Energy fuels most economic activity. Although it drives the world, it always comes with concerns and questions marks about environmental effects. Innovation is, therefore, centred on improving efficiencies or reducing harmful environmental impact.
These are the two themes defining innovation in energy. In recent decades, developments in adjacent technologies like batteries and storage have given a boost to innovation in clean, sustainable and renewable sources.
Renewable energy sources have been growing in importance around the world and will continue to grow. A report,“Global trends in renewable energy investment 2019” – from the UN Environment’s Economy Division – notes rather sombrely that enormous commitments in the coming decade may not be enough suffice to mitigate climate change: “Governments and companies around the world have committed to adding some 826 gigawatts of new non-hydro renewable power capacity in the decade to 2030, at a likely cost of around $1 trillion. Those commitments fall far short of what would be needed to limit world temperature increases to less than 2 degrees Celsius.”
The UN report acknowledges that the slowdown in deals thanks to the covid-19 pandemic will have a negative short-term effect but also that it will create an opportunity to promote a clean energy agenda in the post-pandemic world: “The covid-19 crisis has slowed down dealmaking in renewables in recent months, along with that in other sectors, and this will affect investment levels in 2020. However, governments now have the chance to tailor their economic recovery programmes to accelerate the phase-out of polluting processes and the adoption of cost-competitive sustainable technologies.”
According to the same report, overall investment in renewables globally stood at $282.2bn in 2019, up merely 1% from the previous year. The study also breaks down growth rates by types of renewables: “Capacity investment in solar slipped 3% to $131.1bn in 2019, while that in wind climbed 6% to $138.2bn – the first time that wind has outweighed solar in terms of dollars committed since 2010. Falling capital costs, and a further slowdown in China’s PV [photovoltaic] market, held back the solar total.”
The evolution of solar and wind energy over the past decade has been largely thanks to decreasing levelised cost of electricity (LCOE) for solar photovoltaics, onshore and offshore. More importantly, however, the cost of energy storage has gone down significantly.
Energy storage is arguably the main technical challenge of emerging technologies like electric vehicles or renewable power generation, if there is to be global reliance on intermittent renewable sources. “Five steps to energy storage”, a recent report by the World Energy Council, highlights some of the difficulties in the evolution of useful technology. The report concludes that “today’s mainstream storage technologies are unlikely to be sufficient to meet future flexibility requirements resulting from further decentralisation and decarbonisation efforts”. It also points out that “a restricted focus on lithium-ion batteries is putting the development of more cost-effective alternative technologies at risk”.
According to data from the International Energy Agency (IEA), 2.9GW of storage capacity was added around the world through 2019, considerably less (nearly 30%) than in 2018. The report attributes this decline to the fact that “much storage remains an early-stage technology, present in only a few key markets and heavily dependent on policy support”.
The IEA report also states: “For the first time in nearly a decade, annual installations of energy storage technologies fell year-on-year in 2019. Grid-scale storage installations dropped 20%, while behind-the-meter storage remained flat overall despite a near-doubling of residential batteries, consolidating a shift towards behind-the-meter storage. Continued uncertainty in 2018’s key growth market, Korea, and sluggish activity in Europe and the United States underpinned a lacklustre year for storage.”
Given the high stakes in climate, politics and economics, energy storage is likely to continue to be an area of much interest in the next decade, especially for energy corporates.
Today even the oil and gas majors of the world are increasing positioning themselves as broader energy companies and preparing for a low carbon future. A case in point is a recent analysis by UK-based BP, which said oil consumption levels may never return to pre-pandemic levels. Most notably, even in the most bullish scenario, the analysis forecasts demand for oil to stay “broadly flat” over the next two decades, as the transition to low carbon unfolds.
This is only a prediction and it is hard to make predictions, particularly about the future, as Mark Twain (or maybe it was Yogi Berra) put it. However, there is undoubtedly a powerful vision of low carbon future and the social ethos is pushing it forward.
What would it take to decarbonise the world’s industry? In short – a lot. Decarbonisation of heavy industry is an immense technological challenge, which, like any obstacle, is likely to generate opportunities for tech developers. The McKinsey report “Decarbonisation of industrial sectors: The next frontier” states that ammonia, cement, ethylene and steel production companies may be able to reduce their CO2 emissions to nearly zero via measures like efficiency improvement, the use of hydrogen and biomass as feedstock or fuel and carbon capture. Nevertheless, complete decarbonisation would cost, according to their estimates, between $11 trillion and $21 trillion by 2050, and need much more non-carbon electricity than presently produced.
In recent years, we have seen corporates from the oil and gas ventures explore opportunities in low-carbon energy applications, from renewables – like solar and wind energy – to infrastructure for electric vehicles, as the potential disruption of these technologies has serious implications for oil majors on the supply and demand side. There are even some energy utility companies, like Engie, which have divested their upstream assets to focus on power and renewables.
