GDF Suez New Ventures, the corporate venturing arm of France-based energy company GDF Suez, is looking to invest in energy efficiency and storage to reflect changes in the energy sector that have made traditional models less profitable, according to Giovanni Rivana, an investment manager at the unit.
GDF Suez launched the €100m ($125m) fund in May this year, following the lead of other large European utilities like RWE and EDF in establishing a venture fund. However, despite overseeing a substantial power generation portfolio, the company plans to avoid funding centralised power production technology as large-scale power is becoming increasingly unprofitable.
“The energy sector is facing many challenges as the existing business models are not profitable anymore, so new business opportunities are key for our future,” Ravina told Global Corporate Venturing.
Those opportunities run the gamut from decentralised generation, much of which is based in renewable energy, and storage to energy efficiency, load management and smart cities technology such as connected development and greener transportation.
GDF Suez New Ventures will generally provide between €1m and €5m as a first investment at series B+ stage, and also intends to participate in follow-on rounds, but its status as a power provider rather than a technology developer means it will stick to minority stakes while helping each portfolio company to scale its technology.
“We understand the importance of technology, but we are a large group and our DNA has not been in technology development or manufacturing,” Ravina explained.
“We have been much more technology users and buyers. In general, we do not aim to become a developer of the technology itself, but we do want to commercialise them and implement profitable business models around them.”
Nevertheless, Ravina said GDF Suez formed the fund to harness external innovation, and will largely target portfolio companies with which it has a strategic fit, providing assistance by linking them up with its own business units. Exits through initial public offerings, trade sales or internal acquisitions are all possibilities and the investments will be assessed on a case-by-case basis.
The unit has already made its first investment, acquiring a 33% stake in Belgium-based energy monitoring and electrical mobility technology company Powerdale, and Ravina revealed Powerdale is already collaborating with GDF Suez subsidiaries Electrabel and Cofely Benelux.
“We do work closely with our business units to ensure a strategic fit for the investments we make, keeping in mind there can be exceptions if we see something very valuable in the long term,” Ravina said. “But the basis is to have business units supporting us in the start-ups in which we invest.
“From a financial perspective I see great opportunities, because if our business units see value in our portfolio of technologies or business models, the collaboration should be reflected in a positive financial return for GDF Suez New Ventures too.”
– Photo of Giovanni Ravina courtesy of LinkedIn