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Bringing jobs and health benefits, BlocPower unlocks energy efficiency retrofits for low income communities

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Retrofitting buildings to make them more energy efficient and better at withstanding climate change induced extreme weather is going to be a big, multi-billion dollar business. But it’s one that’s been hard for low-income communities to tap, thanks to obstacles ranging faulty incentive structures to an inability to adequately plan for which upgrades will be most effective in which buildings.

Enter BlocPower, a New York-based startup founded by a longtime advocate for energy efficiency and the job creation that comes with it, which has a novel solution for identifying, developing and profiting off of building upgrades in low income communities — all while supporting high-paying jobs for workers in the communities the company hopes to serve.

The company also has managed to raise $63 million in equity and debt financing to support its mission. That money is split between an $8 million investment from some of the country’s top venture firms and a $55 million debt facility structured in part by Goldman Sachs to finance the redevelopment projects that BlocPower is creating.

These capital commitments aren’t charity. Government dollars are coming for the industry and private companies from healthcare providers, to utility companies, to real estate developers and property managers all have a vested interest in seeing this market succeed.

There’s going to be over $1 billion carved out for weatherization and building upgrades in the stimulus package that’s still making its way through Congress

For BlocPower’s founder, Donnel Baird, the issue of seeing buildings revitalized and good high-paying jobs coming into local communities isn’t academic. Baird was born in Brooklyn’s Bedford Stuyvesant neighborhood and witnessed firsthand the violence and joblessness that was ripping the fabric of that rich and vibrant community apart during the crack epidemic and economic decline of the 1980s and early 90s.

Seeing that violence firsthand, including a shooting on his way to school, instilled in Baird a desire to “create jobs for disconnected Black and brown people” so they would never feel the hopelessness and lack of opportunity that fosters cycles of violence.

Some time after the shooting, Baird’s family relocated from Brooklyn to Stone Mountain, Georgia, and after graduating from Duke University, Baird became a climate activist and community organizer, with a focus on green jobs. That led to a role in the presidential campaign for Barack Obama and an offer to work in Washington on Obama’s staff.

Baird declined the opportunity, but did take on a role reaching out to communities and unions to help implement the first stimulus package that Obama and Biden put together to promote green jobs.

And it was while watching the benefits of that stimulus collapse under the weight of a fragmented building industry that Baird came up with the idea for BlocPower.

“It was all about the implementation challenges that we ran into,” Baird said. “If you have ten buildings on a block in Oakland and they were all built by the same developer at the same time. If you rebuild those buildings and you retrofit all of those buildings, in five of those buildings you’re going to trap carbon monoxide in and kill everybody and in the other five buildings you’re going to have a reduction in emissions and energy savings.”

Before conducting any retrofits to capture energy savings (and health savings, but more on that later), Baird says developers need to figure out the potential for asbestos contamination in the building; understand the current heating, ventilation, and cooling systems that the building uses; and get an assessment of what actually needs to be done.

That’s the core problem that Baird says BlocPower solves. The company has developed software to analyze a building’s construction by creating a virtual twin based on blueprints and public records. Using that digital twin the company can identify what upgrades a building needs. Then the company taps lines of credit to work with building owners to manage the retrofits and capture the value of the energy savings and carbon offsets associated with the building upgrades.

For BlocPower to work, the financing piece is just as important as the software. Without getting banks to sign off on loans to make the upgrades, all of those dollars from the federal government remain locked up. “That’s why the $7 billion earmarked for investment in green buildings did not work,” Baird said. “At BlocPower our view is that we could build software to simulate using government records… we could simulate enough about the mechanicals, electrical, and plumbing across buildings in NYC so that we could avoid that cost.”

Along with co-founder Morris Cox, Baird built BlocPower while at Columbia University’s business school so that he could solve the technical problems and overcome the hurdles for community financing of renewable retrofit projects.

Right before his graduation, in 2014, the company had applied for a contract to do energy efficiency retrofits and was set to receive financing from the Department of Energy. The finalists had to go down to the White House and pitch the President. That pitch was scheduled for the same day as a key final exam for one of Baird’s Columbia classes, which the professor said was mandatory. Baird skipped the test and won the pitch, but failed the class.

After that it was off to Silicon Valley to pitch the business. Baird met with 200 or more investors who rejected his pitch. Many of these investors had been burned in the first cleantech bubble or had witnessed the fiery conflagrations that engulfed firms that did back cleantech businesses and swore they’d never make the same mistakes.

