The built world is facing what many consider to be an existential threat, with a storm of challenges, including rising interest rates, rampant inflation, tightening environmental regulations, and capital markets pressure on non-ESG-compliant assets. The convergence of these powerful stakeholder pressure points has triggered what many believe to be the single largest industry transition and capex super cycle of our lifetime towards net zero. Without rapid adoption of technology that mitigates the impact of the built world on the planet, the relevance and survival of many of the built world’s incumbents could be severely at challenged.
Is in this scenario that A/O, one of Europe’s largest venture capital firm primarily focused on built-world technologies, is doubling down on investing in technologies that aim to reduce greenhouse gas emissions, build climate resiliency, accelerate the energy transition and digitalization of the real estate and construction industries as it reaches the first close of its new flagship Fund targeting €250 million.
Founded in 2019, A/O is committed to investing in technologies that enable the ‘positive transformation’ of the built world, a concept that drives the firms strategy throughout. Gregory Dewerpe, founder and CIO of A/O, said:
“We believe this is one of the largest industry transitions of our generation, that will see the emergence of some of the most significant category defining technology companies globally. Furthermore, the emergence of AI in the built world is showing very promising potential to further accelerate the transition to automation, efficiency and transparency across the entire lifecycle of assets and power the next wave of adoption. We believe the transition of the built world is the most tangible way to tackle climate change today and with this new fund we will continue to dedicate our time, resources and attention to it. The more challenging market conditions of the last 18 months have been a great reminder for many that being a specialist firm with deep expertise, backing technology that matters, and aiming to solve mission-critical problems is a good place to be in.”
According to recent reports, real estate is the world’s largest ($330 trillion), one of the least digitised and the most polluting industry globally responsible for an estimated 40% of global CO2 emissions. If left unchecked, these emissions are projected to double by 2050 as our economies continue to build more to accommodate growing populations and rapid global urbanisation. An unprecedented climate and energy crisis marred by extreme weather and catastrophic natural disasters has contributed to accelerate the need to drive the digital and sustainable transformation of the sector. A/O’s investment landscape spans the entire lifecycle of the built world. From supply chain, new materials, and AEC (architecture, engineering, and construction), to building operations and management, targeting decarbonisation, climate resiliency, electrification and energy transition, as well as digitisation, automation and big data management through a mix of software, hardware, deeptech and AI.
Through Fund I, A/O invested in 22 companies throughout the lifecycle of the built world. Examples of investments in those specific climate related verticals include, amongst others, are SPAN (California-based housing electrification), Satellite Vu (UK-based Earth Observation firm), PassiveLogic (US-based next-gen BMS leveraging AI to operate buildings more efficiently.011H (Spain-based sustainable mass timber prefab developer) taking an asset-light and software-first approach to timber construction, Plentific (UK-based property management software platform and trades marketplace).
Some of AO’s portfolio companies have gone on to attract global later stage investors including Coatue, Target Global, Brookfield, Wellington Management, Highland Europe, Nvidia, among others.
The first investment from Fund II has already been announced with Enter’s €19.4 million Series A, a company A/O has backed since its Seed round a few months earlier. A/O’s second investment is into a company currently in stealth mode, developing a digital first solution and software platform solving the skilled labour shortages currently holding back the retrofitting industry
“A lot of the attention on climate change appears to remain somewhat misdirected, creating a false impression that we can solve climate change simply with meatless burgers or paper straws or carbon credits. We can’t. That doesn’t mean those initiatives are not important, but rather that they are, in our view , not decisive or impactful enough, at a time of great urgency when we are potentially years away from being caught irreversibly offside. We must focus our time, resources and attention on what truly moves the needle now. Onwards and upwards.”