Electric power utilities live in a world ruled by technological and regulatory forces. While policy varies from country to country around the globe, technological disruption in clean energy may be opening a new potential for growth. The “2020 outlook on power and utilities” report by consulting and auditing firm Deloitte sums it up as: “The power and utilities industry started the new decade in a strong position, identifying new opportunities for growth while leading the economy-wide clean energy transition. But just months later, the covid-19 pandemic struck and tested the mettle of a crisis-resilient sector in new ways.”
The sector in charts
For the period between September 2019 and August 2020, we reported 154 venturing rounds involving corporate investors from the energy sector. Many of them (71) took place in the US, while 18 were hosted in Japan and nine in the UK.
On a calendar year-on-year basis, total capital raised in corporate-backed rounds rose from $2.74bn in 2018 to $2.92bn in 2019, representing a 7% increase. The deal count also rose, even more significantly, by 57% to 159, up from the 101 rounds reported in 2018. The 10 largest investments by corporate venturers from the energy sector were concentrated mostly in the same industry and in mobility.
Overall, corporate investments in emerging energy-focused enterprises went up from 100 rounds in 2018 to 112 by the end of 2019, suggesting a 12% increase. The estimated total dollars in those rounds also increased 46% from $1.89bn in 2018 to $2.77bn last year. By the end of August this year we had already tracked 79 rounds, worth an estimated total of $1.63bn, suggesting valuations of such enterprises may still on the rise despite the pandemic.
The leading corporate investors from the energy sector in terms of number of deals were oil and gas majors Chevron and Shell, and energy utility Constellation Energy. The list of energy corporates committing capital in the largest rounds was headed also by Chevron, with utility Origin Energy, Shell and oil and gas supplier Saudi Aramco.
The most active corporate venture investors in the emerging energy businesses were Chevron, Constellation and Shell.
Energy software solutions and AI solutions for gas safety (Pexapark, Seeq and Urbint)
Energy efficiency and measurement (Innowats)
Clean and renewable energy (Zolar, LevelTen Energy)
Carbon dioxide capture technology (Carbon Engineering, Carbon Clean Solutions)
Control valve developers (Clarke Valve)
Charging stations for electric vehicles (Chargepoint)
Charging stations for electric vehicles (Chargepoint)
Carbon dioxide capture technology (Carbon Engineering, Carbon Clean)
Asset monitoring solutions (Veros Systems)
Fusion technology (Commonwealth Fusion Systems)
Clean energy and related tech (LevelTen, Dandelion, Sunfire, Solytic)
Energy storage and batteries (Energy Vault, ESS and Natron Energy)
Deals
Corporates from the energy sector invested in large multi-million-dollar rounds, raised by enterprises from the same sector as well as from the transport sector. None of the top 10 deals was above the $1bn mark.
UK-based renewable energy supplier Octopus Energy secured A$507m ($327m) from Origin Energy. The transaction gave the latter a 20% stake in Octopus Energy. The corporate committed to provide the investment in tranches over four financial years, with $98.7m released immediately.
Founded in 2015, Octopus Energy is an electricity and gas retailer focused on the UK market that relies exclusively on renewable energy and enables customers to carbon offset their gas. The company has also developed a cloud-based software platform, Kraken, to interact with consumers, and with industry, enabling features such as wholesale market trading and consumption forecasting.
Shell invested in a series E round of undisclosed size for Via Transportation, a US-based mobility services and software provider backed by carmaker Daimler and media group Hearst. As part of the round, diversified holding company Exor agreed to pay $200m for an 8.87% stake in the company. Property manager Mori Building and Hearst Ventures, Hearst’s corporate venturing arm also contributed to the Series E.
Via provides a range of on-demand or pre-scheduled urban mobility services covering ordinary urban and rural transport to specialised services across more than 20 countries. Its algorithm optimises transport for maximum efficiency and can be incorporated into existing transport management systems.
Singapore-based biodegradable plastic developer RWDC Industries completed a $133m series B round backed by Flint Hills Resources, a chemicals and biofuel subsidiary of conglomerate Koch Industries. Venture capital firm Vickers Venture Partners led the round, which also featured International, an alternative investment fund operated by Interogo Holding, a subsidiary of furniture retailer Ikea’s owner Interogo Foundation. Founded in 2015, RWDC is working on cost-effective biopolymer materials, including polyhydroxyalkanoates – a commercially viable, biodegradable plastic that is created through microbial fermentation. The company will use the cash to meet to repurpose a factory in the US state of Georgia.
ChargePoint, the US-based operator of an electric vehicle (EV) charging network, raised $127m from investors including Chevron, energy utility American Electric Power and private equity firm Quantum Energy Partners. Chevron participated via Chevron Technology Ventures. Formerly known as Coulomb Technologies, ChargePoint offers subscription-based charging services for EVs that encompasses more than 110,000 charging stations. It will allocate the funding to strengthening its commercial and fleet businesses.
