Building a Green 21st Century: Tracking Venture Investments in Green Buildings to Uncover New Opportunities

Venture capitalists have pumped in more than $4 billion in the race to build greener buildings.  As the first wave of investments reach exits, they are now looking at new innovative technologies to further develop this space, according to Lux Research.

Of the 332 venture investment rounds in technology and materials developers for green buildings since 2000, 152 were series A investments and 83 were series B. Last year, however, nearly 50 per cent of the funding, totaling $445 million, were 15 late-stage investments, signaling the maturation of the first wave of green buildings start-ups. Meanwhile, new opportunities are emerging in integrated design, on-site generation, energy services, the advanced building envelope, and low-carbon cement and concrete.

To understand investment activity in the green buildings space, Lux Research analysts tracked 332 venture transactions amounting to $4.06 billion in 160 companies since 2000. Among their findings:

  • Integrated design is the future. Driven by the European Union’s aggressive energy efficiency targets, as well as similar long-term targets in the U.S. and elsewhere, “integrated design” will become critical. Innovative startups in this area – including Project Frog and Blu Homes – have received $84 million in VC funding since 2008.
  • On-site generation is a growth area. On-site generation materials and systems have become a hotbed for investment, raking in a combined $983 million. Technologies such as micro-combined heat and power (micro-CHP) generators from the likes of Baxi or WhisperGen can help meet the global push for Net Zero Energy Buildings.
  • M&A will surge. Since 2010, 11 of the 16 VC-backed companies that have exited have been acquired. In the first half of 2012, there have been four acquisitions. Other mature startups that are ripe acquisition targets include Digital Lumens, Redwood Systems, Adura Technologies, Metrolight, EnOcean, Serious Energy, Control4 and Aspen Aerogels.

The report, titled “Building a Green 21st Century: Tracking Venture Investments in Green Buildings to Uncover New Opportunities,” is part of the Lux Research Sustainable Building Materials and the Lux Research Efficient Building Systems Intelligence services.

About Lux Research

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