That was the initial position at Andreessen Horowitz when Baird pitched them, he said. “When I went to Andreessen Horowitz, they said ‘Our policy is no cleantech whatsoever. You need to figure out how software is going to eat up this energy efficiency market’,” Baird recalled.

Working with Mitch Kapor, an investor and advisor, Baird worked on the pitch and got Kapor to talk to Ben Horowitz. Both men agreed to invest and BlocPower was off to the races.

The company has completed retrofits in over 1,000 buildings since its launch, Baird said, mainly to prove out its thesis. Now, with the revolving credit facility in hand, BlocPower can take bigger bites out of the market. That includes a contract with utility companies in New York that will pay $30 million if the company can complete its retrofits and verify the energy savings from that work.

There are also early projects underway in Oakland and Chicago, Baird said.

Building retrofits do more than just provide energy savings, as Goldman Sachs managing director Margaret Anadu noted in a statement.

“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,” Anadu said. “We are so proud to have supported Donnel and his team…through both equity and debt capital to further expand their reach.”

These benefits also have potential additional revenue streams associated with them that BlocPower can also capture, according to investor and director, Mitch Kapor.

“There are significant linkages that are known between buildings and pollution that are a public health issue. In a number of geographies community hospitals are under a mandate to improve health outcomes and BlocPower can get paid from health outcomes associated with the reduction in carbon. That could be a new revenue stream and a financing mechanism,” Kapor said. “There’s a lot of work to be done in essentially taking the value creation engine they have and figuring out where to bring it and which other engines they need to have to have the maximum social impact.”

Social impact is something that both Kapor and Baird talk about extensively and Baird sees the creation of green jobs as an engine for social justice — and one that can reunite a lot of working class voters whose alliances were fractured by the previous administration. Baird also believes that putting people to work is the best argument for climate change policies that have met with resistance among many union workers.

“We will not be able to pass shit unless workers and people of color are on board to force the U.S. senate to pass climate change policy,” Baird said. “We have to pass the legislation that’s going to facilitate green infrastructure in a massive way.”

He pointed to the project in Oakland as an example of how climate policies can create jobs and incentivize political action.

“In Oakland we’re doing a pilot project in 12 low income buildings in oakland. I sent them $20K to train these workers from local people of color in Oakland… they are being put to work in Oakland,” Baird said. “That’s the model for how this gets built. So now we need them to call Chuck Shumer to push him to the left on green building legislation.” 

 

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An AI is training counselors to deal with teens in crisis

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Counselors volunteering at the Trevor Project need to be prepared for their first conversation with an LGBTQ teen who may be thinking about suicide. So first, they practice. One of the ways they do it is by talking to fictional personas like “Riley,” a 16-year-old from North Carolina who is feeling a bit down and depressed. With a team member playing Riley’s part, trainees can drill into what’s happening: they can uncover that the teen is anxious about coming out to family, recently told friends and it didn’t go well, and has experienced suicidal thoughts before, if not at the moment.

Now, though, Riley isn’t being played by a Trevor Project employee but is instead being powered by AI.

Just like the original persona, this version of Riley—trained on thousands of past transcripts of role-plays between counselors and the organization’s staff—still needs to be coaxed a bit to open up, laying out a situation that can test what trainees have learned about the best ways to help LGBTQ teens. 

Counselors aren’t supposed to pressure Riley to come out. The goal, instead, is to validate Riley’s feelings and, if needed, help develop a plan for staying safe. 

Crisis hotlines and chat services make them a fundamental promise: reach out, and we’ll connect you with a real human who can help. But the need can outpace the capacity of even the most successful services. The Trevor Project believes that 1.8 million LGBTQ youth in America seriously consider suicide each year. The existing 600 counselors for its chat-based services can’t handle that need. That’s why the group—like an increasing number of mental health organizations—turned to AI-powered tools to help meet demand. It’s a development that makes a lot of sense, while simultaneously raising questions about how well current AI technology can perform in situations where the lives of vulnerable people are at stake. 

Taking risks—and assessing them

The Trevor Project believes it understands this balance—and stresses what Riley doesn’t do. 

“We didn’t set out to and are not setting out to design an AI system that will take the place of a counselor, or that will directly interact with a person who might be in crisis,” says Dan Fichter, the organization’s head of AI and engineering. This human connection is important in all mental health services, but it might be especially important for the people the Trevor Project serves. According to the organization’s own research in 2019, LGBTQ youth with at least one accepting adult in their life were 40% less likely to report a suicide attempt in the previous year. 