China-based life sciences product developer CapitalBio Technology raised more than RMB800m ($113m) from investors including oil and gas supplier Sinopec and healthcare services provider Meinian Onehealth. Guangzhou Boyi Architectural Design Institute put up $57m to lead the round, which also featured New Alliance Capital, Red Horse Investments Group, Xin Dig Capital and Friend Capital, while Sinopec’s contribution came from investment vehicle Sinopec Capital. Founded in 2012 as a subsidiary of medical technology producer CapitalBio Corporation, the company provides products such as nucleic acid or gene mutation detection kits for use in drug development. It also offers biotech research services including genetic sequencing and profiling. The company reportedly intends to float on Shanghai Stock Exchange’s Star Market.
Japan-based lithium-ion battery developer APB raised ¥8bn ($74.4m) in funding from investors including corporates JFE Chemical, JXTG, Nagase, Obayashi, Teijin and Yokogawa Electric. Industrial, mining and petroleum group JXTG Holdings took part through subsidiary JXTG Innovation Partners while coal chemistry technology provider JFE Chemical, construction firm Obayashi Corporation, textile manufacturer Teijin and industrial technology producers Nagase & Co and Yokogawa Electric invested directly. The round also featured Keio Innovation Initiative, a joint venture capital vehicle for Keio University and securities brokerage Nomura Holdings. APB is developing bipolar lithium-ion batteries using speciality chemicals producer Sanyo Chemical Industries’ surface active technology, where the battery’s electrodes are formed through a resin current collector.
Solar power services provider Sunseap, which is Singapore-based, secured S$100m ($72m) in series D4 funding from energy utility Banpu to bring its series D round to $146m. The country’s state-owned investment firm Temasek and private equity fund ABC World Asia supplied $36m for the round but Sunseap did not reveal who provided the remaining $22m. Founded in 2011, Sunseap operates several subsidiaries focused on solar energy, including a solar leasing business, an off-site renewable energy supply arm, and an engineering, procurement and construction division for photovoltaic projects. The company operates an international division that targets markets across Southeast Asia and the Asia-Pacific region.
US-based fusion energy technology developer Commonwealth Fusion Systems (CFS) secured $84m in a series A2 round featuring oil and gas suppliers Equinor and Eni. The round was led by Temasek and included Devonshire Investors – part of investment and financial services group Fidelity. Eni took part through its Eni Next unit, having provided $50m for the company’s $115m series A round, which closed in June 2019. CFS is working on a system intended to produce nuclear fusion, a still-hypothetical means of electricity generation where two nuclei spliced together would theoretically release vast amounts of energy. The startup’s approach uses a relatively recent innovation known as high-temperature superconducting magnets as the potential basis for size and cost-efficient nuclear fusion plants.
Prosperity7 Ventures, a VC representative of Saudi Aramco took part in a a $60m funding round for Taulia, a US-based provider of software that helps optimise a company’s working capital. The round was led by insurance group Ping An’s Global Voyager Fund and included investment banking firm JP Morgan. Existing backers that re-upped included private equity fund manager Zouk Capital. The round reportedly valued Taulia at up to $400m. It combines a technology platform with live experts to help small and medium-sized enterprises make their supply chain more efficient so they can maximise their working capital.
US-based employee management software provider Parsable received $60m in series D funding from investors including networking technology producer Cisco, Saudi Aramco and industrial and industrial conglomerate Honeywell. The round was co-led by growth equity firms Activate Capital and Glade Brook Capital Partners and also featured Evolv Ventures, the venture capital firm backed by food producer Heinz, among other investors. Cisco and Saudi Aramco participated through venturing subsidiaries Cisco Investments and Saudi Aramco Energy Ventures. Parsable has built a software platform that helps industrial workers receive instructions and provide feedback through mobile devices. The cash will support expansion in places such as Africa, Latin America, Europe, the Middle East and Asia.
There were other interesting deals in emerging energy-focused businesses that received financial backing from corporate investors from the energy and other sectors.
Automotive manufacturer Volkswagen revealed that it is investing up to $200m in US-based solid-state battery developer and existing portfolio company QuantumScape. The company was spun out of Stanford University in 2010 and began collaborating with Volkswagen two years later, before the carmaker invested $100m in QuantumScape in mid-2018. That investment was provided a partnership agreement that will involve the companies working together on the industrial-level manufacturing of solid-state batteries for Volkswagen vehicles. QuantumScape develops solid-state batteries that use solid electrodes and a solid electrolyte, in theory offering greater energy density than lithium-ion batteries.
Taiwan-based advanced battery producer ProLogium Technology secured $100m in a series D round that included automotive manufacturer FAW Group. FAW was joined by BOCG Investment, the venture capital arm of Bank of China. Founded in 2006, ProLogium produces solid-state lithium ceramic batteries it claims are safer, more stable, less flammable and compressible than lithium-ion batteries. The batteries can be used in electric vehicles in addition to home and microgrid energy storage systems and consumer products such as portable or wearable internet-of-things devices.
UK-based fusion energy technology developer Tokamak Energy received £67m ($87m) in funding from investors including financial services and insurance group Legal & General. The round was led by Hans-Peter Wild, former chairman of food ingredient provider Rudolf Wild, and included David Harding, the founder and chief executive of investment manager Winton Group. Tokamak is working on development of a compact system that will be able to produce fusion power and claims to have built a working prototype capable of creating high-temperature plasma. The technology uses a spherical tokamak system where a powerful magnetic field is used to confine hot plasma so it can be heated to the temperature – 100 million degrees – required for fusing particles to generate energy.
