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Autonomous building tech company PassiveLogic is gearing up to ship its product in 2023 – Fortune

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The first time I spoke with Troy Harvey, co-founder of the autonomous building technology company PassiveLogic, we ended up on the phone for over an hour—mostly because it took about that long for me to start piecing together exactly what it is he does. 
For years, Harvey and Jeremy Fillingim have been thinking big—really big—about how to assemble a new tech platform to tackle energy inefficiencies in what Harvey describes as the most complex things humans make: Buildings.
A high-end vehicle may have around 30 electronic systems and 100 sensors (think parking sensors or fuel temperature sensors). But some commercial buildings, Harvey says, have 500,000 inputs and outputs. And no one single technology system controls them. The thermostats, pumps, boilers, evaporator coolers—you name it—are all working separately without talking to one another, and consuming that much more energy. 
To address those inefficiencies (and aim to conserve about 30% of a building’s energy output), PassiveLogic’s 90-person team has been building a platform that offers buildings level five autonomy—where artificial intelligence is used to optimize millions of different control paths. The tech is meant to work in the background, controlling each part of an industrial or residential building’s functions, without needing the human input that smart devices require. PassiveLogic has been testing its technology with an early subset of customers, and it plans to start shipping its initial product at the beginning of next year, Harvey says, declining to comment on the initial contracts. The company also plans to sell its cloud services on what is basically the equivalent of an app store for buildings. 
The funding for PassiveLogic started pouring in from VCs at the end of 2020. That October, Keyframe Capital Partners and Addition led a $16 million Series A round for the company. Earlier this year, it raised a $34 million Series B round, and then an additional $15 million in April, led by Brookfield Growth, the growth investing arm of real estate giant Brookfield, which is one of the companies now working with PassiveLogic. Harvey told me earlier this year he was spending  “a good bit” of his week now fielding inbound investor calls.
But the interest from venture investors has only come more recently. “Five years ago, we were at the idea stage with a little bit of prototype technology, and we went up and down Sand Hill Road,” Harvey says, noting that venture capitalists kept saying: “I don’t get it.” Interestingly, that’s a sentiment I’ve heard before from other founders pitching complicated, innovative technologies. 
It’s the Department of Energy that has been most bullish on the technology’s potential, according to Harvey, who says that “government’s been a big part of how we got to this point.” The Department of Energy funded the company’s initial tech development via a grant that PassiveLogic used to develop its digital twin technology, which can be used to digitally describe spaces, systems, and occupants of a building, and develop control systems automatically.
Now that the technology is getting closer to initial deployment and PassiveLogic is working with Brookfield and Amazon warehouse owner Prologis, the DOE is circling back to the startup with $1 million for a two-year partnership between it and the Pacific Northwest National Laboratory (PNNL). Together they plan to conduct research and develop deep artificial intelligence for predictive building control, with an aim to improve the energy efficiency of four million buildings by 2030—lining up with a key priority of the current administration to substantially reduce net greenhouse gas pollution by that year.
An important part of the project is that PNNL will provide open-source generic code libraries for deep learning models, so that other industry stakeholders (think control companies or engineering firms) can integrate the software into their own workflows, according to Draguna Vrabie, Chief Data Scientist at PNNL.
The framework “is not specific to buildings,” Vrabie tells me. Her team of data scientists and computer engineers are thinking bigger about what the predictive technology could mean for a wider range of application areas and complex energy systems.
Harvey may be a founder without a product quite yet on the market, but he gets energetic when talking about the downturn. 
For him it means more people available to hire, and, very importantly, cleaning up the supply chain. Bottlenecks stemming from the pandemic have forced PassiveLogic to put in orders for parts they won’t need for another three years. Those time tables are already shrinking, Harvey says.
But Harvey also says he is ready for venture capital dollars to start pouring into more transformational projects, rather than “lightweight” technologies that turn a quick profit.
“The investments in actual technology are lower than they’ve been in 40 years,” Harvey says, adding later: “I think this is going to be a cleaning cycle for some of that behavior that has been maybe profitable to a certain extent, but not very meaningful.”
After all, while Harvey initially struggled to explain to VCs what his team was building, it didn’t take long for his mechanical and electrical engineers, installer, and technician customer base to get the idea—particularly if you ask John Arfman, whose company, TEC Systems, manages the technology systems for about 250 buildings, primarily in New York City, and has been involved in the testing of PassiveLogic’s product. Arfman points out that they are still a ways out from widely installing PassiveLogic’s predictive control technology, but he’s optimistic and very enthusiastic about what he has seen so far.
