Fifth Wall Leads Sealed’s $16 Million Series B Round
Investment in residential energy efficiency and electrification company marks the Climate Technology fund’s first lead position
Recently, I had to do a minor renovation on my home: install a heat pump. I thought it would be as simple as a Google search. Little did I know, I’d end up combing through twenty or thirty websites, juggling finding reputable contractors with ones who were able to meet the unique needs of my property, or, even just people who would pick up the phone. One of the biggest pain points was not being able to conduct this process digitally. Most contractors’ websites are archaic, and almost everyone I wanted to work with required a phone call (and a subsequent game of phone tag). The project, which was supposed to be a quick-hit, kicked off in February. It’s now June and I’m still waiting on an installation.
My renovation story was a nightmare, but it’s anything but unique. Single-family homes in the United States are incredibly energy inefficient. In fact, roughly 20% of US energy-related greenhouse gas emissions come from heating, cooling, and powering households. If considered a country, these emissions would be the world’s sixth largest emitter, and larger than Germany. Common problems include windows that either leak or don’t close, and because many homes are built from wood, it’s not uncommon for them to be really poorly insulated. Add to that the fact that they typically have decades-old, fossil-fuel burning furnaces, and it’s easy to see why single family homes are such a massive contributor to greenhouse gas emissions. Then there’s the adjacent problem, which is what I went through: not only are many of these houses in dire need of renovation, but the renovation process itself is a labyrinthine and quagmire; super slow, complicated to navigate, and an uphill battle at every step.
That’s why, today, I’m proud to announce that Fifth Wall has invested in Sealed, a home wellness company that’s designed to help make energy efficient renovations seamless, resulting in homes that are more healthy, comfortable, and sustainable. The company is the proverbial Easy Button for home comfort and sustainability. They’re a one-stop-shop to evaluate what upgrades make sense for your house, and then Sealed finds and corrals the various contractors required to perform the work; and you as the home owner don’t pay anything up front. And the cherry on top? Sealed stands behind its work, and only gets paid if its customers actually save energy.
This investment is the first that we are leading out of Fifth Wall’s Climate Technology fund, as part of a $16 million Series B round that also garnered participation from Robert Downey Jr.’s FootPrint Coalition Ventures, as well as returning backers Cyrus Capital and CityRock Ventures. In addition, I’m proud to join Sealed’s Board of Directors.
Streamlining a process traditionally known as a logistical nightmare
If you’ve ever embarked on a home renovation project, you know that it’s pretty standard to work with local Mom-and-Pop contractors. While these contractors might do great work, organizing them can be a logistical nightmare, more akin to herding cats. From the start, these contractors rarely have a digital presence. Their websites are poorly designed, and appointments often need to be made over the phone. Once you do get a hold of them, it may take months to complete your project — perhaps parts need to be ordered, or schedules aren’t lining up. And then there’s the issue of trying to coordinate multiple contractors, whose calendars and workflows may need to complement one another. And then on top of that, because these small contractors don’t have the clout to have strong relationships with banks, you as the customer may have to front them all the money. In a worst case scenario, organizing a home renovation can be a full-time job, and not any easy one at that.
That’s where Sealed comes in. All you have to do is visit its website, and complete a brief quiz to determine whether your home is eligible. Then you’ll get set up with a consultation, during which time Sealed will help you identify weak points in your house and design a solution using machine learning that predicts a home’s energy efficiency with up to 99% accuracy. Its machine learning algorithms combine a number of difficult-to-replicate datasets, including utility data, demographic information, home characteristics, and project improvement details in order to get to that level of never-before-seen accuracy.
From there, Sealed will coordinate any necessary renovations to your home, from getting a heat pump installed, or deploying smart home technology, to installation of better insulations, and properly caulking your windows. They tap into a network of pre-vetted contractors, eliminating the difficult process of researching local installers. This also streamlines business for contractors, who can then focus on what they do best without having to worry about getting acquainted with ever-evolving and costly marketing strategies.
Finally, Sealed offers a unique payment program. While typical installations cost as much as $30,000, Sealed covers all upfront costs for its customers. Instead, after installation, homeowners pay Sealed a monthly fee, based on the actual energy saved as a result of the project. Best of all, Sealed stands behind their work: if your house doesn’t save energy, Sealed doesn’t get paid. So as a homeowner, you can be sure that Sealed is aligned with making the maximal impact for your home’s comfort and the planet
Delivering a sustainable, energy efficient solution for residential real estate owners
As I mentioned earlier, Sealed is the first investment we’ve led out of our Climate Technology fund. It’s a compelling business to us for a few reasons. Most saliently, buildings account for about 40% of all greenhouse gases. There’s a common misconception that the highest number of emissions come from cars, but in reality, transportation (all transportation, including planes, ships, rail, trucks, and cars) is only about 23% of the problem. If we want to get to carbon zero by 2050, we first and foremost need to focus on making our buildings more sustainable.
Sealed is helping to tackle this problem by embarking on a quest to retrofit the US’ existing residential building stock and help them run more efficiently. Globally, there are $270 trillion worth of buildings, and the vast majority of them aren’t energy efficient. Many were built poorly, aren’t well-insulated, and utilize out-of-date appliances. This presents both a massive investment opportunity and a massive decarbonization opportunity.
Sealed also stood out to us because of its incredible leadership. Overall, this is a space with a dearth of consumer-experts. Co-founder and CEO Lauren Salz is laser-focused on the consumerization of this tech, making incredible strides in the ease of the process for Sealed’s customers. And somehow, she’s managed to juggle guiding the company through this phase of growth and a fundraising cycle, all while becoming a new mom. Andy Frank, her co-founder and President, brings over twelve years of energy efficiency experience to bear.
The longer term vision for Sealed is to expand into new markets, like Texas, which recently experienced both significant grid issues during inclement winter weather and a crisis of poorly insulated homes.
Overall, residential home renovation is a space with incredible potential that we’ve never been able to realize, because so far it’s been fragmented and underserviced. As the US residential real estate market continues to sizzle, there is a massive opportunity for those who can develop sustainable solutions for a broken process, all while delivering cost savings to the consumer. We see not only incredible potential in Sealed, but the sector at large.
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