Energy Monster, the China-based operator of a power-bank rental service, completed a RMB500m ($71.4m) series C round led by telecoms conglomerate SoftBank through its SoftBank Ventures Asia fund. Hedge fund manager Hillhouse Capital and venture capital firm Shunwei Capital also participated in the round. Energy Monster produces charging banks for mobile devices, providing banks that can be fixed to tables at restaurants or cafes, and portable systems that can be borrowed from vending machines.
General Fusion, a Canada-based fusion power technology developer backed by oil and gas supplier Cenovus Energy, closed a $65m series E round led by Singaporean sovereign wealth fund Temasek. Business Development Bank of Canada’s Cleantech Practice, DLF Group, Gimv, I2BF Global Ventures, Disruptive Technology Advisers, Hatch, Chrysalix Energy Venture Capital, Bezos Expeditions, Braemar Energy Ventures, Entrepreneurs Fund, Set Ventures and Khazanah Nasional also took part in the round alongside individual investors.
Founded in 2002, General Fusion is working on nuclear fusion technology that relies on a sphere filled with molten lead-lithium which is then pumped to form a vortex into which plasma fuel is injected. Pressure inside the sphere is increased to compress the plasma and create the right conditions for nuclear fusion.
Exits
Corporate venturers from the energy sector completed seven exits between September 2019 and August 2020 – all of which were acquisitions.
We registered six exits by energy corporates in 2019 worth an estimated $228m, up from the four recorded in 2018, worth an estimated $370m. The usually low number of exits in this space is attributable to the generally longer investment horizon, as new energy and industrial enterprises tend to mature more slowly than emerging businesses in other sectors.
Cybersecurity software producer Palo Alto Networks agreed to acquire US-based network security technology developer Aporeto for $150m in cash. Aporeto has been backed by a number of corporates including media conglomerate Comcast, utility company National Grid, cybersecurity software developer Symantec and telecoms carrier Telia. Founded in 2015, Aporeto has built a zero-trust cybersecurity platform that automatically protects hybrid and multi-cloud environments from being hacked. The software authenticates, authorises and encrypts each workload with a cryptographically-signed identity independently of the network configuration and at scale, rather than relying on IP addresses or static access control lists.
Cybersecurity software producer Tenable acquired Indegy, a US-based industrial cybersecurity technology developer backed by energy utility Centrica, mass media group Liberty Media and diversified holding company Ofer Global, for $78m. Founded in 2014, Indegy has created a software platform that detects network anomalies, checks connected devices and offers policy-based monitoring to protect infrastructure in areas such as energy, automotive, pharmaceuticals and water. Specifically, the software protects operational technology environments, such as power stations. Tenable will use Indegy’s technology to strengthen its own cybersecurity capabilities in the operational technology environments domain and plans to integrate the technologies into a single platform.
Industrial technology manufacturer Siemens agreed to purchase US-based edge computing platform developer Pixeom for an undisclosed sum, allowing semiconductor technology provider Intel, electronics producer Samsung and National Grid to exit. Intel and National Grid had co-led a $15m round for the company in April 2019 through corporate venturing subsidiaries Intel Capital and National Grid Partners, with Samsung’s Catalyst Fund an existing investor. Pixeom has created edge computing technology that helps cloud software providers develop, monetise and launch containerised IT applications. It will be incorporated into Siemens’ Industrial Edge activities.
Canada-based test and measurement technology group Eddyfi/NDT agreed to acquire Halfwave for an undisclosed amount. TheNorway-based acoustic technology developer that counts corporates Shell and Chevron as backers. Halfwave has developed a proprietary acoustic resonance technology that enables high-precision measurements in imperfect conditions. Halfwave is active globally in the field of subsea inspection and pipeline inline inspection, boasting more than 70 employees and offices in Oslo and Houston.
Energy utility ESB exited Cylon Controls, an Ireland-based building control system spinout of University College Dublin, in an acquisition by power and automation group ABB. The size was undisclosed Founded in 1985, Cylon markets a range of control interfaces such as fuse boxes, energy meters and heating and air ventilation controls for residential and commercial buildings. The company offers a real-time, analytics-based software portal where building operators can gauge and restrain energy usage through features such as visualisation and trigger-activated alarms.
Software provider Microsoft acquired US-based cybersecurity software producer CyberX in a deal that enabled energy utility Čez and mobile semiconductor producer Qualcomm to exit. The price was not officially disclosed but according to sources it stood at about $165m. Founded in 2013, CyberX provides cybersecurity software designed to protect unmanaged internet of things (IoT) or operational technology (OT) devices. The product is intended to enhance the security of Microsoft’s Azure cloud computing platform and connected devices spanning areas such as industrial IoT or OT, where hardware and software systems monitor large hardware-based systems.
