enormous energy if the distribution system for that air isn’t sealed properly. It turns out that 20-30% of all that expensively conditioned air is lost in transmission through leaky ducts. Aeroseal’s non-toxic polymer can eliminate virtually all leaks optimizing equipment performance and improving indoor air quality while reducing energy waste.
These are just a few examples from our portfolio that demonstrate the opportunity to improve the sustainability of our existing built environment. But with the need to double the world’s physical footprint we need to design in sustainability from the beginning.
Designing for sustainability
In the US, the primary interior wall material used is gypsum wallboard, commonly referred to as sheetrock. The US has been producing more and more drywall each year, and in 2020 produced about 22 million tons. Tragically, the US also produces about 14 million tons of wallboard waste each year—that’s more than half of the materials produced and that isn’t even the worst of it. The most upsetting, for us, is that throwing away a double-digit percentage of wallboard is considered standard industry practice.
This doesn’t have to be the case if we design sustainability into the built environment.
Thanks to advanced modeling and 3D design, the interior dimensions of new walls are well understood before construction begins. Hypar, a computation design platform, is being used by leading general contractors to understand and optimize wallboard layout to dramatically reduce and eventually eliminate this unnecessary waste—and this completely avoidable strain on our environment.
And what if you didn’t need to use gypsum wallboard at all? Canoa is the first end-to-end platform for designing, procuring and managing low-carbon, reconfigurable interiors. By using modular, recyclable, reusable components, Canoa’s software and marketplace can outfit a beautiful workplace interior that “floats” inside the building shell for maximum re-usability and minimal carbon footprint. Their tagline issues a compelling command: “build less.” What it doesn’t say, but is immediately obvious, if you visit a customer site, is that you can do this without sacrificing any quality.
Another one of the tragically accepted heuristics in construction is the prevalence, and expectation of, rework—essentially, doing it over. Often, this is simply a function of poorly coordinated or misunderstood decisions made earlier in the construction process. Nonetheless, it costs the construction industry as much as $1 trillion of unnecessary work each year and a countless amount of waste as a result. As some 60% of construction costs are materials, it’s a safe bet that over $500 million in materials is wasted each year because of these errors. Join is a decisioning software platform used to coordinate and catalog all the decisioning activities of owners, architects, engineers, general contractors, subcontractors and manufacturers on a project from design through handover. This collaboration and coordination not only helps to avoid costly errors, but it allows us to build more sustainably.
Sustainability and our built environment in the future
The track record to date in the building and operating of our built environment has been abysmal, and the poor performance is clearly reflected in the 40% problem. But now, players all across the lifecycle of the built environment are demanding change and thousands of entrepreneurs are meeting the challenge by re-imagining how we can do better.
We are confident that a sustainable built environment is not only possible but being developed, and re-developed, before our eyes. We are privileged to do our part and work with some incredible founders whose missions are aligned with ours in delivering a better built world each day. If you are working on enabling this protopian future (or know someone who is), please reach out and share with us. After all, we live in this system together—we might as well make it one that lasts.