Reservoir raises $8M to make water heaters that people and the grid will actually want; plus, AI code-testing startup Blacksmith’s valuation jumps almost 10x

0:01This is TechCrunch.

0:10This episode is brought to you by Framer. Whenever the end of the year creeps up, things get hectic. You've got holiday sales to plan and projects to carry over the finish line. The last thing you should have to worry about is your website. With Framer, you don't have to. Framer is the AI website builder that helps creators, teams, and businesses ship production-ready sites faster than ever while getting every detail right. Prompt, inspect, edit, and publish in one place at a whole new pace. And it's easy to improve and update things, even after launching. With their AI agents and your team working together, managing a website is a cinch.

0:50So you can focus on other important things, like savoring that last bit of pumpkin pie. From early startups to Fortune 500 companies, thousands are turning to Framer to build a website they'll love. Learn how you can get more out of your site from a Framer specialist or get started building for free today at framer.com slash tcstartups for 30 % off a Framer Pro annual plan. That's framer.com slash tcstartups for 30 % off. Rules and restrictions may apply. You know, it's kind of hard to imagine a home appliance more forgotten, yet more consequential, than your water heater. Most people only think of water heaters when their shower runs cold, but they represent about 18 % of a household's total energy budget and are one of the main causes of residential water damage.

1:43To Luke Winston Elmanzar, water heaters are in clear need of an upgrade. He said, the typical water heater is devoid of intelligence. It's using a god-awful amount of energy, and my air fryer is smarter than it. I was using more energy to heat my water than it takes to drive my electric car. So Winston Almanzar, who was previously chief business officer at 3D printing startup Formlabs, co-founded Reservoir, along with Gabriel Parisi Amon and Jake Felser, to make a water heater that they would want to buy. Reservoir announced Wednesday that it has raised$8 million in a seed round led by Asymmetric Capital Partners, with participation from Founder Collective and MCJ.

2:31The funding will help the company install more of its water heaters in homes around the Boston area, its initial market. Reservoir has installed about 100 devices to date, and Winston Elmanzar said his company hopes to have around 1 ,000 installed by the end of next year. He said that's when you start talking about a megawatt scale in terms of capacity. Storing megawatt hours of energy as hot water could go a long way to stabilizing the grid. Today's water heaters tend to be dumb devices, responding only to changes in temperature in the tank. But Reservoir, by predicting when people will need hot water, can heat the tank when electricity demand is low and prices are cheap.

3:16Plus, the device's heat pump is nearly four times more efficient than an electric water heater and five times more efficient than a natural gas version. The startup has been able to show that it can relieve strain on the grid at the neighborhood level. Eventually, Reservoir could aggregate its fleet of water heaters to participate in utility demand response programs, which pay handsomely for large users to avoid tapping the grid at certain times. Winston Almanzar said he's looking at ways to use those payments to keep Reservoir's prices down. While energy storage might get grid experts excited, it won't sell many water heaters.

3:57Most people replace their water heaters with whatever their plumber has on hand. The Reservoir team knew they needed to do more than build another heat pump water heater. To make an appliance that customers will seek out, Reservoir has included a number of features that are not found in typical water heaters. The predictive heating feature ties in with energy storage. Reservoir's water heater will spend the first month in a home gathering information about water usage patterns to train a model. Once trained, it will run the unit's heat pump at the most efficient and cost-effective times to save money, while also ensuring ample supply.

4:37Reservoir also added an ultrasonic flow sensor to help detect plumbing leaks throughout the home, sending homeowners an alert through its app. In the MAX version, Reservoir added more features, including a recirculation valve to provide instant hot water and a mixing valve that can prevent pipes from freezing and cold snaps. In the MAX version, a 50-gallon tank can deliver up to 150 gallons of hot water in party mode, which can be set either on the device's touchscreen or through the app. To keep pricing simple and to speed up the sales process, Reservoir has also started its own plumbing company.

5:16Winston Almanzar said that decision was inspired by his experience at Formlabs. We built direct relationships there because, in a lot of cases, distributors were not embracing the new technology. Reservoir's Max version costs$6 ,500, while the base core version costs$5 ,000, installation costs included. Massachusetts residents qualify for a$1 ,050 rebate, bringing the price down significantly. At$3 ,950, the core model is competitive with or cheaper than existing heat pump water heaters. For comparison, the 80-gallon A.O. Smith that's sitting in many people's basements at this point currently costs about$3 ,500, and installation would run about$1 ,000.

6:05Traditional electric water heaters might cost less up front at about$1 ,700 for an 80-gallon tank, but Winston Almanzar said a reservoir could save typical Boston homeowners up to$1 ,000 a year in energy costs. Breakeven should happen long before the reservoir dies, since the company offers a 10-year warranty. Water heating seems to be ripe for some new technology. The newest advanced heat pump water heaters have failed to make a dent. commanding a small part of the market. If Reservoir succeeds, it might finally push them into the mainstream and, in the process, take some pressure off the grid.

6:48As AI makes coding dramatically faster, the next big challenge in software development is testing and validating all that code. Blacksmith has raised a new$45 million round to capitalize on that shift. The Series B, led by Peak15 Partners, values Blacksmith at$550 million, up from the$60 million valuation it was assigned when it raised a$10 million Series A less than a year ago. Existing investors GV and Y Combinator also participated, bringing the startup's total funding to$58.5 million. Founded back in 2024, Blacksmith helps companies build, test, and verify software before it reaches production.

7:34The startup now serves more than 5 ,000 customers, including Mercury, Supabase, Clerc, Ashby, and Expensify, up from more than 700 customers less than a year ago. The rise of AI coding tools such as Cursor, OpenAI's Codex, and Anthropix-Clawed Code has made it significantly easier for software teams to generate code, but the quality of AI-generated code is not a given. Co-founder and CEO Aditya Jaya Prakash said validating code is still a bottleneck, and it's an even bigger bottleneck because people are writing even more. Blacksmith started as a cloud provider for continuous integration workloads, helping companies run the software builds and tests needed to validate code before it reaches production.

8:25The startup has since broadened its platform with Codesmith, an AI coding agent that can automatically fix failed code checks. Jaya Prakash said Blacksmith reached a$10 million annualized revenue run rate with just 10 employees and has since grown its workforce to about 30 and grown revenue to tens of millions of dollars. He declined to provide a specific updated ARR figure, though he did say some of its largest customers now spend more than a million dollars a year on the platform. While that appears to be solid and fast progress, Blacksmith is operating in a crowded market. Its key competitors include GitHub Actions, Cursor Automations, Validation Capabilities baked into Codex and Claude Code, numerous other startups, and AI code testing services offered by Amazon Web Services, Microsoft Azure, and Google Cloud.

9:21Jayaprakash said his startup is competing on the speed of testing code as well as affordability. Looking ahead, Jayaprakash said that Blacksmith plans to expand into a broader suite of coding tools, aiming to help developers write, validate, and merge software faster. That's all for now. For the latest in tech startups, go to techcrunch.com.

10:09Get customized coverage options so you can be sure you have the right coverage. Get your quote today at Progressive.com. Progressive Casualty Insurance Company affiliates and other insurers. Not available in all states.