Climate-Focused Gradient Comfort Adds to Series A for Total of $27.5M

Gradient Comfort, which works on better ways to approach HVAC, announced that it had extended a Series-A round and brought in an additional $9 million for a total of $27.5 million.

Leading the round was Climate Investment (CI), a specialist decarbonization climate investor. Cindi Bough, Managing Director Ventures at CI, will join the Gradient Comfort Board and Rick Cutright, Technology Director at CI will join as an observer.

“With 30% and 50% of the energy footprint of U.S. buildings and homes, respectively, coming from heating and cooling, it is essential that buildings have carbon neutral solutions that are effective and affordable,” a company press release quoted Cindi Bough as saying. “Heat pumps are increasingly recognized as a critical technology for buildings’ decarbonization. Innovations are needed to lower purchase and installation costs, reduce complex renovations, improve energy performance, and leverage heat pumps for grid and flexibility. We believe Gradient Comfort’s solution suite delivers on all of these elements.”

Gradient’s first product is a window heat pump that doesn’t obscure a view. The company says it will use the new capital in several ways, including:

• “Design deployment & manufacturability of Gradient Comfort’s air sourced window heat pump units that decarbonize heating for cold climates and deliver air conditioning with climate friendly R32 refrigerants
• “Accelerate decarbonization with a focus on solutions for business-to-business channels”
• “Software services like hardware monitoring, maintenance, leasing, and demand response services including integration with virtual power plants”
• “Adding headcount in key roles”

HVAC has become a significant area of technical concern in commercial real estate because of its connection to three things: cost, reputation, and marketing.

The more a property owner must spend to heat, cool, and ventilate a space, the less money can go into profits. The financial motive becomes only stronger with increased interest rates and the greater expense to refinance a building. CRE investors and owners can find it challenging enough to make a property financially viable when it comes time to refinance. Additional money marching out of NOI makes the situation even more potentially fraught.

Next, reputation. Investors are eyeing CRE property with some wariness because of questions about the future in terms of ESG. Environmental seems the biggest part of that trinity, and one that governments are most likely to seize on for further regulation. They want to put their money into properties that won’t become a public issue.

Third, marketing. Whether talking of office, multifamily, or other space where user perception can play a large role in taking a lease, investors and operators face the reality that those who inhabit buildings, for personal or work lives, could lean toward properties that seem to be modern and in keeping with social expectations.