If you own a home, Sealed has a heat pump to sell you. The Manhattan-based startup, which helps homeowners replace their oil- and gas-gulping heating systems via an unusual financing model, has secured an additional $29.5 million in a new deal led by property-tech investor Fifth Wall. Other investors, including Robert Downey Jr.’s FootPrint Coalition and CityRock, also chipped in.
Heat pumps work by moving heat around, directing it inside or outside your home depending on whether you’re trying to cool down or stay warm. They’re more efficient than their fossil-fueled counterparts, but costly to install, which is where Sealed's model kicks in. The firm covers installation and weatherization costs upfront, billing homeowners monthly based on the energy they save. That means Sealed only gets paid if it succeeds in cutting down energy waste.
The startup's big bet is on its machine learning algorithms, which "really accurately predict a home's future energy usage," CEO Lauren Salz claimed in a call with TechCrunch. Sealed's predictions aren't flawless; sometimes the startup loses money on a contract, sometimes it profits, "but we can balance it out by holding a portfolio of homes," Salz said.
To handle the actual installation, Sealed relies on existing heat pump hardware and connects its customers to a network of contractors, who reduce energy waste via upgrades such as air sealing, insulation and LED bulbs in addition to heat pumps. It’s all “very tried-and-true technology that's been around for decades,” Salz added.
While theoretical solutions to the climate crisis — such as sucking carbon out of the sky at scale — seem to hog the spotlight, the tech that’s needed to tackle climate change is already here, the Intergovernmental Panel on Climate Change concluded in its April report. At the utility level, this means replacing fossil fuel-burning power plants with renewables. Yet this won’t rid homes of fossil fuels unless individual homeowners also ditch oil and gas heating.
Nine-year-old Sealed aims to accelerate that switch in the U.S., using its new funds to expand outside the Northeast for the first time, starting with Chicago. The firm also intends to double the size of its team to around 200 staffers by the end of the year. The $29.5 million deal elevates Sealed’s preexisting $16 million series B to a total of $45.5 million, and it is “definitely a big, big up round,” per Salz. The startup’s valuation now sits in the nine figures, the CEO added, declining to share more.