Heat-pump maker Quilt has landed $20 million in new funding to ramp up sales and expand its footprint across North America, a sign of investor confidence in the software-driven electrification of home heating and cooling. The Redwood City startup, which has popularized what it calls a design-forward system with app-based controls, said the money will help expand its market and customer deliveries as demand for high-efficiency heat pumps grows.
The round was led by Energy Impact Partners and Galvanize Climate Solutions, with contributions from Alumni Ventures, Gradient Ventures, Incite Ventures, and Lowercarbon Capital. Galvanize’s Veery Maxwell will be joining Quilt’s board of directors, in addition to former Nest CFO Tom von Reichbauer — a duo that drives home the fact that consumer-level hardware, and thermostats especially, are a natural bastion for Quilt. The company has installed nearly 1,000 units in 16 U.S. states and five Canadian provinces and intends to increase installations dramatically with the new funding.
A Bet on Software-Defined HVAC and Over-the-Air Updates
Quilt is distinctive in treating the heat pump like a software platform. The company has already pushed over-the-air updates to units that were installed or retrofitted into homes and boosted those systems’ real-world efficiency by more than 20 percent, a rare outcome for residential HVAC where performance is usually fixed at the time of installation. It’s the same paradigm as the smartphone age: firmware and control algorithm updates that improve comfort, cut energy use, and lower peak loads over time.
Design is the other cornerstone. Compact, modular quilts are made for room-by-room zoning in a manner that doesn’t require overhauling your ductwork, one of the biggest obstacles for most homeowners. For installers, digital commissioning and remote diagnostics can cut job times down and reduce callbacks — crucial in an industry where labor is frequently the largest cost driver. The Nest heritage is an important thing here: consumer-friendly UX is not window-dressing in HVAC, it’s the difference between features that go unused and recorded savings.
Market Momentum and Policy Tailwinds for Heat Pump Adoption
The broader backdrop favors electrification. The E.P.A. says direct emissions from U.S. residential and commercial buildings represent roughly 13 percent of national greenhouse gases, much of it from burning fossil fuels for space and water heating. And heating and hot water can account for more than 60 percent of home energy use, according to the EIA — meaning that efficient heat pumps are a high-impact lever for cutting bills and emissions.
Market adoption is accelerating. More heat pumps than gas furnaces were shipped in the U.S. for the first time ever in 2022, according to trade group AHRI. AHRI has reported shipping totals since 2003, but a spokesman said he did not know why it had begun doing so then. At the policy level, federal incentives funneled through utilities include tax credits of $2,000 for heat pump installations and anticipated state-administered rebates up to $8,000 for income-qualified households. Some states have been adding their own rebates and gas-to-electric transition programs over the last few years, broadening the potential market for vendors like Quilt.
Competition and the Road to Scale in the HVAC Market
Quilt is going up against global incumbents Daikin, Mitsubishi Electric, Carrier, and Trane, whose distribution systems and installer networks span the globe. The startup’s argument is a vertically integrated, direct-to-consumer experience: transparent pricing, easy installation, and ongoing software updates. If the company can standardize site assessments and erode installation friction, it’s in a position to cut total installed cost — the actual metric homeowners evaluate, more than equipment efficiency ratings.
The new funds will be used to scale sales operations, increase service territories, and deepen installer training. With seasoned climate investors sitting at the table and board members experienced in consumer hardware and go-to-market execution, Quilt is setting itself up to be a modern HVAC brand rather than a component provider. The firm previously raised a $33 million Series A, and with this latest infusion has the balance sheet required to build out inventory, logistics footprint, and meet demand from multistate customers.
What to Watch Next as Quilt Scales Installations
As Quilt moves from hundreds of installations to thousands, the questions will be unit economics and reliability at scale. Can efficiency gains continue to reach double digits across wide ranges of climates and types of homes with software updates? As a partner contractor, will I always save installation hours in the field with digital ordering? And how well can Quilt maneuver utility incentive programs that encourage load shifting and demand response — where its connected systems are presumably a natural fit?
If the company pulls it off, it won’t just sell more heat pumps; it could reset homeowner expectations about comfort, control, and transparency in an industry that has changed little for generations. For climate tech investors and policy planners both, that’s the scale of story that turns incentives into impact.
