If you talk to climate professionals in the Bay Area, there’s a high chance they’ll mention the day “when the sun didn’t rise,” back in 2020. Four years ago, the skies turned darkly orange, obscured by smoke from multiple wildfires.
Four years later, wildfires remain a regular feature of life in the West. As damages mount, fueled by the consequences of climate change, companies vowing to use technology — and especially artificial intelligence — to fight them are having a moment.
Hardware and software startups leveraging AI to prevent, detect, and contain wildfires have been raking in early-stage venture capital money, contracts with utilities, and attention. According to a review of the sector by one such startup, Kodama Systems, there are at least 30 with VC funding in the U.S.
Recently, for example, Rhizome announced a new tool that uses machine learning to assess utilities assets’ likelihood of sparking a fire. A couple of weeks later, both Kodama, which deploys robotics to handle vegetation management, and Pano AI, which uses high-definition cameras to detect early signs of wildfires, made it into a list of the 50 most promising climate-tech companies.
And it’s not just startups. Just last week, Google announced FireSat, a constellation of satellites that can detect small wildfires across the globe in 20 minutes.
But while they may have the potential to help avert another Orange Skies Day (as Wikipedia aptly dubbed September 9, 2020), these VC-backed companies will need to prove their worth to survive for the long haul. This traction reflects the wider opportunity that adaptation tech presents for investors. Abe Yokell, co-founder and managing partner of Congruent Ventures, a climate-tech VC fund and one of the investors in Pano AI, said it’s key to have a clear picture of the commercial counterparty of wildfire-dedicated startups
“Is it government entities? Is it private? What’s that actual go-to-market?” he said. “Everybody knows that wildfires are a huge problem, but who’s the buyer of the solution?”
Slow contracts, but sticky
Sonia Kastner, CEO and founder of Pano AI, agrees.
“Wildfires are a ‘we’ problem, a societal problem,” she told Latitude Media in an email. “And we don’t have to solve climate change to address the wildfire crisis. Investment in wildfire prevention technologies must become a public/private partnership and a priority.”
That said, Bill Clerico, CEO and founder of the wildfire-focused VC fund Convective Capital, sees the space as an “enormous” — even “generational” — kind of opportunity.
“There’s $4 trillion of U.S. real estate at major fire risk or higher,” he told Latitude Media. “Wildfire costs for utilities, government, and insurers are between $30 and $50 billion a year, depending on the year. There’s massive amounts of spending to reduce that risk, and there’s very little technology being applied to that.”
For instance, PG&E filed for bankruptcy in 2019 after having accumulated an estimated $30 billion in liability for fires started by its assets. In the wake of that crisis, it has become clear to utilities in California and beyond that utilities are sorely in need of the solutions these startups are engineering.
Today, Austin Energy, Xcel Energy, and Portland General Electric, are among Pano AI’s clients. And the startup piloted its technology with PG&E via the Electric Power Research Institute in 2021.
As Kastner explained, Pano AI operates on a subscription-based model where customers pay an annual fee for a comprehensive wildfire detection service, including the installation and maintenance of camera systems, an AI-driven detection software and patented triangulation process, and monitoring by analysts — as well as continuous software updates, hardware maintenance, and support.
This software-as-a-service (SaaS) model is shared by the vast majority of startups using technology to fight wildfires. In addition to utilities, government agencies, and insurance companies tend to be the main subscribers.
“These are incredibly deep-pocketed institutions, but they’re also incredibly slow institutions,” Clerico said. “In the startup world, figuring out how to get momentum with that group and get that first contract, and that second contract, that third contract, that’s the hard part. Once you get over that hump, it’s easy to have long-term, sticky contracts.”
Interoperability of systems
Like many climate tech subsectors, though, using tech for wildfire fighting is still an immature space, one without a track record of exits.
Joshua Posamentier, Congruent Ventures managing partner and co-founder, thinks that SaaS businesses with a purpose have a lot of value from a VC perspective.
“You get a business like that up to $200 million and it’s credibly a standalone [company],” he said. He acknowledged, however, that not every wildfire-focused startup currently in the market will have such a growth curve, and some of the companies will likely have to “slot into” something else in the future.
Meanwhile, large companies like Google — which is tackling extreme heat and wildfires mostly out of a sense of social responsibility — are waiting on the other side to greet the players who make it.
And Kate Dargan Marquis, former fire marshal and senior advisor for the Moore Foundation’s Wildfire Resilience Initiative, which is supporting Google’s FireSat system, says there isn’t just one technological approach that will win out. Preventing and managing wildfires will involve all the technologies that different startups are developing, she said — from vegetation management to smoke sensors to visual detection.
“It’s a dynamic system,” she said during a press conference announcing FireSat’s launch. “All of those are part of the artificial intelligence and interoperability of systems that we’re envisioning.”