“When I first met Troy, I was not positive that he [could] pull this all off. But if he can pull off 50% of it, he’s going to transform our entire industry,” Arfman says.  
Until Monday,
Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
Submit a deal for the Term Sheet newsletter here.
Correction: A previous version of this newsletter misstated the number of employees at PassiveLogic.
Jackson Fordyce curated the deals section of today’s newsletter.
VENTURE DEALS
IDRx, a Boston-based clinical-stage cancer treatment biopharmaceutical company, raised $122 million in Series A funding. Andreessen Horowitz and Casdin Capital led the round and were joined by investors including Nextech Invest, Forge Life Science Partners, and others.
PayIt, a Kansas City-based digital government services and payments platform, raised $90 million in funding from Macquarie Capital Principal Finance.
Orange EV, a Kansas City-based EV manufacturer, raised $35 million co-led by S2G Ventures and CCI
Arena AI, a New York-based autonomous operating system platform provider, raised $32 million in Series A funding. Initialized Capital and Goldcrest Capital led the round and were joined by investors including Peter Thiel, General David Petraeus, Michael Siebel, and other angels. 
Mosey, a San Francisco-based employment and tax compliance platform, raised $18 million in Series A funding. Canaan led the round and was joined by investors including Gusto, SemperVirens, and Charge
Locket, a Los Angeles-based photo-sharing widget, raised $12.5 million in funding. Sam Altman led the round and was joined by investors including Sugar Capital, Costanoa Ventures, Instagram co-founder Mike Krieger, Quora CEO Adam D'Angelo, and others.  
Stride, a New York-based multichain liquid staking protocol, raised $6.7 million in seed funding. North Island VC, Distributed Global, and Pantera Capital co-led the round and were joined by investors including Imperator, Cosmostation, Everstake, Staking Facilities, 1Confirmation, Cerulean Ventures, Node VC, Picus Capital, and Road Capital.
Sportsbox AI, a Bellevue, Wash.-based 3D motion capture technology company, raised $5.5 million in seed funding led by EP Golf Ventures.
Glambook, a Berlin-based SaaS beauty platform, raised $2.5 million led by Endel CEO Vlad Pinskj
Clutch, a Houston-based digital marketplace company, raised $1.2 million in pre-seed funding. Precursor Ventures led the round and was joined by investors including Capital Factory and HearstLab
Ruuf, a Santiago, Chile-based solar power marketplace, raised $1 million in seed funding. Positive Ventures and Collaborative Fund co-led the round and were joined by investors including Harvard Business School Rock Center Accelerator, Harvard Innovation Labs, and Chile's Former Minister of Energy Juan Carlos Jobet .
PRIVATE EQUITY
Accelalpha, backed by Century Park, acquired Frontera Consulting, a Hong Kong, London, and New York-based Oracle cloud consulting services provider. Financial terms were not disclosed. 
Highview Capital acquired WilMar, a Vernon, Calif.-based meat packing company. Financial terms were not disclosed. Per terms of the deal, WilMar will merge with Highview’s portfolio company, Randall Foods.
Thompson Street Capital Partners acquired a majority stake in Recovery Benefit Group, a Memphis-based subrogation services provider. Financial terms were not disclosed. 
EXITS
Siemens acquired Brightly Software, a Cary, N.C.-based asset management and facility operations management SaaS provider, from Clearlake Capital Group for $1.875 billion. 
OTHER
Amgen agreed to acquire ChemoCentryx, a San Carlos, Calif.-based rare diseases biopharmaceutical company, for $3.7 billion. 
Gilead Sciences agreed to acquire MiroBio, an Oxford, U.K.-based biotech focused on autoimmune health, for approximately $405 million.
Dentsu Group acquired a majority stake in Extentia, a Pune, India-based mobility, cloud engineering, and UX technology and services firm. 
Roofstock acquired RentPrep, a Lancaster, N.Y.-based tenant screening company for landlords. Financial terms were not disclosed.
Topia acquired Pearl Global Tech, a San Francisco-based immigration risk engine and knowledge base. Financial terms were not disclosed. 
IPOS
Burjeel Holdings, an Abu Dhabi-based health care provider, plans to raise at least $750 million from an initial public offering in Abu Dhabi this year, according to Bloomberg.
SPAC
Bridger Aerospace Group Holdings, a Bozeman, Mont.-based aerial firefighting services provider, agreed to go public via a merger with Jack Creek Investment Corp., a SPAC. A deal would value the company at $869 million. 
Plastiq, a San Francisco-based payments provider, agreed to go public via a merger with Colonnade Acquisition Corp. II, a SPAC. A deal will value the company at about $480 million, including debt. Kleiner Perkins, B Capital Group, and Khosla Ventures back the company.
FUNDS + FUNDS OF FUNDS
Top Tier Capital Partners, a San Francisco-based investment manager, raised $925 million for a fund focused on late-stage climate tech co-investments.
HighPost Capital, a New York-based private investment firm, raised $535 million for a fund focused on the consumer sector.
PEOPLE
AE Industrial Partners, a Boca Raton, Fla.-based private equity firm, promoted Nathan Dickstein to managing director and head of the AE Industrial Partners Aerospace Opportunities Fund.
Kickstart, a Cottonwood Heights, Utah-based venture capital firm, hired Kat Kennedy as general partner. Formerly, she was with Degreed.
TSG Consumer Partners, a San Francisco-based private equity firm, promoted Drew Weilbacher to managing director.
This is the web version of Term Sheet, a daily newsletter on the biggest deals and dealmakers. Sign up to get it delivered free to your inbox.
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Biden begs for money for 2024 Campaign from local SF Bay Area tech leaders and talks AI

