The two primary mechanisms to improve home energy efficiency is to first target a home’s building envelope (walls, attics, windows, doors, etc.) and to focus on the efficiency of heating, lighting, cooling, and appliance choices. However, the hassle, time, and upfront costs required are an impediment –counter-intuitive as improving energy efficiency is an investment that saves customers money while they are in the home. Sealed is a full-service platform that makes the process of weatherization easy and accessible. The company, through its network of vetted contractors, focuses on insulation upgrades, air sealing, and the installation of efficient heat pump systems. There are no upfront costs as the company has developed a financing arrangement that’s based on actual energy use reduction from Sealed upgrades, aligning the company’s mission of climate tech accessibility with customer interests; typical plans span 20 years. The company is currently serving residential customers in the northeast (NY, NJ, CT, and PA) and recently expanded to Chicago, with plans to serve more markets in the near future.
AlleyWatch caught up with Sealed CEO Lauren Salz to learn more about the business, the company’s strategic plans, latest round of funding, and much, much more…
Who were your investors and how much did you raise?
Sealed expanded its Series B funding, adding $29.5M to the initial (June 2021) $16M B raise from previous investors. The full $45.5M B round was led by Fifth Wall Climate Tech with participation from Robert Downey Jr.’s FootPrint Coalition, CityRock Venture Partners, Cyrus Capital and Keyframe Capital. Sealed’s total capital raised is now $62.5M.
Tell us about the product or service that Sealed offers.
Sealed is a climate tech company that designs, manages, and finances home weatherization and electrification projects, making it easy and affordable for people to be more comfortable while using less energy.
Sealed’s solutions can reduce energy use by 50% and take a home completely off of fossil fuels with upgrades like high-performance insulation, air sealing, and heat pump HVAC.
Sealed offers a unique performance-based payment program that eliminate up-front costs, with customers paying back the financing based on the actual energy reductions that result from the work, so we’re accountable to results and to making an impact
If Sealed doesn’t cut home energy waste, we don’t get paid.
What inspired the start of Sealed?
Homes contribute to 20% of GHG emissions in the US.
The big question we had when we started Sealed was why was there such low adoption of home energy efficiency improvements? Really effective hardware already existed to decarbonized homes: air sealing, insulation, HVAC upgrades, smart home tech, and LED bulbs. It is tried and true technology that is cost-effective, solves a clear customer pain point (drafty, uncomfortable homes, outdated heating/cooling systems. etc.), and is necessary to mitigate climate change.
Through speaking to thousands of homeowners, we realized that there were two primary barriers – hassle and expense. Homeowners know they have a problem, but they don’t know what the solutions are. And even if they did, then they have to figure out the best contractor, or in some cases, a combination of contractors to solve the problem. Most people don’t even make it to the step where they realize how expensive the upfront cost can be.
We started Sealed to make it easy and affordable.
How is Sealed different?
Sealed works directly with homeowners to accelerate energy efficiency improvements and electrification: we design, manage, and finance home weatherization and electrification projects, making it easy for people to be more comfortable while reducing overall energy use by up to 50%.
Sealed is your full-service partner to stop home energy waste and electrify. Instead of making dozens of phone calls to multiple contractors, our customers get a single touchpoint and all-virtual service up to the point of the home improvement work getting done. Sealed vets, matches, and manages the contractors for our customers from the start to the finish of the project.
Sealed is the only company accountable to making an impact: we cover the upfront costs of the improvements, and we only get paid if we cut energy waste in your home.
What market does Sealed target and how big is it?
Sealed’s addressable market is the 100 million+ single-family homes in the U.S. that lack adequate air sealing, insulation, and are filled with fossil fuels for heating and cooling.
Sealed initially focused on its home market in New York State but quickly grew to cover Connecticut, New Jersey, and the Philadelphia metro area.
Sealed just recently expanded operations to the Chicago metro area, and will have more expansions to follow.
These markets represent tens of millions of single-family residential homes that are in need of home weatherization and electrification.
What’s your business model?
