The World Health Organization (WHO) estimates 92% of the global population live in areas where air pollution exceeds safe limits. Following global lock-downs due to Covid-19, people are starting to return to commercial buildings. For regulators and building owners, sanitation and air quality are front of mind. As such, landlords will be seeking tools to ensure their buildings are as safe as possible. Additionally, rising consumer awareness of indoor air pollution, airborne allergens and viruses are driving the market for domestic air monitoring and purification solutions. This insight outlines the market attractiveness and the business activities of innovators and incumbents of the indoor environmental monitoring market.
The indoor air quality market is expected to grow by $1.17 billion from 2020 – 2024, at a 6% CAGR. It is estimated the APAC region will take the lead, accounting for 34% of the growth, followed by the US and then Europe. In APAC countries, indoor air quality monitoring held a 71% share of the wider air quality market with a 9.3% CAGR. The fastest growth market is in China due to expanding air pollution contributing to the increasing prevalence of respiratory diseases.
Buildings will play a vital role in minimizing viral transmission of Covid-19. It is estimated enhancing indoor air quality (IAQ) could be as effective in reducing aerosol transmission of viruses as vaccinating 50%-60% of the population. Historic efforts to address IAQ have focussed on CO2, Particulate Matter (PM) and Volatile Organic Compounds (VOC), which are getting worse in most urban areas. As such, monitoring, control technology solutions and software will likely see an uptick in growth.
Innovators are offering air quality monitoring and purification systems as a package. The monitoring aspect allows the user to modify the air purification system and separate Heating, Ventilation and Air Conditioning (HVAC) systems, accordingly. For purification systems to work effectively, filters need to be regularly changed. Innovators are responding to this need and ensuring ongoing revenue in the process. For example, Second Nature offers subscription service for air filters with varying degrees of filtration capabilities.
There is a market preference for live and continuous monitoring systems, enabled by the advancement of more accurate sensors, moving down the cost curve. Many companies focused on indoor air quality have emerged this year with accelerator support, seed and Series A funding. These include:
- March 2020: Second Nature, the US-based provider of air water filter subscription services, raised $16 million in a Series B round, led by investors MANN+HUMMEL, IDEA Fund Partners, Multiplier Capital, Lead Edge Capital, Arsenal Growth and Bonaventure Capital. Funding is to help launch a new product range of home filters.
- May 2020: HawaDawa, was selected to join the BMW Foundation’s Accelerator program called RESPOND. HawaDawa, developer of indoor and outdoor sensor-based air quality monitoring, provides remote and real-time air quality data.
- August 2020: Aeris Health, developer of AI smart domestic air purifiers, raised $3.3 million in a Series A round led by Tencent co-founder Vic Lee, Tinder co-founder Justin Mateen, PreAngel and Sarona Ventures. The company is primarily established in China and Hong Kong but entered the US market in 2019 via partnerships with retailers such as Target, QVC and Amazon.
- September 2020: Clarify was selected to join the virtual Plug and Play Tech Centre Internet of Things Accelerator. Based in the Netherlands, Clarify has developed an indoor environmental monitoring software and sensor system to improve health and comfort. In June 2020, Clarify launched its V2 Sensor, promoting good indoor air quality for those returning to office spaces following Covid-19.
Incumbents in this space are industrial manufacturing and electric technology providers such as Siemens, Emerson Electric, 3M, Honeywell and Thermo Fisher. These incumbents are well established in both the commercial and industrial markets and can include air quality monitoring into existing infrastructure offerings like HVAC systems. In May 2020, Honeywell launched ‘Honeywell’s Healthy Buildings’ solution, an integrated system to help commercial building owners improve the safety of indoor environments. The system integrates air quality, safety and security technologies along with advanced analytics. Similarly, in July 2020, Siemens launched a complete package of ‘digital solutions’ for workplaces to adapt to new Covid-19 safety requirements. The package included: IoT solutions to support social distancing, indoor air quality optimization, and secure remote-monitoring of a building’s systems. While the incumbents are positioned to win a lot of this business, opportunities for innovators still exist in the decentralized, smaller scale and domestic markets.
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In addition to monitoring IAQ, innovators are developing sensors to detect viruses and diseases in real-time to provide resilience and avoid business interruption from threats like Covid-19. For example, BioFlyte has developed air quality sensors which detect microbes and toxins in real-time. The company is one of the first to commercialize portable biological threat detection and identification devices, which are intended for emergency response teams. In June 2020, BioFlyte raised $1.25 million in a seed round led by Anzu Partners. The company intends to use the funding to accelerate the development of its sensors. Going forwards, we expect greater specialization and flexibility of air monitoring solutions for specific pollutants, diseases and viruses as they arise. This will provide greater resilience against compounding environmental risks like air pollution and COVID-19.