The AI-powered training role-play, called the crisis contact simulator and supported by money and engineering help from Google, is the second project the organization has developed this way: it also uses a machine-learning algorithm to help determine who’s at highest risk of danger. (It trialed several other approaches, including many that didn’t use AI, but the algorithm simply gave the most accurate predictions for who was experiencing the most urgent need.)

AI-powered risk assessment isn’t new to suicide prevention services: the Department of Veterans Affairs also uses machine learning to identify at-risk veterans in its clinical practices, as the New York Times reported late last year. 

Opinions vary on the usefulness, accuracy, and risk of using AI in this way. In specific environments, AI can be more accurate than humans in assessing people’s suicide risk, argues Thomas Joiner, a psychology professor at Florida State University who studies suicidal behavior. In the real world, with more variables, AI seems to perform about as well as humans. What it can do, however, is assess more people at a faster rate. 

Thus, it’s best used to help human counselors, not replace them. The Trevor Project still relies on humans to perform full risk assessments on young people who use its services. And after counselors finish their role-plays with Riley, those transcripts are reviewed by a human. 

How the system works

The crisis contact simulator was developed because doing role-plays takes up a lot of staff time and is limited to normal working hours, even though a majority of counselors plan on volunteering during night and weekend shifts. But even if the aim was to train more counselors faster, and better accommodate volunteer schedules, efficiency wasn’t the only ambition. The developers still wanted the role-play to feel natural, and for the chatbot to nimbly adapt to a volunteers’ mistakes. Natural-language-processing algorithms, which had recently gotten really good at mimicking human conversations, seemed like a good fit for the challenge. After testing two options, the Trevor Project settled on OpenAI’s GPT-2 algorithm.

The chatbot uses GPT-2 for its baseline conversational abilities. That model is trained on 45 million pages from the web, which teaches it the basic structure and grammar of the English language. The Trevor Project then trained it further on all the transcripts of previous Riley role-play conversations, which gave the bot the materials it needed to mimic the persona.

Throughout the development process, the team was surprised by how well the chatbot performed. There is no database storing details of Riley’s bio, yet the chatbot stayed consistent because every transcript reflects the same storyline.

But there are also trade-offs to using AI, especially in sensitive contexts with vulnerable communities. GPT-2, and other natural-language algorithms like it, are known to embed deeply racist, sexist, and homophobic ideas. More than one chatbot has been led disastrously astray this way, the most recent being a South Korean chatbot called Lee Luda that had the persona of a 20-year-old university student. After quickly gaining popularity and interacting with more and more users, it began using slurs to describe the queer and disabled communities.

The Trevor Project is aware of this and designed ways to limit the potential for trouble. While Lee Luda was meant to converse with users about anything, Riley is very narrowly focused. Volunteers won’t deviate too far from the conversations it has been trained on, which minimizes the chances of unpredictable behavior.

This also makes it easier to comprehensively test the chatbot, which the Trevor Project says it is doing. “These use cases that are highly specialized and well-defined, and designed inclusively, don’t pose a very high risk,” says Nenad Tomasev, a researcher at DeepMind.

Human to human

This isn’t the first time the mental health field has tried to tap into AI’s potential to provide inclusive, ethical assistance without hurting the people it’s designed to help. Researchers have developed promising ways of detecting depression from a combination of visual and auditory signals. Therapy “bots,” while not equivalent to a human professional, are being pitched as alternatives for those who can’t access a therapist or are uncomfortable  confiding in a person. 

Each of these developments, and others like it, require thinking about how much agency AI tools should have when it comes to treating vulnerable people. And the consensus seems to be that at this point the technology isn’t really suited to replacing human help. 

Still, Joiner, the psychology professor, says this could change over time. While replacing human counselors with AI copies is currently a bad idea, “that doesn’t mean that it’s a constraint that’s permanent,” he says. People, “have artificial friendships and relationships” with AI services already. As long as people aren’t being tricked into thinking they are having a discussion with a human when they are talking to an AI, he says, it could be a possibility down the line. 

In the meantime, Riley will never face the youths who actually text in to the Trevor Project: it will only ever serve as a training tool for volunteers. “The human-to-human connection between our counselors and the people who reach out to us is essential to everything that we do,” says Kendra Gaunt, the group’s data and AI product lead. “I think that makes us really unique, and something that I don’t think any of us want to replace or change.”

