Investing in Redaptive

Tailwinds behind the energy transition have long been apparent. Federal stimulus, regulatory disclosures, rising energy costs, corporate sustainability pledges, and operational improvements are top of mind for Fortune 500 companies. Technologies for the two largest drivers of sustainable emissions targets — energy efficiency and generation — are widely available, yet few companies have developed actionable pathways to achieving their corporate pledges.

A company’s approach to sustainability requires alignment across numerous stakeholders (energy, finance, operations, and real estate). The reality is it is very difficult to align corporate leaders into action around energy initiatives, creating too much friction to effectively procure, install, finance, and operate energy-efficient technologies. Companies are often stumped translating energy goals into actions — leaving a large opportunity in the energy efficiency and sustainability market worth tens of billions of dollars.

Companies have two common problems when approaching their sustainability targets: (1) they are not sure what combinations of technology will get them to their emissions goals, and (2) they are not sure how to implement these solutions across their real estate portfolios in a way that is economically viable. Getting one site to carbon neutrality is difficult enough. Now, as a Fortune 500 company, try replicating the investment and project management for hundreds or thousands of disbursed stores, branches, or offices with different energy needs. It’s very complex.

Redaptive was built to relieve these points of friction that make sustainability difficult to scale. For customers, Redaptive is the full service provider to remove financial, technological, and logistical barriers from investing in emissions reductions. Redaptive does this in several ways:

1. Funds the project upfront — no impact to the balance sheet for the customer, which transforms the customer’s investment from capex to opex by billing for energy saved/generated in measured monthly payments
2. Manages the installation through its network of partners
3. Provides ongoing maintenance of the systems installed
4. Installs its proprietary submeter to collect data used for site performance, equipment optimization, and opportunity identification
5. Identifies/underwrites other opportunities across the customer’s portfolio
6. Consolidates all of this data into its software platform to provide a single pane for all sustainability, energy management, and compliance needs

Rather than build all of these capabilities in-house, customers find it much more efficient to turn to Redaptive and leverage the scale of Redaptive’s expertise across technology, partnerships, and financing. Redaptive is tech-agnostic since it relies on installation partners and OEMs for the energy efficiency/generation technology, so Redaptive can be aligned to install the best-fit technology for any site.

What is so impressive about Redaptive’s model is that it is best tailored to the world’s largest and most complex businesses. Redaptive’s top customers are Fortune 50 companies — enterprises with tens of thousands of employees and thousands of sites turn to Redaptive for their energy efficiency and sustainability needs. And while those large customer relationships continue to grow, it is easy to see how traction can easily expand through types of energy technology projects (lighting, HVAC, solar, etc.), number of sites deployed, and software to monitor/report performance with each customer.

Energy-as-a-service is a broad but fragmented market. Energy service companies (ESCOs), project developers, OEMs, specialty finance businesses, and IoT data providers all have competitive angles to Redaptive; however, these competitors each serve various segments (development, installation, or financing) of sustainability. Redaptive offers the complete solution — managing the financing, project lifecycle, and data from end-to-end. This holistic approach and ability to move quickly gives us confidence that Redaptive will continue to succeed in removing the friction associated with corporate sustainability at scale.

Linse Capital first invested in Redaptive in 2017. After spending a decade researching the energy efficiency space, we concluded that the best opportunities in the space are businesses that address the bottlenecks of adoption, rather than any specific energy efficiency technology. As Redaptive’s traction has multiplied since the original investment, Linse Capital’s thesis remains the same. Continued innovation across energy efficiency and generation will improve sustainability capabilities; Redaptive will enable the financing, installation, maintenance, and analytics of leading energy technology in the most frictionless way possible.

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