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Biden discusses risks and promises of artificial intelligence with tech leaders in San Francisco

SAN FRANCISCO (AP) — President Joe Biden convened a group of technology leaders on Tuesday to debate what he called the “risks and enormous promises” of artificial intelligence.

The Biden administration is seeking to figure out how to regulate the emergent field of AI, looking for ways to nurture its potential for economic growth and national security and protect against its potential dangers.

“We’ll see more technological change in the next 10 years that we saw in the last 50 years,” Biden said as the meeting with eight technology experts from academia and advocacy groups kicked off.

“AI is already driving that change,” Biden said.

The sudden emergence of AI chatbot ChatGPT and other tools has jumpstarted investment in the sector. AI tools are able to craft human-like text, music, images and computer code. This form of automation could increase the productivity of workers, but experts warn of numerous risks.

The technology could be used to replace workers, causing layoffs. It’s already being deployed in false images and videos, becoming a vehicle of disinformation that could undermine democratic elections. Governments, as well as the European Union, have said they are determined to regulate and put brakes on AI before it is too late.

Biden said social media has already shown the harm technology can do “without the right safeguards in place.”

In May, Biden’s administration brought together tech CEOs at the White House to discuss these issues, with the Democratic president telling them, “What you’re doing has enormous potential and enormous danger.”

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White House chief of staff Jeff Zients’ office is developing a set of actions the federal government can take over the coming weeks regarding AI, according to the White House. Top officials are meeting two to three times each week on this issue, in addition to the daily work of federal agencies. The administration wants commitments from private companies to address the possible risks from AI.

Biden met Tuesday at the Fairmont hotel in San Francisco with Tristan Harris, executive director of the Center for Human Technology; Jim Steyer, the CEO of Common Sense Media; and Joy Buolamwin, founder of the Algorithmic Justice League, among others. California Gov. Gavin Newsom was also in attendance.

Biden is also in the San Francisco area to raise money for this 2024 reelection campaign. At his first fundraiser of the night, Biden spoke about what he saw as freedoms under siege, particularly for the LGBTQ community and with the overturning of abortion protections by the U.S. Supreme Court. And as president, it’s his job to help safeguard the right to choose.

