POWER: Co.’s System AdjustsEnvironment in Empty Rooms■ By BRITTANY MEILING

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TMVolume 37, Number 33 August 15-21, 2016 $2.00

Startup

Acquisition

The Lists

Retail Centers 20Office Parks 22Commercial Real Estate Brokers 26Industrial Parks 32

ROAST MASTERS

BEVERAGE: S.D. Coffee Culture Advances To the Next Level

■ By BRITTANY MEILING

Coffee page 44

Conectric page 45

Jamie Scott Lytle

Laurie Britton, owner of Café Virtuoso, said when coffee is done right, “you can enjoy it black.”

Hotels Get In-Room Help Saving Energy

Partners Take HolisticApproach to M&AFINANCE: New InvestmentBank Won’t Parcel Out Process■ By SARAH DE CRESCENZO

An investment banker and the head of mar-keting operations for a division of the nation’s largest energy retailer have teamed up to open a Del Mar-based investment bank focused on mergers and acquisitions.

Ashish Jariwala and Zaheer Dhruv , who met about 10 years ago, recently launched PierCap Partners LLC , the name a reference to the ar-chitectural element that manages the stresses between a bridge and the piers that support it.

The founding partners, also the firm’s managing directors, said they intend to limit the number of transactions to ensure they both are involved from start to � nish.

Special Report: Commercial Real Estate

Adigica page 55

Teens Targeted WithSubscription SkincareRETAIL: E-Commerce TacticsTo Open Up Market for Adigica■ By BRITTANY MEILING

One of the biggest names in local biotech, David Hale , is joining forces with an e-com-merce expert to bring the sale of skincare products into the digital age.

The � rm, called Adigica Health, is a bit of a hybrid between a tech startup and a cosmetics company. It’s starting out with a skincare treatment for teenagers dealing with acne.

Skincare is an area of familiarity for Hale, as he served as chairman of SkinMedica for over a decade until it was sold to Allergan

Bradon Young and Garrett Mincks have bootstrapped their company, YouBackpacking. The entrepreneurs are looking to capture the adventuresome travelers among the millennial crowd. Page 8

Naveen Rao, founder and CEO of Nervana Systems, a deep-learning startup, has sold his company to Intel Corp. Intel says the deal is part of the plan to boost its AI portfolio through acquisitions.Page 3

and craftsmanship. The craft coffee scene is big

in San Francisco, Seattle and New York, and San Diego’s own coffee culture is growing up fast.

Earlier this year, San Diego was named the sixth best coffee

city in the U.S. by data-driven � ntech company SmartAsset — trailing the above mentioned coffee hubs, along with Portland and Oakland.

SmartAsset collected data on the 100

San Diego’s craft beer brew-ers — with their sophisticated palates and purist culture — may be priming the region for another kind of brew business: artisan coffee.

“The craft beer industry has educated San Diegans about micro-regional artisans,” said Chuck Patton , owner of Bird Rock Coffee Roasters , a popular local bean roaster on the coast.

Now, he says, people are practiced in buying local, and more tuned in to quality

Hotels waste a lot of energy when they heat and cool the booked — yet empty — rooms of travelers. And those sky-high utility bills end up taking a sizable chunk from the hotel’s bottom line.

“Hotels are one of the few businesses open 24 hours a day, 365 days a year,” said Phillip Kopp , founder and CEO of Conectric Networks LLC . “The problem is that they’re actually unoccupied most of the time. Unless guests are sleeping, these rooms are empty.”

At the same time, hotels can’t exactly force customers to be environmental stewards and turn off air conditioning when they leave the room. Forward-thinking hotels are in quite the

PierCap page 46

David Hale

Industry experts forecast that high demand and low vacancy will fuel the local market for the next couple of years.Page 15

Jamie Scott Lytle

Laurie Britton, owner of Café Virtuoso, said when coffee is done right, “you can enjoy it black.”

Jamie Scott LytleJamie Scott LytleJamie Scott Lytle

Laurie Britton, owner Laurie Britton, owner Laurie Britton, owner of Café Virtuoso, of Café Virtuoso, of Café Virtuoso, said when coffee is said when coffee is said when coffee is done right, “you can done right, “you can done right, “you can enjoy it black.”enjoy it black.”enjoy it black.”

Jamie Scott Lytle

Laurie Britton, owner of Café Virtuoso, said when coffee is done right, “you can enjoy it black.”

AUGUST 15, 2016 SAN DIEGO BUSINESS JOURNAL 45Local breaking news: www.sdbj.com

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from page 1

Conectric:pickle, trying to balance environmental sustainability and utility cost savings with customer comfort.

Conectric Networks, a cleantech startup in San Diego, has developed an arti� cial intelligence control system for hotels to better manage their energy costs.