Sealed provides two core services: financing and managing (planning, hiring, and working with contractors) home improvements that make homes more comfortable, stop energy waste, and shrink a home’s carbon footprint.
Based on the data we collect on each home, we custom design the best combination of improvements and equipment upgrades that will most effectively cut down energy waste.
Sealed provides two core services: financing and managing (planning, hiring, and working with contractors) home improvements that make homes more comfortable, stop energy waste, and shrink a home’s carbon footprint.
Based on the data we collect on each home, we custom design the best combination of improvements and equipment upgrades that will most effectively cut down energy waste.
Our primary source of revenue comes from the unique performance-based financing we provide that can reduce or eliminate the up-front costs of valuable home improvements.
We cover the upfront costs of the upgrades, and homeowners repay us based on how much the upgrades reduce home energy use. This way, homeowners get to enjoy more comfortable and efficient homes, and can rest assured that they will only pay for our services if we cut energy waste and make an impact.
What are your post-COVID office plans?
We are remote-first and have employees all over the country – we’ve also reopened our NYC HQ office for team members who are local or who want to travel to spend time in the office. The hybrid model has been working well for our modern workforce.
What was the funding process like?
This most recent round was unique because our investors proactively came to us wanting to expand their commitment to our B-round that we announced last May.
Our Series B investors saw our incredible growth–350% from 2020 to 2021–and an increasingly favorable market for our services, and decided to double down.
Raising a larger, second portion of our B round from returning investors was preferable to initiating a C round because it allowed us to work with investors we know and trust while saving our leadership team’s time and allowing them to focus on our ongoing expansion and other operations.
Raising a larger, second portion of our B round from returning investors was preferable to initiating a C round because it allowed us to work with investors we know and trust while saving our leadership team’s time and allowing them to focus on our ongoing expansion and other operations.
The investment follows explosive company growth as homeowners adopt Sealed’s model for eliminating the complications and up-front costs of heat pump HVAC and weatherization that stop energy waste, enhance comfort and slash greenhouse gas emissions.
What are the biggest challenges that you faced while raising capital?
-We were fortunate that the business was doing so well and we did not face any significant challenges while raising capital.
What factors about your business led your investors to write the check?
For this most recent round, our investors saw how quickly we were growing the business–Sealed completed more home energy improvement projects in 2021 than 2012-2020 combined–as well as Americans’ growing interest in reducing energy use and removing fossil fuels from their homes, and jumped at the chance to increase their investments.
Our direct-to-consumer approach is unique in the home improvement space and we have proven that we can successfully scale it up.
In the last few months, we’ve attracted top leaders in the tech industry to our team who will help guide the company as we accelerate our growth: Sarah Pierce (Chief Revenue Officer), Paul Zeckser (VP of Product), and Angela Romano (Chief People Officer).
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Ruthlessly prioritize the most important things to your business. There are things you might have to put on hold for now, but if you’re disciplined and committed to what you’re doing, the odds of riding out a lack of funding go up.
Ruthlessly prioritize the most important things to your business. There are things you might have to put on hold for now, but if you’re disciplined and committed to what you’re doing, the odds of riding out a lack of funding go up.
Where do you see the company going now over the near term?
Americans are waking up to the blight of energy waste in their homes. More and more homeowners are ready to make changes that will stop energy waste, make their homes more comfortable, and reduce climate-changing emissions. We are the best full-service partner to help them make those changes.
We anticipate continued company growth as homeowners adopt Sealed’s model for eliminating the complications and up-front costs of heat pump HVAC and weatherization that stop energy waste, enhance comfort and get fossil fuels out of the home.
We expect consumers’ growing interest in heat pumps to play an important role in near-term growth. In the past five years, Google searches for heat pumps have increased 1000%. In 2021, the share of Sealed projects that included heat pump installation grew 5x over the previous year. Sealed is a market leader in heat pump expertise and we have multiple partners that allow us to source and install heat pumps more quickly than many other home improvement service providers.
What’s your favorite outdoor dining restaurant in NYC?
Bryant Park Grill.