Solar cell and module manufacturer Q Cells agreed to acquire US-based energy storage software provider Geli for an undisclosed sum, allowing Shell to exit. Geli created a software platform that can be used to design and manage battery-based energy storage systems for renewable energy installations. Its technology will be used by Q Cells to strengthen its integrated solar-and-energy-storage projects.
Global Corporate Venturing reported one additional exit from an emerging energy-related enterprise that involved a corporate investor.
China-based electric vehicle (EV) battery manufacturer Farasis Energy floated on the Shanghai Stock Exchange’s Star Market in a RMB3.4bn ($486m) IPO, providing an exit for Daimler. The company issued just over 214 million shares priced at RMB15.90 each, and they closed at RMB27.96 on their first day of trading. Farasis produces lithium-ion batteries for transport and maintains research and development centres in the United States and Germany as well as its home country. The proceeds will be used to expand the company’s manufacturing capacity. It generated about $350m in revenue in 2019 resulting in a net profit of approximately $18.7m, according to figures in its IPO prospectus.
Funds
For the period between September 2019 and August 2020, corporate venturers and funds investing in the energy sector secured over $4.01bn in capital via 18 funding initiatives, which included 10 VC funds, five new CVC subsidiaries, one accelerator, one incubator and two other initiatives.
On a calendar year-to-year basis, the number of funding initiatives in the energy sector in 2019 stood at 22, down from the 25 registered in 2018, and from the peak (27) reported in 2016. The total estimated capital decreased from $3.71bn to $2.24bn.
US-based e-commerce group Amazon launched a $2bn investment fund that will back developers of products that support carbon reductions. The Climate Pledge Fund is targeting transportation, logistics, manufacturing, materials, food and agriculture technology developers as well as those engaged with clean power production and storage or involved in the circular economy. Amazon’s business now encompasses its Amazon Web Services cloud offering and consumer devices Echo, Fire and Kindle as well as e-commerce. Its market cap has expanded to $1.38 trillion as covid-19 lockdowns increase remote buying patterns.
Software company Microsoft set up a $1bn fund that could invest in “carbon reduction, capture and removal technologies”, amid a broader commitment to clean up the software giant’s emissions by 2050. It is one of the largest funding commitments ever to the development of methods of sucking carbon dioxide out of the air, an area that includes startups such as Silicon Kingdom, Carbon Engineering, Climeworks and Global Thermostat, according to the Massachusetts Institute of Technology.
BP announced it would provide $70m for India and UK-focused cleantech investment vehicle Green Growth Equity Fund (GGEF), which was formed to invest in India-based technology developers operating in fields such as renewable energy, energy efficiency, energy storage, electric mobility and resource conservation. It has a target size of $700m. The government of India’s National Investment and Infrastructure Fund (NIIF) and the UK Department for International Development are anchoring the vehicle, having each made a £120m ($170m) commitment at its April 2018 launch.
The fund is managed by Eversource Capital, an India-based joint venture created by BP’s solar power subsidiary, Lightsource BP, and private equity and real estate investment firm Everstone Capital. BP’s decision to invest in GGEF follows an earlier commitment by the corporate to become a net-zero carbon emissions business by 2050, partially by investing more in companies outside its traditional oil and gas focus.
France-based oil and gas supplier Total plans to invest up to $400m in carbon neutrality technology developers through an investment vehicle it launched. Total Carbon Neutrality Ventures will deploy the capital over a five-year period, targeting developers of technology or products that can help businesses cut their energy consumption or the intensity of their carbon emissions. The unit will operate from offices in Europe and the US, and its areas of interest include energy storage, smart energy and mobility products, bioplastics and recycling technology.
Malaysia-based oil supplier Petronas set up another corporate venture capital (CVC) unit with $350m, having created a Europe and US-based CVC subsidiary in January. The state-owned firm announced that Petronas Corporate Venture Capital will make direct investments in technology startups developing industry 4.0, advanced materials, specialty chemicals and futuristic energy technology as well as access into new markets.
The company said in a statement: “Petronas CVC’s global coverage will focus not only in North America and Europe, managed by its recently launched VC arm PTV International Ventures America (Piva), but also in the Asia-Pacific and Malaysian startups, to spur local entrepreneurship and the venture capital ecosystemRicardo Angel oversees the $250m Piva as CEO and managing partner.
Japan-based insurance firm Nippon Life revealed plans to invest a total of ¥30bn ($280m) in companies and funds that are addressing social and environmental issues. Sectors under consideration include food, healthcare and technologies intended to mitigate climate change.
The insurance firm began by commiting capital to an impact investment fund run by private equity group TPG that is concentrating on deals for medical technology developers. It intends to begin making impact investments directly by 2023 and plans to provide more than $90m per year.
Spain-based natural gas supplier Enagás and investment banking firm Alantra launched a €150m ($170m) vehicle called Clima Energy Transition Fund to back renewable energy companies in Europe. The fund will acquire minority stakes in late and growth-stage developers of products and technologies in the biogas, decarbonisation, energy digitisation and efficiency, green hydrogen and sustainable mobility sectors.