In short, Conec-tric provides hotels with sensors that can tell when a room is occupied and when it is vacant. Then, through its AI-enabled software, Conectric can “turn down the dial” on electricity usage. Think of it as the “internet of hotel things.”

The � rst generation of this system is already installed at 14 sites, including AccorHotels and Barceló Hotels .

Saving the Grid?Founded in late 2015, Conectric has

already made some huge inroads in the energy management industry. That’s be-cause Conectric’s service does a whole lot more than save hotels on their energy bill. Its energy management system could be the answer to what Kopp calls “the U.S. power grid crisis.”

“We live in an entirely electric society that’s depending on a system — the U.S. power grid — that’s highly unstable and on the verge of collapse,” Kopp said.

That’s because the massive in� ux of solar power has caused an unregulated energy dump into the power grid that can create problems for energy management.

“Solar customers are essentially using

the grid as their battery storage, but they’re not paying for its infrastructure,” said Eric Clifton , CEO of battery � rm Orison , in an interview earlier this year. “As more cus-tomers put power on the grid, it becomes a real problem. Utility companies have to buy power in blocks from a regulated market, and putting excess power from renewables on the grid upsets the balance and makes it dif� cult to manage.”

IoT NetworksKopp said the situation is a little more

urgent than most people realize.“The whole energy grid is imploding,

and their nearest-term solution (besides killing the solar industry) is installing batteries everywhere that can store and release energy,” Kopp said. “Alternative-ly, we can use Internet of Things (IoT) networks that can turn things on and off when it’s convenient for the grid.”

This IoT management of power is called “the virtual grid,” and it’s a concept that could mean big money to whichever company � gures it out.

Conectric is eyeing this market for the future, but managing (and reducing) the electricity draw of major facilities like hotels is a good place to start.

$4 Million GrantThe energy sector is taking notice of

Conectric’s ideas. Conectric is sharing a $4 million grant from the California Energy Commission and the California Center for Sustainable Energy to pilot its energy management system for hotels here in San Diego.

As part of the grant, Conectric will install its system in two hotels, and con-sultants from Europe will analyze the value of the hotels’ savings to the power grid at large.

Ideally, Conectric will be able to save

enough power per hotel that the hotel will — for all intents and purposes — be classi� ed as an “electricity generator.” Not because it’s creating power, per se, but because it’s saving so much power that it’s creating “negative energy.” And negative energy is just as valuable to util-ity companies as new energy, Kopp said.

“Essentially, these buildings will receive payments from SG&E just like (nuclear power plant) San Onofre,” Kopp said. “Because the hotels are now ‘generators.’ ”

Making It PayHow does this benefit Conectric?

Well, the startup actually owns all of the above-referenced payments from SDG&E and other energy distribution companies. But that doesn’t mean the hotels miss out on the extra cash. Conectric plans to keep about 70 percent of the payments, and distribute the remaining 30 percent to the hotels that are saving energy.

So the value proposition for hotels is twofold: save money on the electricity bill by reducing energy waste in unoccupied rooms, and later receive cash payments from utility companies via Conectric for the excess power being saved. That could be a lot of savings for a service that only costs about $10 per room per month for the hotel.

And the value proposition for utility companies is also clear. In fact, Paci� c Gas & Electric Co. in Northern Califor-nia just agreed to pay any hotels’ upfront costs to use Conectric’s service so that they can bene� t from the power savings.

Kopp said that once Conectric has landed 10 new contracts in that territory, it will begin raising a $3 million Series A round of funding.

By 2017, Kopp said he expects the company will generate about $3 million in annual revenue.

Phillip Kopp

Free ShuttleService BeginsDowntown ■ By LOU HIRSH

San Diego city and business development leaders have of� cially launched a free downtown circulator shuttle service, now called FRED. The acronym for the service, which uses all-electric vehicles, stands for Free Ride Everywhere Downtown.

The program started Aug. 9 with 15 advertiser-supported vehicles, with the � eet expected to grow to 20 within the � rst year. Civic San Diego has budgeted $500,000 initially from downtown parking revenue to cover startup costs in expanding a previ-ously existing � ve-vehicle service that was already being operated by The Free Ride , a Florida-based company.

A statement from Civic San Diego said the service uses � ve-passenger vehicles that can be hailed or sched-uled for pickups via a mobile app. Shuttles have been made free to the public through dedicated funding from Civic San Diego, which man-ages the downtown community parking district, and private spon-sorships.

Of� cials said FRED is the � rst program of its size in a major met-ropolitan U.S. city. The city’s goal is to have the program become fully sustainable through private sponsor-ships over the next few years, with public funds to be phased out.