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How to land startup funding from Brookfield Asset Management, which manages $600 billion in assets

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There are big investment firms, and then there are big investment firms. Brookfield Asset Management, the Toronto-based 122-year-old outfit whose current market cap is $63 billion and that oversees $600 billion in assets, clearly falls into the latter camp. Think real estate, infrastructure, renewable power, private equity, and credit. If it falls into a defined asset class, Brookfield probably has it in its portfolio.

That’s also true of venture capital, though venture is new enough to Brookfield that founders who might like its capital are still getting the memo. Indeed, it was a little less than four years ago that Brookfield Technology Partners began investing off the company’s balance sheet and soon after recruited Josh Raffaelli — a Stanford MBA who cut his teeth as a principal with Draper Fisher Jurvetson, then spent another five years with Silver Lake — to lead the practice.

Its existence came as a surprise to him, actually. “I’ve been a tech investor in Silicon Valley,” says Raffaelli. “My entire professional career has been in a 15-minute drive from the house I grew up in. And I had never heard about Brookfield before they started this practice because it’s in businesses. It’s in real estate. It has done things that are not generally tech-enabled.”

Not until fairly recently, that is. Raffaelli and his 11-person team have not only made dozens of bets since then, but they’re currently investing out of a pool of capital that features third party capital in addition to that of Brookfield — which is a first. As for what they are looking for, the idea is help Brookfield reimagine how its many office towers, malls and other real estate might be used or developed or leased or insured. It’s to make Brookfield smarter, better prepared, and more profitable. In return, the startups get industry expertise and a major customer in Brookfield

 

To date, its bets have varied widely, as with Armis, an IoT startup focused on unmanaged device security; Loanpal, a point-of-sale payment platform for solar and other home efficiency products; and Carbon Health, a primary care company that blends real-world and virtual visits. “”We’re getting our themes effectively from the Brookfield ecosystem,” Raffaelli says.

Pulling back the curtain a bit more, Raffaelli says his team writes checks from $25 million to $50 million dollars and that they look for companies with $10 million in revenue that are seeing top-line year-over-year growth of more than 100%. In terms of pacing, they jump into roughly one new deal per quarter.

The fund is also independent and has its own custom committee, but that the committee is made up of the senior managing partners from each line of Brookfield’s businesses. (“These are the people that actually help us translate our investment themes that we’re generating here,” Raffaelli notes.)

To highlight how the operation works, Raffaelli points to Latch, a smart access software business that announced last month that it’s using a blank-check company backed by the real estate giant Tishman Speyer to become publicly traded. Brookfield owns roughly 70,000 multifamily units in North America, “so we have a lot of doors that need a lot of locks,” Raffaelli says. Latch, of course, is not the only smart access lock out there, so Brookfield ran “what was almost like a mini [proposal process], reaching out to all different companies in the market to understand how they compete,” he says.

It was a “six-month exercise,” but ultimately, his group led Latch’s Series B round in 2018 and since then, Brookfield was bought about 7,000 blocks from the business. It’s a meaningful difference, considering that when Brookfield first invested, the company had less than $20 million in bookings and those 7,000 locks have since brought in an additional $10 million to $15 million in revenue, Raffaelli says. “When we buy a lot of things at that stage of a company,” he adds, “we’re meaningfully enhancing their trajectory.”

It’s not a foolproof strategy, doubling down. If Latch’s locks turned out to be lemons (they haven’t), Brookfield would be out a big check along with that capital expenditure. It’s why Brookfield takes its time, says Raffaelli, adding that if he has done his job right, his team is involved with a company well before it is raising a round and shown already that it is a “strategic partner that has another lever.”

Either way, Raffaelli says that while the commercial real estate market has been hard hit by the pandemic, it has, counterintuitively, been a productive time for his group given the stronger incentive it has given the real estate world to adopt tech tools faster. Among the bets about which Raffaelli sounds most excited right now is VTS, for example, a leasing and asset management platform that can show properties remotely, and Deliverr, an e-commerce fulfillment startup that Raffaelli describes as “Amazon Prime for everybody else.”

In fact, Raffaelli convincingly argues that while the use case for a lot of real estate is changing,  the so-called built world remains Brookfield’s strongest competitive advantage given the size of its footprint.  The way he sees it, its options going forward are plentiful. “You’re looking at retail locations becoming ghost kitchens; you’re looking at retail locations turning into distribution and logistics facilities. We can turn physical locations into healthcare sites for [our portfolio company] Carbon Health, and our mall locations into locations for urgent care and primary care clinics for testing and vaccinations.”