A management company will oversee the fund’s activities, with 30% of its shares being owned by Enagás and the remainder by Alantra. The new entity falls under Alantra’s alternative asset management group and the firm will provide investment know-how in areas including venture capital and private equity. Enagás is providing at least $22.7m for the fund and will offer insights from its experience in the gas industry.
Canada-based VC fund ArcTern Ventures raised a second cleantech-focused fund with C$200m ($153m) from backers including energy producers Equinor and Suncor Energy. Financial services provider Toronto-Dominion Bank is also among the limited partners (LPs), as are Canadian government-owned Venture Capital Catalyst Initiative, pension fund Omers and the state-owned Business Development Bank of Canada.
Other investors include enterprise promotion board Investissement Québec, Norwegian state-owned fund Nysnø, an unnamed Canada-based pension fund, and family offices from North America and Europe.
Founded in 2012, ArcTern Ventures backs early-stage cleantech companies with the aim of capturing returns as economies shift toward low-carbon technologies. Its target segments include energy storage, mobility, advanced manufacturing, resource efficiency, agtech and foodtech.
Circulate Capital Ocean Fund, a US-based investment fund targeting technologies that could mitigate plastic pollution, has raised $106m in capital from backers that include several corporate investors. Chemicals and plastics producer Chevron Phillips Chemical Company provided $15m. The other corporate LPs are beverages producers PepsiCo and Coca-Cola, chemicals supplier Dow Chemicals, food product provider Danone and consumer product manufacturers Unilever and Procter and Gamble. Circulate Capital intends to provide debt or equity financing for developers of technologies or infrastructure intended to reduce the flow of plastic waste into the world’s oceans. Areas of interest include circular supply chains, waste management and recycling.
The firm will also incubate startups through a vehicle called Circulate Initiative that will also create open source metrics which will measure the social and environmental impact of investments.
Italy-based energy utility A2A launched a €70m ($78m) CVC fund called A2A Horizon. It is also backed by Poli360, the university venture fund of Polytechnic University of Milan, and 360 Capital Partners, the VC firm that manages Poli360. A2A Horizon will invest in startups with strategic value to the business of its corporate parent, in areas such as the circular and sharing economy, artificial intelligence, blockchain-based grid control and remote plant management systems, home automation and smart micro-mobility services.
The unit is the culmination of an innovation strategy dubbed Innova2a that was launched by A2A in 2017. Innova2a is a team of 20, who seek out innovative ideas across the group and help them grow through proof-of-concepts and pitches.
University funding
By the end of 2019, we registered 26 rounds raised by university spinouts developing energy-related technologies, down 30% from the 37 recorded in the previous year. The level of estimated total capital deployed in 2019 stood at $400m, up 18% from $338m in 2018. By the end of August, we had already tracked 24 rounds, worth an estimated total of $459m, which suggests that valuations of these enterprises emerging from academia are likely to have risen despite the pandemic shock.
Zero Mass Water, a US-based water creation system developer spun out of Arizona State University, received $50m in a series C1 round that included energy utility Duke Energy. The round was led by investment manager BlackRock and also featured energy-focused investment fund Breakthrough Energy Ventures and universities-backed VC firm Material Impact Fund.
Founded in 2015, Zero Mass Water has created Hydropanels it claims can produce drinking water from air and sunlight. Its systems are installed across 45 countries and it intends to use the funding to bolster direct-to-consumer sales, particularly in the residential market outside North America.
Natron Energy, a US-based advanced battery technology spinout of Stanford University, raised $35m in a series D round co-led by ABB Technology Ventures, the strategic investment arm of power and automation technology producer ABB. Corporate-backed battery technology fund Volta Energy Technologies and venture capital firm NanoDimension Capital co-led the round, which also included Chevron.
Founded in 2012 and formerly known as Alveo Energy, Natron Energy develops battery storage that depends on sodium-ion technology to carry charge as an alternative to traditional lithium or lead-based materials. Natron focuses on batteries for infrastructure such as telecoms, industrial and data centres where sodium-ion is potentially safer because it is less prone to thermal explosions.
Transphorm, a US-based semiconductor technology spinout of University of California Santa Barbara, completed a reverse merger with shell company Peninsula Acquisition, also raising $21.5m in a private placement co-led by automotive component supplier Marelli. The funding round was co-led by an unnamed affiliate of private equity firm KKR and undisclosed new and existing investors.
Founded in 2007, Transphorm has developed gallium nitride semiconductors it claims can convert power with a higher efficiency than silicon-based systems while being produced at a smaller size. The technology has applications in power supplies for infrastructure such as data centres and chargers for electric vehicles and facilitates fast charging in consumer devices.
Sector specialist: David Hayes, investment officer and managing director for Americas, BP Ventures
David Hayes has been chief investment officer (CIO) and managing director for Americas at BP Ventures,
the corporate venturing arm of the UK-based energy company, since September 2019. BP Ventures now stands at almost $700m, having invested in over 50 companies and 12 funds with 250 coinvestors.