“I think the American people need to have the confidence that we’re going to do what we say we’re going to do,” he said.

Climate change has also been a priority in Biden’s speeches at the fundraisers. On Tuesday, he told a group that he expects that John Kerry, the special envoy for climate, will soon return to China for talks on reducing carbon emissions.

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Associated Press writer Barbara Ortutay in San Francisco contributed to this report.

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Microsoft makes case for Activision merger amid EU scrutiny

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Microsoft makes case for Activision merger amid EU scrutiny

BRUSSELS (AP) — Microsoft’s Xbox video game division on Tuesday announced new partnerships with Nintendo and chipmaker Nvidia as it tries to persuade European regulators to approve its planned $68.7 billion takeover of game publishing giant Activision Blizzard.

A key audience for the announcements were the European Union antitrust regulators who held a closed-door meeting Tuesday with executives from Microsoft and some of its competitors, including Sony and Google.

Microsoft announced a 10-year agreement with chipmaker Nvidia to bring Xbox games to Nvidia’s cloud gaming service. Microsoft also said it has now signed a similar deal with Nintendo, formalizing a commitment it revealed late last year.

What it does not have is an agreement with Xbox’s chief rival, PlayStation-maker Sony, which has sought to convince antitrust regulators around the world to stop the Activision Blizzard merger.

The all-cash deal, which is set to be the largest in the history of the tech industry, faces pushback from regulators in the U.S. and Europe because it would give Microsoft control of popular game franchises such as Call of Duty, World of Warcraft and Candy Crush.

The European Commission, the 27-nation bloc’s executive arm, has been investigating whether the merger would distort fair competition to popular Activision Blizzard game titles. It’s scheduled to make a decision by March 23.

Microsoft first announced the agreement to buy the California-based game publisher early last year, but the takeover has also been stalled in the U.S., where the Federal Trade Commission has sued to block the deal, and in Britain, where an antitrust watchdog’s provisional report said it will stifle competition and hurt gamers.

Microsoft, which is based in Redmond, Washington, has been counting on getting approval in either the EU or Britain to help advance its case in the U.S.

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Microsoft’s president, Brad Smith, said at a Brussels news conference after meeting with regulators Tuesday that he was “not in a position to say exactly what was said in the hearing room” but emphasized that Xbox has a much smaller share of the market than PlayStation does in Europe, and asserted that the deal would be good for the industry by bringing more games to more people.

“For us at Microsoft, this has never been about spending $69 billion so that we could acquire titles like Call of Duty and make them less available to people,” Smith said. “That’s actually not a great way to turn a $69 billion asset into something that will become more valuable over time.”

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Amid ChatGPT outcry, some teachers are inviting AI to class

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Amid ChatGPT outcry, some teachers are inviting AI to class

LEXINGTON, Ky. (AP) — Under the fluorescent lights of a fifth grade classroom in Lexington, Kentucky, Donnie Piercey instructed his 23 students to try and outwit the “robot” that was churning out writing assignments.

The robot was the new artificial intelligence tool ChatGPT, which can generate everything from essays and haikus to term papers within seconds. The technology has panicked teachers and prompted school districts to block access to the site. But Piercey has taken another approach by embracing it as a teaching tool, saying his job is to prepare students for a world where knowledge of AI will be required.

“This is the future,” said Piercey, who describes ChatGPT as just the latest technology in his 17 years of teaching that prompted concerns about the potential for cheating. The calculator, spellcheck, Google, Wikipedia, YouTube. Now all his students have Chromebooks on their desks. “As educators, we haven’t figured out the best way to use artificial intelligence yet. But it’s coming, whether we want it to or not.”

One exercise in his class pitted students against the machine in a lively, interactive writing game. Piercey asked students to “Find the Bot:” Each student summarized a text about boxing champion and Kentucky icon Muhammad Ali, then tried to figure out which was written by the chatbot.

