Data from Pitchbook (chart below) shows the relative decline to 2% from 10% in energy’s share of global venture capital over the past decade. Although as the overall amounts of funding has quintupled in this period, meaning the overall amounts going to venture-backed, energy startups has remained broadly the same, energy, materials and resources as a sector has pivoted to a niche, led by a handful of hybrid funds, such as Breakthrough Energy Ventures, CVCs and sovereign wealth funds. Generalist VCs seen the attractions of software and consumer-focused products where success or failure can be judged quickly and large potential exits.
This relative focus might make sense. The sums involved run into trillions of dollars, which is why the United Nations Development Programme (UNDP) and the European Investment Fund (EIF) are joining forces to develop joint initiatives for sustainable finance and the implementation of the Sustainable Development Goals (SDGs).
But even while the EIF and UNDP cooperate on the design and delivery of financial instruments and asset management services the focus is to support “inclusive, private sector-led, growth”.
As the World Intellectual Property Organisation (WIPO) notes in its annual review: “Generally, policymakers and the financiers of innovation are obsessed with funding startups, and thus new ventures only. Recently that attention has shifted to unicorns as the sacred source of innovation.
“Existing, mature firms are in, in turn, regularly forgotten. That is a mistake. Many countries would first and foremost benefit from the innovation rate of firms on the market, be they in the technology sector or in more traditional sectors or linked to natural resource. Unfortunately, often that is not how support schemes are currently conceived.”
It is clear looking at the data for the first nine months of the year – subscribers can download the GCV October issue here – that many of these corporations are being lost to the innovation cycle. It is not to late to save their innovation teams but time is short.
The three big drivers of human evolution remain healthcare, energy and communications. The push to digitalisation and software through 5G, cloud and the internet have caught investors imagination and covid-19 is driving efforts to look again at the healthcare priorities but energy risks being left to last even when we will all suffer without substantial changes.
This is why GCV has formed the Global Energy Council (GEC) to provide a forum and quarterly report and discussion for utilities, industrials as well as oil and gas (O&G) majors to look at the mobility and storage trends in the countdown the 45% fall in global carbon emissions required on the world to net zero emissions by 2050 as outlined by the United Nations.
The GEC, led by an advisory board, will include corporate venturing units by:
- Fuel: O&G, electricity, solar, wind, hydrogen, batteries, biofuels
- Generation and distribution: Electric and gas utilities, gas and electricity distribution companies, aggregators
- Suppliers: hardware, software, services
Barbara Burger, head of Chevron Technology Ventures and chair of the GCV Energy conference and sustainability stream and past chair of the GEC, points to the innovation and collaboration required and her optimism that it can be achieved “because, frankly, society depends on it”.
My thanks to Burger, BP, Shell and the other corporate venturing leaders behind the past four years’ O&G quarterly reports, produced by Kaloyan Andonov, and a welcome to the new members under incoming GEC chairwoman, Lisa Lambert, chief technology and innovation officer at utility National Grid and founder and president of its National Grid Partners corporate venturing unit.
Paul Morris, founder and former head of the CVC operation of Dow Chemical in Europe and Israel and head of the GCV Academy, will be president of the GEC to facilitate the future network between the energy industry corporate venturing units.
To see more from new supplement on Energy for Q3 2020, which include:
- Introducing the Global Energy Council;
- Sub-sector report: oil and gas; and
- New highs for hydrogen.
Access the full report here at no cost after logging in to the GCV website.
