Pacific Northwest companies merge and raise cash to build energy efficient, modular construction tech
While COVID-19 and vaccinations have pushed many into us-versus-them camps, for Bec Chapin, the pandemic instead inspired an appreciation for how much we’re connected.
“We’re in it together already,” Chapin said. “So let’s be together.”
Chapin realized that togetherness in a newly announced business merger between NODE, the Seattle-based, carbon-cutting construction company that they co-founded, and Seattle and Portland’s Green Canopy, an eco-focused real estate developer and home builder. The venture, called Green Canopy NODE, has raised $10 million in new funding to help launch the partnership. The business has 31 employees and expects to double that number over the next year.
Chapin will be co-chief executive alongside Green Canopy co-founder Aaron Fairchild. The business will maintain offices in both cities. Splitting the CEO role will require a lot of collaboration and clear communication, Chapin said, but the model, which is more commonly found in European leadership structures, is a workable one.
“We have a ‘king complex’ in the U.S.,” they said. “It ends up that we can really collaborate. Together we can be exponentially more effective.”
Chapin and Fairchild have already demonstrated their professional compatibility. Chapin worked for Green Canopy for a few years, helping the business reorganize to cut costs and improve speed. Chapin admits to re-organizing themselves out of a job, but their friendship with Fairchild endured. In fact, Fairchild is the one who connected Chapin with Don Bunnell and the two launched NODE in 2016. The startup was featured in GeekWire in 2018.
With the merger, Bunnell has left day-to-day operations and is serving on the company’s board of directors.
Greening construction using tech
There’s general agreement that the construction sector is well overdue for modernizing, and many see modular or prefab technology as part of the solution. NODE has been developing an approach to building energy-saving homes out of pre-fabricated components made from environmentally friendly materials. The strategy cuts the amount of labor needed, has a smaller carbon-footprint and could help address the housing shortage, Chapin said.
But construction technology is a tricky business to make profitable and to scale, particularly when getting started. One of the big challenges is the super slow permitting process. It takes 12-to-18 months in Seattle for building permits to be approved; in nearby Tacoma it’s three months.
“Think about your startup mentality,” Chapin said. The time scale is totally different. “It’s what can you do in one month, what can you do in a week?”
And it’s a complicated ecosystem with lots of moving parts. Merging with Green Canopy, which started in 2010, helps flesh out that ecosystem. The Portland business encompasses real estate development, manages real estate funds, and provides project design, feasibility and construction of energy-efficient residential multi-family projects.
The merged business will incorporate the structural panels that NODE has developed into Green Canopy projects. The long-term plan is to engineer a system of modular panels that will assemble into an entire home. Chapin hopes to reach that goal within two years, and ultimately create a modular kit that anyone could order and hire an independent contractor to assemble.
Riding the climate tech wave
Green Canopy NODE is part of the Pacific Northwest’s growing climate tech sector, which includes businesses trying to cut the carbon emissions associated with construction, transportation, agriculture and energy production. Climate tech companies in the region have landed more that $1 billion in capital since the start of 2020, according to a GeekWire analysis.
Before this latest round, Green Canopy raised nearly $15 million and NODE has received $2.8 million from investors. The new round includes Chloe Capital, Portland Seed Fund, Techstars and others.
There are other successful companies building energy-efficient, modular, sustainable housing and commercial spaces:
- Sustainable Living Innovations is a Seattle tech company that in June broke ground on a 15-story development that’s pegged as the world’s first “net zero energy” high-rise apartment building.
- Seattle startup Blokable creates modular homes with a focus on steel-frame designs that are suitable for stacking into large, multi-family units. The company launched in 2016, has raised more than $30 million and expanded into California.
- Method Homes is a long-time Northwest modular home company that includes energy-efficient designs.
- Vancouver, B.C.-based Nexii is a green, modular, commercial construction company recently valued at $1 billion.
But the sector has had notable failures as well. California-based construction giant Katerra went bankrupt in June, despite raising more than $2 billion in venture capital. The company worked on more than 10 projects in Washington, and in 2019 opened a 270,000 square-foot timber factory in Spokane, Wash. The business was working on modular building and other technologies, but experts say it tried to do too much too quickly.
Greenfab, a trio of Seattle companies that designed and constructed environmental, pre-fab homes, filed for bankruptcy in June 2020. Greenfab had operated for 11 years and left customers in a lurch with the sudden closure, according to news reports.