Hayes said: “2019 was a year of strong growth for BP Ventures. The year brought increased dealflow and investments, further recognition of our work and some great additions to our talented team.
“As we continue with 2020, despite current uncertainty, we look forward to finding more technologies and businesses that can help us reinvent BP – and deliver on our ambition to become a net-zero company by 2050
or sooner.”
In 2019, BP Ventures invested $47m in new deals, $86m in 20 existing portfolio companies and $7m in funds. Eight companies joined the portfolio, including artificial intelligence-backed energy system provider Grid Edge, protein-based feed producer Calysta and electric-vehicle charging developer Powershare.
BP Ventures achieved $16m of returns from exits in 2019, involving biotechnology company Mendel
and commodities platform Xpansiv. The latter merged with Commodity Bourses to form data trading service
Xpansiv CBL Holding Group (XCHG). BP Ventures also partnered XCHG with cement and concrete technology company Solidia Technologies.
BP Ventures advocates inclusivity and the team has 44% female representation, with members from six nationalities.
Sector specialist: Barbara Burger, president, Chevron Technology Ventures
Since mid-2013, Barbara Burger has been president of Chevron Technology Ventures (CTV), the 20-year-old strategic investment arm of oil and gas producer Chevron.
A Luminary member of the GCV Leadership Society, CTV is active in the innovation ecosystem in Houston. At
GCV’s Venture Houston in November 2018, Burger said that although the parent, Chevron, is headquartered in California, it had more employees and contractors based in Houston than in any other place in the world.
Innovation in technology in the oil and gas industry required change, such as more digitised value chains and energy efficiency, she added.
As a result, CTV had a much greater interest in engaging with external innovation, particularly in the digital
arena, and Chevron was increasingly leveraging from technologies developed by its innovation unit.
Burger told Dow Jones in 2019 that, unlike previous years, only in a matter of days, rather than weeks or months,
the unit could learn of a startup’s activities and evaluate its technology.
In early 2019, CTV backed Canada based cleantech producer Carbon Engineering, whose technology transforms carbon dioxide into fuels, in a $68m round. Burger is on the board of the Houston Technology Centre, a technology and business incubator, and also on the US Department of Energy National Renewable Laboratory External Advisory Council and the governing board of the MIT Energy Initiative.
People
Timmeko Moore Love joined US-based energy utility Entergy as co-founder and managing director of its newly formed corporate venturing unit, Entergy Strategic Ventures. Love had spent five and a half years with US-based health research and care provider Mayo Clinic. where she was nominated for the 2017 GCV Rising Stars award.
US-based software provider Microsoft has appointed Brandon Middaugh to manage its $1bn Climate Innovation Fund. Middaugh will manage the fund and investment strategy, having spent four years at Microsoft as a senior programme manager, leading its distributed energy strategy as part of the company’s energy and sustainability activities. Microsoft pledged $1bn for the vehicle as part of a wider goal to achieve carbon neutrality by 2030, and to remove the equivalent of the excess carbon it has emitted since its launch by 2050, through actions that will also involve switching to renewable energy use and electric vehicles across all its campuses. The fund will invest in developers of carbon reduction and removal technology, though the corporate – which already owns venture capital unit M12 – has not revealed details of a timeframe for that capital nor how wide the range of its portfolio is likely to be.
Matthias Dill joined corporate-backed venture capital firm Energy Impact Partners (EIP) as managing partner after leaving Statkraft Ventures, the corporate venturing unit operated by Norway-headquartered energy provider Statkraft. Dill had been a managing director for four and a half years and his deals included Tado, Greenbird Integration Technology and Metron. EIP has been building its portfolio under founder Hans Kobler, with recent deals including a $44m round for electric vehicle charging service Volta Charging, a $33m round for Cimcon Lighting and a $100m round for data management technology provider Trifacta.
Luis Casado Padilla, head of Spain-based oil and gas supplier Repsol’s corporate venturing unit, moved to the company’s foundation to set up a €50m ($55.5m) impact investment fund. Padilla said the Social Investment Fund at Repsol Foundation would support “startups with a double ambition: helping to solve relevant challenges around energy transition and environment and having a positive impact on the most vulnerable people in our society”. The move came after nearly two and a half years as corporate venturing director for Padilla at Repsol, with his deals including 3D printing company Recreus. The existing unit will remain independent of the new investment fund.
Mikko Huumo was promoted from startup investments and acquisitions manager to head of external venturing at Finland-based energy group Fortum. Huumo had spent about two and a half years in the position after nearly four years as manager for research and development growth projects. His board roles included wave power producer AW-Energy and Stereoscape, a developer of virtual reality technology for industrial businesses.
Meghan Sharp, formerly managing director of the Americas for BP Ventures, BP’s corporate venturing unit, joined one of its portfolio companies as chief operating officer. Sharp, who was ranked second in 2019’s GCV Rising Stars awards, said: “I am experimenting with the other side of the fence – a COO role at Beyond Limits. I have no doubt that I will one day be in venture again, but this is great experience in an operating role at a company I know well.” Cognitive computing technology developer Beyond Limits raised $20m from BP Ventures in June 2017 and Sharp took a board seat.
