Audette raises CAD $12.8 million to decarbonize buildings
The Victoria-based company exposes "carbon debt" hiding in existing buildings, and empowers action towards net zero emissions.
When Christopher Naismith, founder and CEO of Audette, first spoke to the Victoria Tech Journal in 2021, the company raised a sizeable CAD $1 million seed round. At the time, this funding aimed to help select real estate holders across North America decarbonize. Now, Audette has re-categorized that raise as a pre-seed round to make way for its recently-announced CAD $12.8 million seed financing.
“As we started to deploy that first round of capital and launch our proof of concept, we realized there was a much bigger problem at hand,” said Naismith. That problem was a global gap in intelligence on what buildings actually need to do to become net zero — or, in other words, the tangible pathways that buildings can take to eliminate carbon emissions.
Audette’s technology is particularly appealing to decarbonize the existing built environment, said Allison Myers, general partner at Buoyant Ventures, a digital climate solutions venture capital firm based in Chicago, and leader of this round. “75 percent of sector emissions between now and 2050 will come from buildings that are already on the ground [...] As much as I would love to only focus on the shiny new buildings, there's embedded carbon, which is the carbon it took to build that building in the first place.”
Through research via programs run by Google, Audette “figured out a way that we could model those pathways [to get to net zero] for entire cities’ worth of commercial buildings,” said Naismith. This raise aims to scale Audette’s artificial intelligence technology to achieve this goal across 150 cities in the next two years.
Buildings are assets that need to be protected
The demand for commercial real estate to get to net zero is driven by anticipated regulatory forces that will pressure the sector to take action on their carbon, said Naismith. “What that's doing is changing the price of buildings. There's a certain amount of debt that these buildings are now starting to carry. [Asset holders are asking] — what's our carbon tax exposure? What's our carbon penalty exposure? What types of things do we need to do to our buildings to keep them in compliance?”
Naismith considers these concerns as “carbon debt” and Audette’s technology as a mechanism to protect the value of investors’ assets. “We're exposing [carbon debt] for these large portfolios of buildings and for entire cities worth of buildings, and helping [asset holders] understand that it's actually in their economic benefit to take action now — to stay ahead of those oncoming regulations.”
Myers holds strong belief in Naismith’s leadership and Audette’s ability to create efficiencies for real estate portfolio-holders to tackle this carbon debt. “If you have 1000 buildings, and you're looking across that building landscape, it's really difficult to sort of say — where do we take action first? And thinking about what dollar is best spent where,” she said. “The Audette solution really brings into play that this is the best first action to take.”
This isn’t valuable information for just asset holders, but also everyone in the value chain. “Energy service providers, whether they're doing retrofits or energy efficiency upgrades, those people are looking at the landscape [too] and going — what customers need my services most? Who do I go target?” The public sector is another key player that could benefit from this technology. “Cities are thinking the same thing — how on earth do we get to net zero? And what building operators should we tackle first [...] Who do we incentivize?”
Naismith sees Audette’s technology — “the ubiquitous data provider for carbon intelligence” for buildings — as the first step to scale. “We're the first analytics tool that allows, say, a building portfolio of 1000 or 5000 buildings to really understand the broad international risk exposure around carbon.” Next year, he has his eyes on launching a marketplace, “so anyone who has access to our intelligence can access the technology and finance to make decarbonization happen.”
Climatetech is going strong, despite macroeconomic trends
Contrary to the decline in stocks and investments in other tech sectors, Naismith actually attributes the strong interest from investors in Audette to this macroeconomic environment. The energy crisis and the decline in the traditional use of buildings due to the pandemic made a lot of investors rethink their portfolios and assets, he said. “We're not seeing quite as much of a hit, anecdotally, within climatetech,” Myers confirmed. This is perhaps reflective of the general underinvestment in the space, she added.
But aside from the broader economic trends, Myers also attributed the political pressure from both the grassroots and the top decision-makers as contributors to investor interest: “Now you have not just investors in companies demanding [climate] action by large corporations, but then you also have customers of companies demanding [climate] action, employees of customers demanding [climate] action.” Naismith sees this as an inflection point to get real estate to seriously decarbonize. “It makes for a really great — why now? — moment as to why [investors] should be thinking about switching to low carbon buildings.”
Beyond net zero
Naismith makes clear that the company is not in the business of convincing people to get to net zero. Fundamentally, he aims for Audette to empower cities, asset managers, and funds who have already pledged net zero commitments to strengthen their leadership. “There are many, many cities that are now adopting really meaningful carbon reduction targets [...] and then working with the entire group of net zero asset managers who control over [USD] $70 trillion in assets worldwide.”
Naismith believes that Audette is in a position to get decision-makers to think beyond net zero, and towards climate positivity, which involves removing more carbon than that emitted into the atmosphere. As climate scientists increasingly point out that even targets to reach net zero by 2050 are not enough to slow the Earth’s warming and its consequent impacts, Naismith sees Audette as offering a pathway to set higher standards. “We don't encourage folks to buy offsets, which is possible under net zero,” he said. Rather, Audette aims to minimize asset holders’ direct carbon impact through assessment and minimization of Scope One, Two, and Three emissions first (which account for not only the emissions directly controlled by a company, such as energy, but emissions that are a consequence of the company’s activities, such as waste.) Next, they should offset, to remove more carbon than that emitted.
Myers sees Audette as a key solution provider that could enable real climate action. “We wanted to look for companies that weren't just outlining ‘here's the problem’, but ‘here's the problem, and here's what you should do about it.’ And Audette did exactly that by outlining ‘here's your biggest problem spots, here's what you should do about it in terms of next steps, and here's the outcomes you can expect,’” she said. “Because everyone is now aligned on the fact that there is a problem. But really getting to that deeper-level insight of ‘here's the solution’ is the only way you're gonna get action around this space.”