It will never be a completely seamless transition. Brookfield has to be “thoughtful” given the pandemic and its devastating impacts, too. But Raffaelli comes across as excited in conversation nonetheless. The idea of turning physical real estate into a “mechanism for change within technology businesses,” adds Raffaelli, is a “very powerful place to be.”

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Singapore-based Raena gets $9M Series A for its pivot to skincare and beauty-focused social commerce

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A photo of social commerce startup Raena’s team. From left to right: chief operating officer Guo Xing Lim, chief executive officer Sreejita Deb and chief commercial officer Widelia Liu

Raena’s team, from left to right: chief operating officer Guo Xing Lim, chief executive officer Sreejita Deb and chief commercial officer Widelia Liu

Raena was founded in 2019 to create personal care brands with top social media influencers. After several launches, however, the Singapore-based startup quickly noticed an interesting trend: customers were ordering batches of products from Raena every week and reselling them on social media and e-commerce platforms like Shopee and Tokopedia. Last year, the company decided to focus on those sellers, and pivoted to social commerce.

Today Raena announced it has raised a Series A of $9 million, co-led by Alpha Wave Incubation and Alpha JWC Ventures, with participation from AC Ventures and returning investors Beenext, Beenos and Strive. Its last funding announcement was a $1.82 million seed round announced in July 2019.

After interviewing people who were setting up online stores with products from Raena, the company’s team realized that sellers’ earnings potential was capped because they were paying retail prices for their inventory.

They also saw that the even though new C2C retail models, like social commerce, are gaining popularity, the beauty industry’s supply chain hasn’t kept up. Sellers usually need to order minimum quantities, which makes it harder for people to start their own businesses, Raena co-founder Sreejita Deb told TechCrunch,

“Basically, you have to block your capital upfront. It’s difficult for individual sellers or micro-enterpreneurs to work with the old supply chain and categories like beauty,” she said.

Raena decided to pivot to serve those entrepreneurs. The company provides a catalog that includes mostly Japanese and Korean skincare and beauty brands. For those brands, Raena represents a way to enter new markets like Indonesia, which the startup estimates has $20 billion market opportunity.

Raena resellers, who are mostly women between 18 to 34-years-old in Indonesia and Malaysia, pick what items they want to feature on their social media accounts. Most use TikTok or Instagram for promotion, and set up online stores on Shopee or Tokopedia. But they don’t have to carry inventory. When somebody buys a product from a Raena reseller, the reseller orders it from Raena, which ships it directly to the customer.

This drop-shipping model means resellers make higher margins. Since they don’t have to carry inventory, it also dramatically lowers the barrier to launching a small business. Even though Raena’s pivot to social commerce coincided with the COVID-19 pandemic, Deb said it grew its revenue 50 times between January and December 2020. The platform now has more than 1,500 resellers, and claims a 60% seller retention rate after six months on the platform.

She attributes Raena’s growth to several factors, including the increase in online shopping during lockdowns and people looking for ways to earn additional income during the pandemic. While forced to stay at home, many people also began spending more time online, especially on the social media platforms that Raena resellers use.

Raena also benefited from its focus on skincare. Even though many retail categories, including color cosmetics, took a hit, skincare products proved resilient.

“We saw skincare had higher margins, and there are certain markets that are experts at formulating and producing skincare products, and demand for those products in other parts of the world,” she said, adding, “we’ve continued being a skincare company and because that is a category we had insight into, it was our first entry point into this social selling model as well. 90% of our sales are skincare. Our top-selling products are serums, toners, essences, which makes a lot of sense because people are in their homes and have more time to dedicate to their skincare routines.”

Social commerce, which allows people to earn a side income (or even a full-time income), by promoting products through social media, has taken off in several Asian markets. In China, for example, Pinduoduo has become a formidable rival to Alibaba through its group-selling model and focus on fresh produce. In India, Meesho resellers promote products through social media platforms like WhatsApp, Facebook and Instagram.

Social commerce is also gaining traction in Southeast Asia, with gross merchandise value growing threefold during the first half of 2020, according to iKala.

Deb said one of the ways Raena is different from other social commerce companies is that most of its resellers are selling to customers they don’t know, instead of focusing on family and friends. Many already had TikTok or Instagram profiles focused on beauty and skincare, and had developed reputations for being knowledgeable about products.

As Raena develops, it plans to hire a tech team to build tools that will simplify the process of managing orders and also strike deals directly with manufacturers to increase profit margins for resellers. The funding will be used to increase its team from 15 to over 100 over the next three months, and it plans to enter more Southeast Asian markets.

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