Our Investment in BlocPower
Creating smarter, healthier, electric buildings for all
One of the key provisions of the Biden Administration’s recently passed Bipartisan Infrastructure Bill, officially known as the “Infrastructure Investment and Jobs Act,” is a commitment to invest $47 billion in making communities across the U.S. more resilient to the impacts of climate change. This landmark investment, which includes a focus on low-income and minority communities, recognizes that people of color represent one of the most vulnerable populations to the adverse effects of climate change.
In the U.S., a long history of rampant pollution and inequitable policy has afflicted communities of color. To this day, sources of pollution in the home and in the broader community have led to people of color suffering the effects of exposure well above the average rate.
A legacy of discriminatory policies like “redlining” — so called because banks would draw a red line on a map around low-income minority communities to whom they would not lend — stifled access to the funds needed to address a backlog of deferred maintenance and deficiencies in aging homes. As buildings in these communities continue to fall into disrepair, the accelerating impacts of climate change, including higher temperatures and more frequent flooding, have made them all the more susceptible to its catastrophic consequences. As reported by USA Today, the U.S. Environmental Protection Agency in September issued a report highlighting how communities of color face disproportionate harm from climate change.
Building upgrades are urgently needed to fortify homes in predominantly minority neighborhoods against the effects of climate change and ensure they preserve the health and well-being of their inhabitants. However, the upfront “soft costs” of retrofitting a home, such as hiring a contractor to perform an assessment, has hampered the deployment of energy-efficiency improvements. This stems from the fact that there exists a lot of variability between buildings, requiring solutions that are tailored to a structure’s particular need.
Addressing the host of barriers that limit underserved communities from obtaining these needed upgrades, BlocPower enables them to implement and finance retrofits that make them more climate resilient, safer, and affordable. It achieves this through the company’s proprietary software platform that leverages artificial intelligence to analyze data about the property and identify opportunities for increased energy efficiency and clean electrification. We feel privileged to announce our investment in BlocPower, whose CEO and Founder Donnel Baird shared his impressive journey on the MCJ podcast. The company has achieved tremendous progress since its founding in 2012 and has assembled an all-star group of partners and investors, whose ranks we’re honored to join.
What is BlocPower?
BlocPower delivers a slew of retrofits designed to make buildings greener, safer, and improve the affordability for occupants. The upgrades the company offers include heat pumps, LED lighting, insulation and air sealing, residential solar, battery storage and other upgrades that can improve energy efficiency by an average of 21%. Focusing on single and multifamily (i.e. apartment buildings) homes in disadvantaged neighborhoods, BlocPower reduces the cost it normally would take to assess a building — which can swell to the tens of thousands of dollars — by using machine learning and public housing data to model opportunities for energy efficiency and cost-savings.
BlocPower also addresses the dearth of financing options available to low-income borrowers, who are often perceived by banks as high-risk for loan default. For this reason, FICO scores prove to be an inadequate measure of creditworthiness. With unique insight into how best to measure the risk of non-repayment, the company has partnered with Goldman Sachs to develop a new class of financial product, aimed at underwriting based on alternative types of payment history (e.g. a borrower’s energy bills). Likened to a “green mortgage,” this product spreads the default risk across a pool of borrowers and ensures building owners can fund the retrofits recommended by BlocPower. Finally, BlocPower serves as the general contractor for the building upgrades, partnering with female, veteran, and minority-owned subcontractors. Reflecting the broad socially-minded ethos of the company, BlocPower trains these contractors on how to install “green equipment.” By coupling technology, finance, and community organizing, BlocPower is able to reduce project costs by as much as 80%.
Why Did We Invest?
Compelling Founder-Market Fit
For Donnel Baird, BlocPower’s mission is personal. As he shared during his podcast interview with Jason, Donnel, the son of immigrant parents, grew up in a low-income community. He recounts his childhood living in a one bedroom apartment, which due to a lack of heating in the building, necessitated relying on the kitchen oven for warmth. From these humble beginnings, Donnel went on to scale academic and professional heights, attending Duke University and Columbia Business School and serving as a Regional Field Director in Obama’s first presidential campaign and as director at a green jobs labor union. Since founding BlocPower nearly a decade ago, Donnel has leveraged his personal experience and insights, gathered from working as a community organizer, to bring together partners in both public and private sectors to deliver positive impact to the financially underserved and those most vulnerable to the effects of climate change. We stand in awe of Donnel’s ability to bring a multitude of influential stakeholders to the table to support BlocPower’s mission - whether that includes investors like Mitch Kapor and Andreessen Horowitz, partners like Goldman Sachs, or Vice President Kamala Harris.
Delivering a Critical Social & Climate Impact
The built environment represents a major source of emissions. As important as it is to address it, it is as critical to do so while being mindful of ensuring “climate justice” and rectifying the inequitable burden that has been placed on the shoulders of marginalized groups. This mission is at the core of BlocPower’s business.
An Inspiring Vision: “Turning Buildings into Teslas”
With commercial and political tailwinds coalescing in support, BlocPower’s vision of “turning buildings into Teslas,” by transitioning them off fossil fuels, is proving itself to be a viable and paramount opportunity. The company was just awarded a major contract to partner with Ithaca, New York to become the first U.S. city to begin 100% decarbonization of its buildings.
Having completed nearly a thousand retrofits across the country, BlocPower has well hit its stride, and we are eager to see the positive change the company continues to bring about both in terms of emissions reduction and the improvement of people’s lives across the country.
If you are an accredited investor and want to learn more about being an investor in our fund (to back more great companies like this one!), reach out here, and include desired quarterly commitment level, accredited investor status, and info on your background and how you could be helpful to the portfolio.