How Proptech is Creating Smart Cities
Following our last article on the several areas that we are looking to invest in for our next accelerator cohort at Pi Labs, we decided that we would dive a bit deeper into some of the themes that we consider to be fundamental to reshape not only the real estate industry but also, the way we experience daily life. Smart Houses or Smart Buildings used to be defined by a fairly early version of domotics (home automation) which involved mostly automated blinders or central heating. Nowadays we have evolved from these very local applications to providing digital life to entire cities.
There are no Smart Cities without Smarter Buildings
The concept of Smart Cities has been around for a while and talking about Smart Cities will always beg the question ‘how to make properties smarter?’ Considering that people spend on average 80% of their time inside buildings (at home, at the office, schools, airports, among others), it makes sense to try to make them more efficient, sustainable, comfortable and safer than they have ever been. Demand Logic, a building management software, is one company trying to do just that, not only by addressing building financial issues such as cost reduction via maintenance, insurance risk mitigation, fault and defects identification and overall opex cost reduction, they are also focusing on improving staff’s health and well-being. They do so within 24–48h of connecting their software to any building’s BMS (Building Management System), enabling a simplified process.
Smart Cities and IoT — the perfect match
One cannot think about Smart Cities without directly making a connection to IoT (Internet of Things) and this will be a link that will only grow stronger. In fact, 2019 is set to be the first year where there will be more IoT devices than human beings (this is particularly impressive when you consider that this doesn’t include mobile phones). While predictions do vary, we are likely to see at least 5 to 10 IoT devices per person in 2025, meaning that the data deluge collected by these tiny sensors will increase dramatically.
What is even more astounding is that even though the number of devices will almost triple over the next three years, the actual revenue that can be extracted from IoT will grow almost by a factor of 10 from $151 billion in 2018 to $1.6 trillion in 2025 — this represents a CAGR of almost 40%. What the numbers are in fact saying is that the revenue extracted from big data will grow at a much faster pace than the actual number of devices, mostly because, at the moment, most of the times we are unsure of what to do with the collected data and we can’t monetize it as well as we potentially could. This means that over the next few years new analytics and insights apps will need to be developed to give us the means to do so.
How is this related to Smart Cities? The concept of being ‘smart’ in this case applies to how buildings and cities, in general, can use all this data to make our lives more efficient and more comfortable. Examples of this include Google’s Nest (acquired in 2014), a smart home management system including a smart thermostat, smoke detector, alarm system and cameras, that learns from your behaviour with the initial goal of not only saving on your daily energy consumption but also to make your home connected — for example, it turns heating automatically off when you usually go to work. One of our portfolio companies, Switchee, is tackling this same issue but with a focus on social housing which combats fuel poverty and provides landlords with actionable, enterprise-level analytics, saving up to almost 15% of their energy bills. 720 Degrees, on the other hand, is taking the approach of monitoring air-quality inside properties to improve the well-being and productivity of staff, with a simple and elegant solution that has spread across the Nordics and the US.
Happy communities make for happier cities
Smart cities are not just about devices that optimise buildings but also about community engagement. With the growth of hyper-localised hubs, small communities are popping up around cities like mushrooms, giving people in neighbourhoods, councils and villages a greater sense of ownership and belonging. However, historically local authorities have not had the means or the budget to be able to address all of their citizens’ concerns, let alone knowing how to figure out which projects to finance and how to best implement them to appease their citizens. That is where someone like Savannah the Founder of Built-ID comes in. Their team has launched an inclusive community engagement platform, allowing citizens to have a direct influence in the projects that are being developed in their neighbourhood, while at the same time allowing professionals to showcase their projects to communities in an engaging format. Using a tool like this, is a way to guarantee that whatever project gets to be built, it will be much more likely to succeed (and get funded!).
Keeping in line with sustainability
Truth be told, IoT, sensoring and smart cities can’t have only upsides to them. More recently, there have been some concerns regarding the proliferation of IoT in several aspects, from the energy-hungry devices (such as video-surveillance cameras) to the amount of data the devices can generate, which translates into larger data centers and thus, a significant contribution to overall energy consumption. If you think about it, you would never consider that a small Alexa would significantly increase your energy bill, but if you multiply that by the more than 100 million devices sold, you can figure out that it starts having a huge global impact. And that’s not even mentioning the rare materials that some of these devices require, be it in batteries or other components used. Some solutions using energy-harvesting sensors (which can power themselves by using energy sources such as solar power, vibrations, heat or Hall effect) are providing an interesting alternative to how we use IoT in our everyday life, but we are keen to see what else is out there. Finally, and knowing the immense amount of data that smart cities will generate, there will also be an angle for privacy concerns and GDPR compliance, which is a space we also care about.
These are some of the trends we are exploring under the context of Smart Cities, but we know there are many more — if you think your idea or product might somehow fit with our reasoning, feel free to get in touch or apply to our Accelerator Programme, a 15-week spring with an emphasis on business & product development, product strategy and investment. Applications for our programme will close in December, so if you’re working on a PropTech solution and are thinking about next steps, please make sure to send us your application. Alternatively, if you would like to learn more about our direct seed funding offering or just want to have a chat, please don’t hesitate to get in touch with me at hugo@pilabs.co.uk.
