Venture Capital

Arch Raises $6.2 Million in Seed Funding

SAN FRANCISCO — Arch, operator of a data intelligence platform for HVAC contractors, has raised $6.2 million in seed funding from Gigascale Capital, Coatue, Floodgate, ReGen Ventures, and MCJ Collective. The investment comes as a fast-growing majority of Americans want to electrify their homes amid a shortage of installers and high upfront costs. Arch aims to ease both by transforming the sales process and making heat pumps the obvious financial and performance choice for contractors and homeowners.

The company plans to use the funds to grow its engineering team and expand its customer base in the Northeast and California.

Contractors typically face time-consuming sales processes and low conversion rates, spending 80% of their time on leads that won’t convert, a cost-shared across every installed heat pump. Arch’s System of Intelligence for Revenue Generation integrates data from over 12 sources across internal (e.g., CRM, ERP) and external (e.g., satellite real estate footprints) and uses proprietary algorithms to offer intelligence beyond workflow automation. The platform enables contractors to quickly analyze homes, optimize heat pump systems, and will soon include savings calculations. With these insights, Arch will unlock competitive point-of-sale financing and further boost contractors’ sales.

“I was a solar installer myself, have been on the road with contractors, and know how frustrating it is to invest time upfront and miss out on a sale,” said Phil Krinner, Co-Founder and CEO of Arch. “Heat pumps are currently a black box. By providing insights to contractors, homeowners, and financiers, we’re helping them translate heat pumps into a financial opportunity.”

Electric heat pumps are outselling gas furnaces as consumers navigate roller coaster energy prices, increasingly frequent heatwaves, and take advantage of federal, state, and utility incentives. This critical decarbonization technology cools and heats with significantly lower carbon emissions compared to traditional air-conditioners and furnaces that rely on fossil fuels. Analysis by RMI indicates that replacing a gas furnace with a heat pump can reduce up to 93% of climate pollution.

Rewiring America’s analysis suggests that the Inflation Reduction Act (IRA) will provide American households with an average of $10,600 for full electrification, saving them an average of $1,800 annually on energy bills. In September 2023, a coalition of 25 states, representing 55% of the U.S. population, committed to installing 20 million residential heat pumps by 2030. The International Energy Agency estimates that the U.S. must invest $160 billion annually by 2030 to meet its goals.

Arch is designed to help contractors capitalize on increasing demand by making their work more efficient. It cuts down the time spent on paperwork, site visits, and creating estimates. The platform works similarly to Aurora Solar and is well-placed to benefit from the expected growth in the HVAC sector, which is predicted to grow rapidly like the solar industry. Once a system is designed, the goal is for contractors to use Arch’s savings forecast to provide homeowners with a clear view of a heat pump’s long-term return on investment. Additionally, Arch plans to provide its comprehensive insights to lenders to unlock the industry’s most competitive point-of-sale financing.

“Between falling technology costs, energy volatility, and compelling incentive – heat pumps are becoming a no-brainer for households looking to save money,” said Victoria Beasley, Partner at Gigascale Capital.  “The Arch team is well positioned to take advantage of an exponential growth curve in heat pumps that is set to mirror the growth in solar.”

“Arch’s data intelligence platform seeks to solve an important piece of the heat pump installation puzzle for HVAC contractors,” said Jaimin Rangwalla, Senior Managing Director at Coatue. “We are excited to partner with Arch in this new era of climate-conscious HVAC solutions and we look forward to supporting them on their mission to transform the $126 billion HVAC contractor market in the US.”