At the elementary school level, Piercey is less worried about cheating and plagiarism than high school teachers. His district has blocked students from ChatGPT while allowing teacher access. Many educators around the country say districts need time to evaluate and figure out the chatbot but also acknowledge the futility of a ban that today’s tech-savvy students can work around.

“To be perfectly honest, do I wish it could be uninvented? Yes. But it happened,” said Steve Darlow, the technology trainer at Florida’s Santa Rosa County District Schools, which has blocked the application on school-issued devices and networks.

He sees the advent of AI platforms as both “revolutionary and disruptive” to education. He envisions teachers asking ChatGPT to make “amazing lesson plans for a substitute” or even for help grading papers. “I know it’s lofty talk, but this is a real game changer. You are going to have an advantage in life and business and education from using it.”

ChatGPT quickly became a global phenomenon after its November launch, and rival companies including Google are racing to release their own versions of AI-powered chatbots.

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The topic of AI platforms and how schools should respond drew hundreds of educators to conference rooms at the Future of Education Technology Conference in New Orleans last month, where Texas math teacher Heather Brantley gave an enthusiastic talk on the “Magic of Writing with AI for all Subjects.”

Brantley said she was amazed at ChatGPT’s ability to make her sixth grade math lessons more creative and applicable to everyday life.

“I’m using ChatGPT to enhance all my lessons,” she said in an interview. The platform is blocked for students but open to teachers at her school, White Oak Intermediate. “Take any lesson you’re doing and say, ‘Give me a real-world example,’ and you’ll get examples from today — not 20 years ago when the textbooks we’re using were written.”

For a lesson about slope, the chatbot suggested students build ramps out of cardboard and other items found in a classroom, then measure the slope. For teaching about surface area, the chatbot noted that sixth graders would see how the concept applies to real life when wrapping gifts or building a cardboard box, said Brantley.

She is urging districts to train staff to use the AI platform to stimulate student creativity and problem solving skills. “We have an opportunity to guide our students with the next big thing that will be part of their entire lives. Let’s not block it and shut them out.”

Students in Piercey’s class said the novelty of working with a chatbot makes learning fun.

After a few rounds of “Find the Bot,” Piercey asked his class what skills it helped them hone. Hands shot up. “How to properly summarize and correctly capitalize words and use commas,” said one student. A lively discussion ensued on the importance of developing a writing voice and how some of the chatbot’s sentences lacked flair or sounded stilted.

Trevor James Medley, 11, felt that sentences written by students “have a little more feeling. More backbone. More flavor.”

Next, the class turned to playwriting, or as the worksheet handed out by Piercey called it: “Pl-ai Writing.” The students broke into groups and wrote down (using pencils and paper) the characters of a short play with three scenes to unfold in a plot that included a problem that needs to get solved.

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Piercey fed details from worksheets into the ChatGPT site, along with instructions to set the scenes inside a fifth grade classroom and to add a surprise ending. Line by line, it generated fully formed scripts, which the students edited, briefly rehearsed and then performed.

One was about a class computer that escapes, with students going on a hunt to find it. The play’s creators giggled over unexpected plot twists that the chatbot introduced, including sending the students on a time travel adventure.

“First of all, I was impressed,” said Olivia Laksi, 10, one of the protagonists. She liked how the chatbot came up with creative ideas. But she also liked how Piercey urged them to revise any phrases or stage directions they didn’t like. “It’s helpful in the sense that it gives you a starting point. It’s a good idea generator.”

She and classmate Katherine McCormick, 10, said they can see the pros and cons of working with chatbots. They can help students navigate writer’s block and help those who have trouble articulating their thoughts on paper. And there is no limit to the creativity it can add to classwork.

The fifth graders seemed unaware of the hype or controversy surrounding ChatGPT. For these children, who will grow up as the world’s first native AI users, their approach is simple: Use it for suggestions, but do your own work.

“You shouldn’t take advantage of it,” McCormick says. “You’re not learning anything if you type in what you want, and then it gives you the answer.”

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Associated Press writer Sharon Lurye contributed to this report from New Orleans.

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The Associated Press education team receives support from the Carnegie Corporation of New York. The AP is solely responsible for all content.

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