Philipp Ulbrich was promoted to senior vice-president (SVP) of S4Hana transformation at Germany-based energy utility Eon, leaving Konrad Agustin and Ines Bergmann-Nolting to run corporate venturing at the company. Until his promotion, Ulbrich had spent three and a half years as vice-president of innovation scouting and co-investments, working alongside Frank Meyer, who remains overall SVP for innovation at Eon. Agustin is the only San Francisco-based corporate venturer at Eon; Bergmann-Nolting is based in its headquarters in Essen, alongside investment principal Niklas Rotering.
Florian Loebermann, head of corporate venturing at Germany-based chemicals producer Altana, became managing director of 3D printing company DP Polar. His deals at Altana included a $32m round for Israel-based digital printing technology provider Velox in November 2018 in which he took a board seat. Loebermann had previously been a partner at venture capital firm Munich Venture Partners, where his deals included Sonnen, a battery provider sold to oil major Shell after he had left the board.
Stephen Cook, chief commercial officer for group technology at UK-based oil and gas supplier BP, was promoted to senior vice-president of its Launchpad and Ventures unit. The move followed the retirement of David Gilmour, who had set up Launchpad as a private equity-style investment unit to complement the corporate venturing team. Cook said on his LinkedIn profile he would be “discovering, building and scaling new digital and physical energy businesses for a net-zero carbon future”.
BayWa Renewable Energy (BayWa RE), Germany-based trading conglomerate BayWa Group’s clean energy subsidiary, promoted Jelena Markovic to senior associate for its corporate venturing unit. Markovic joined BayWa RE Energy Ventures as a VC analyst shortly after it was formed in mid-2018. Her role involved performing investment assessment, building an investor network and identifying opportunities. Markovic became investment associate in April 2019 and conducted deal structuring, due diligence and public relations initiatives. BayWa RE Energy Ventures backs early and growth-stage renewable energy technology developers based in Europe and Israel. Markovic told GCV she had helped generate dealflow for the fund that resulted in its first three investments: Blixt, Raycatch and Zolar.
John Egil Johannessen, investment director at Equinor’s CVC unit, moved to take a similar role at Nysnø Climate Investments, a state-owned investment fund set up as a commercial company to invest in technologies that reduce greenhouse gas emissions. At Equinor, his deals included Norway-based underwater imaging company Ecotone, software developer Sharp Reflections and Soiltech, a local drilling waste handling company, and Coreteq Systems, a UK-based electrical motor service provider. In addition, Johannessen was on the board for SåkorninVest II, a seed and early venture capital fund for Norwegian startups in which Equinor (formerly known as Statoil) was the largest private investor in the fund with an equity stake of 20%.
Álvaro Reguera Ferrer and Elena de Benavides Jimenez joined Spain-based power producer Red Eléctrica de España as venture capital manager and open innovation and entrepreneurship lead, respectively. Reguera had spent nearly four years as a senior investment associate at local oil major Repsol’s CVC unit, now led by Jaime Martin Juez after former head Luis Casado Padilla moved to the company’s foundation to set up an impact investment fund.
JSW Ventures, the corporate venturing unit for India-based steel and energy conglomerate JSW Group, hired Sachin Tagra as a partner ahead of a first close of its second fund. Tagra joined from media house Network18 Group, where he headed its corporate venture capital subsidiary, Capital18. JSW Ventures reportedly received approval for the second fund from Indian market regulator SEBI and will look to raise external capital. Its Rs 1bn ($15m) first fund in 2016 was entirely backed by the Jindal family, which owns JSW.
Polish state-owned oil and gas supplier Polskie Górnictwo Naftowe i Gazownictwo (PGNIG) set up a PL100m ($25.9m) corporate venturing vehicle called PGNIG Ventures to fund clean energy technology developers. The unit will be run by its CEO, Małgorzata Piasecka, while Investment director Aneta Kazieczko will oversee fundraising and deal execution on its behalf. The corporate already runs an incubator, InnVento, which was formed in 2016 and which focuses on new materials, services and technologies in the natural gas space. The group also partnered Startup Hub Foundation to launch The Poland Prize accelerator in July 2019.
Tobias Hasenjäger left VNG Innovation, the corporate venturing arm of Germany-based natural gas provider Verbundnetz Gas (VNG) Group, where he was senior investment manager. Hasenjäger joined VNG Innovation in early 2018 from University of Kassel-affiliated innovation hub Science Park Kassel, where he had been an investment manager since 2014, investing in university spinouts from the institution’s seed-stage funding scheme, Unikat Finance, and serving as a mentor. Formed in 2015, VNG Innovation partners and backs startups developing energy-related technologies, including energy digitisation, conversion, efficiency and storage along with mobility and sustainability technology.
GCV Analytics’ definition of the energy sector encompasses renewable energy technologies and providers, oil and gas technologies, energy storage, management and equipment along with grid and power supply technologies, energy software and analytics, energy utilities and other.