Climate change is one of the largest global threats. Smart Lighting has seen a series of robust developments, including the widespread adoption of LEDs, which have created a new age of energy efficiency, lighting customization, and IoT data collection-reconfiguring how we engage with, manage, and integrate lights into our day-to-day activities. Smart lighting has a simple, yet expansive goal-to help clients improve their energy efficiency and lighting operations. In recent years, this has led to novel lighting features that have supported the rise of asset tracking and further integrated building management systems, making Smart Lighting the fastest growing segment in the lighting industry. Smart Lighting is a subset of the Cleantech and PropTech sectors. Commercial and Industrial enterprises make up a very large percentage of total electricity consumption. Small improvements in the energy efficiency of these facilities can have a significant impact on overall energy consumption.

Our portfolio company Digital Lumens Inc., for example, helps customers install an array of integrated lighting solutions and asset tracking sensors. These are connected by a simple, centralized software platform-enabling them to identify energy cost savings and increase visibility into their daily operations. Their Digital Lumens brand serves the industrial sector while the Encelium brand serves the commercial lighting segment. The sector benefits from the increased use of IoT to assist data-driven decision making as well as the focus on environmental consciousness to mitigate excess cost/energy expenditures of lighting and other infrastructure systems.

"Software is revolutionizing the lighting industry. New technologies in cloud, wireless, and sensors allow companies to manage their office lighting environments more efficiently. 

Adaptive lighting can also improve the morale and productivity of staff. Companies that deploy smart lighting control technologies and strategies can also save up to 40percent on their electricity costs and reduce their carbon footprint", said CEO Brian Bernstein, Digital Lumens, Inc.

Despitea wide range of previous developments in the lighting industry, there is still significant room for growth. The transition from incandescent and CFLs to LED’s has led to large energy savings, and now the introduction of automated lighting controls is the next frontier of lighting development. This enables users to manage how their lights are colored, where they are on, how they turn on, and a number of other configurations to best manage lighting efficiency. The advent of IoT and asset tracking has been a key enabling technology, expediting the growth of Smart Lighting with sensors embedded in and around lights to monitor motion and activity—providing critical data insights for how to improve operations and manage assets. Smart Lighting easily integrates into the rest of building systems and is an important part of this push toward smart buildings and smart city ecosystems. The sector, aided by numerous tailwinds, has potential or cost savings.

"The transition from incandescent and CFLs to LED’s has led to large energy savings, and now the introduction of automated lighting controls is the next frontier of lighting development"

There have been some very interesting Smart Lighting transactions as companies seek to increase IP portfolios and create a more cohesive Smart Lighting and BMS (building management system) product set. Companies in the industry can be divided across numerous axes including their hardware/software product offerings, industry focus, and location specification.

On a recent Cleantech Open conference, it was highlighted how commercial and industrial facilities make up a very large percentage of energy consumption. With the shortage of workers and strained supply chains, companies asked how to improve their building operations and boost efficiency with that lower supply of workers and inputs.

These trends point to a continued transition toward energy efficient solutions and IoT products to optimize operations through data. Core to this is easy of use, cost savings, and data that are provided by centralized smart lighting and asset tracking systems. Companies that can provide a comprehensive set of lighting solutions with integrated asset tracking and BMS systems will find increased success while those who offer a more commoditized product set will continue to compete on price and volume.

We expect to see continued investment in the Clean and Prop Tech space in Southern California and the rest of the world as companies seek to improve energy efficiency and channel the insights driven by IoT data and connectivity.
Matt Thompson is a technology investor with Skyview Capital. Matt has an MBA from Stanford Business School and a BA in Economics and Biology from Pomona College. Matt lives in Los Angeles. Kevin Wu is a Skyview Capital Intern.