BlocPower, a Brooklyn-based climate tech startup that is rapidly greening American inner cities, today announced a $63 million Series A round ($55 million debt, $8 million equity). The round was led by American Family Insurance Institute for Corporate and Social Impact, AccelR8 and The Goldman Sachs Urban Investment Group, with participation from Kapor Capital, Elemental Excelerator, CityRock Venture Partners, The Schmidt Family Foundation and Salesforce Ventures. To date, the company has raised $68 million from early anchor investors, including Kapor Capital, Andreessen Horowitz, MaC Venture Capital, Exelon, New York Ventures of the Empire State Development Corporation, Echoing Green, and The Schmidt Family Foundation. The funding will enable BlocPower to expand and scale its inner-city energy retrofit projects across the U.S., create green jobs, improve quality of life for urban residents and save the planet.
Founded in 2014 by CEO Donnel Baird, BlocPower was inspired by his experience working alongside the Obama administration on an American Recovery and Reinvestment Act project. The goal was to hire and train unemployed union workers to "green" buildings around the country but, at the time, the costs of retrofits overwhelmed savings from the shift to clean energy.
BlocPower has overcome these challenges by leveraging advanced technologies, innovative electrification equipment and structured finance to provide green heating and cooling to America's aging urban buildings. As a Public Benefit Corporation, BlocPower partners with utilities, government agencies, and building owners to identify unhealthy, energy-wasting buildings to retrofit. BlocPower's machine learning platform determines which retrofits will produce the most energy savings at scale and uses the cloud and IoT to gather data and remotely monitor energy consumption.
"By combining emerging technologies, our software platform and our new innovative green financing solution, we can now provide sustainability upgrades to millions of buildings in underserved communities," Baird says. "BlocPower is creating new green jobs by turning buildings into Teslas, making them smarter, healthier, and more profitable by getting them off of fossil fuels."
To fund these projects, BlocPower created an innovative financing solution that enables small and medium sized building owners to bring much needed energy efficiency improvements to their properties with no out-of-pocket cost. Backed by up to $50 million from The Goldman Sachs Urban Investment Group and $5 million from Inclusive Prosperity Capital, this structured financial product covers the installation and maintenance of air source heat pumps, a proven high-efficiency technology that uses electricity to cleanly provide both heating and cooling, and which is more cost effective than even natural gas systems. By installing modern, efficient, all electric heating and cooling equipment, BlocPower improves indoor air quality and reduces or eliminates fossil fuel use, saving building owners 20 to 70 percent on energy costs.
So far, BlocPower has completed retrofits in more than 1,000 buildings in New York City and has projects underway in 24 cities, including Philadelphia, Milwaukee, and Oakland. The company will soon offer Environmental Justice Impact Green Bonds to other institutional investors to help finance BlocPower's future green retrofit projects.
"Given the state of economic inequality in the U.S., we're committed to advancing BlocPower's business as a social necessity and a proof point that impact investing isn't sacrificial," said Mitch Kapor, partner at Kapor Capital. "Greening America's inner-city buildings is a critical part of protecting our planet and ensuring a brighter, healthier, more equitable future for everyone. BlocPower is showing the world how it can be done, but more importantly, why it must be done."
Louis Kang, Managing Director of AccelR8, adds, "BlocPower's success will demonstrate equitable climate change mitigation can be achieved in a financially sustainable and thoughtful manner."
The market opportunity is considerable. America's aging buildings produce more greenhouse gases (GHGs) than the entire U.S. transportation sector. On average, 30 percent of the energy used in commercial buildings is wasted at a cost of $100 billion a year. By transforming antiquated buildings into greener, smarter, healthier facilities, BlocPower has reduced building energy costs by 30 to 50 percent and reduced GHGs by 40 to 70 percent in current projects. The company believes that it can reduce U.S. GHGs by 3 to 25 percent in 5 to 10 years and recapture up to 30 percent of the wasted energy spend.
"BlocPower is proving that it is possible to have commercial solutions that improve public health in underserved communities, create quality jobs, and lower carbon emissions," says Margaret Anadu, Managing Director and Head of the Goldman Sachs Urban Investment Group. "We are so proud to have supported Donnel and his team through the Launch With GS entrepreneur cohort and now through both equity and debt capital to further expand their reach."
"One of the key questions we wrestle with is how do we help create generational wealth for underrepresented and undercapitalized people and communities in America? Climate change has the potential to devastate at-risk communities. We envision the potential to transition to clean energy as an opportunity to invest in those same communities and their people. With the investment the AmFam Institute has made in BlocPower, we believe Donnel Baird and his team can turn that vision into reality," said John McIntyre, Managing Director of the American Family Insurance Institute for Corporate and Social Impact (AmFam Institute).
BlocPower is a Brooklyn-based climate technology startup that is making American cities greener, smarter and healthier. Since its founding in 2014, the company has retrofitted more than 1,000 buildings in disadvantaged communities in New York City, with projects underway in 24 cities. BlocPower uses proprietary software for analysis, leasing, project management, and monitoring of clean energy projects that save customers between 20-70 percent on annual energy costs. The company has raised $68 million from the world's top investors including American Family Insurance Institute for Corporate and Social Impact, AccelR8, The Goldman Sachs Urban Investment Group, Kapor Capital, Elemental Excelerator, CityRock Venture Partners, Hatzimemos/Libby, The Schmidt Family Foundation, Salesforce Ventures, Andreessen Horowitz, MaC Venture Capital, Exelon, the New York Ventures of the Empire State Development Corporation and Echoing Green.