The energy sector, by its nature, fuels most economic activity. However, what drives the motor of the world nearly always comes along with concerns about its environmental impact. Innovation in this sector is therefore often focused either on increasing efficiencies and lowering costs or reducing the environmental impact. These are the two ever-present themes. Innovation in sustainable and renewable energy sources has been enabled recently by developments in adjacent technologies like batteries, energy storage and grid tech.
Renewable energy sources are growing in importance around the world. A report entitled “Global trends in renewable energy investment 2019” – prepared by the UN Environment’s Economy Division, the Frankfurt School-UNEP Collaborating Centre for Climate & Sustainable Energy Finance and Bloomberg New Energy Finance – found the world had “added a record 167 GW of new capacity of renewables in 2018 – excluding large hydro – with solar additions hitting their own record of 108GW”. The report also noted these additions have “helped renewables, excluding large hydro, to raise its share of global electricity generation, from 11.6% in 2017 to 12.9% in 2018, helping the world to avoid an estimated two gigatonnes of carbon dioxide emissions.”
According to the report, overall investment in renewables globally stood at $272.9bn in 2018, outpacing investments in fossil fuel generation and exceeding $250bn for a fifth consecutive year. However, the figure was down versus the previous year, largely due to a policy change that hit the financing of Chinese solar power generation in the second half. The report stresses the latter is not necessarily a step back globally, as renewable energy, especially solar, is beginning to scale and become cheaper. Looking across 2010-19, heavy investment trend becomes even clearer. It estimates that a total of $2.6 trillion will have been invested in renewable capacity (excluding large hydro) over that period. This corresponds to an estimated 1.2 terawatts of new renewable energy capacity over this decade, more than the entire electricity generating fleet of the US.
Undoubtedly, this long-term growth of renewables has been due to decreasing capital and generating costs. The levelised cost of electricity (LCOE) for solar photovoltaics and onshore and offshore wind has gone down in recent years, which has given a much-needed boost to their competitiveness against traditional ones like coal and gas. According to the report, solar energy has managed to maintain “its position as the technology attracting the most capacity investment, at $133.5bn, although this was down 22% on 2017”. In contrast, wind energy generation secured $129.7bn, up 3% on year-on-year.
Many of the opportunities in renewables lie outside developed countries. In 2018, capacity investment in renewable energy in emerging economies outweighed that in developed economies. Developed economies invested $125.8bn, 10% more than in 2017, while the developing countries committed $147.1bn, down 24% compared with 2017.
Investments in China and India dropped by 36% year-on-year to $99.6bn, while the capacity investment in the remaining developing countries reached $47.5bn in 2018 — a 22% increase over the previous year and a record. The Middle East and Africa region registered capacity investments going up 61% to $16.1bn in 2018, with financing of projects in African countries like South Africa, Morocco and Kenya exceeding $1bn.
Prospects and challenges
Water tech and water treatment technologies also offer prospects for growth. This area has been forecast to grow globally, driven mostly by developments in China, with a combination of a growing demand for potable water and increasing pollution levels. The “Water treatment systems market size, share and trends report 2018-2025” by consulting firm Grand View Research expects the global water treatment systems market, estimated at $23.8bn by the end of 2017, to experience a compound annual growth rate of 7.1% by 2025.
Energy storage is one of the major technical challenges for some emerging technologies today like electric vehicles and renewable power generation. According to “Battery storage: The next disruptive technology in the power sector”, an analysis by consultancy firm McKinsey, prices of such technologies are decreasing thanks to high demand in consumer electronics and electric vehicles. Indeed, according to estimates from Statista, lithium-ion battery pack costs have decreased considerably to $230 per kilowatt-hour in 2016, down from $1,000 per kilowatt-hour in 2010, and are expected to go down to $158 per kilowatt-hour by the end of 2019 Recent forecasts from research company BloombergNEF suggest energy storage installations worldwide are expected to mushroom from a modest 9GW deployed in 2018 to 2.85 TW by 2040. “Energy Storage Outlook 2019” also notes this enormous boom over the next two decades will require an investment of $662bn but will also be enabled by further sharp declines in the cost of batteries. The expected drops in these costs will be fuelled by demand take-offs in stationary storage and electric vehicles.
With the advent of smart and cleaner grids, cities, homes and vehicles, the transition to a low-carbon energy world brings to the forefront the issue of decarbonisation. While there have been some notable improvements in consumer applications, the decarbonisation of heavy industry remains an immense technological hurdle, 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 through measures like efficiency improvement, the use of hydrogen and biomass as feedstock or fuel and carbon capture. Nevertheless, complete decarbonisation would cost, according to McKinsey estimates, between $11 trillion and $21 trillion by 2050 and need much more non-carbon generated electricity than presently produced.
The oil and gas sub-sector of the energy industry still plays a pivotal role. Their prices have been recovering, and mostly rising, since 2016. This has been achieved by the efforts of OPEC member countries and despite the significant increase in US domestic oil production, a recent World Bank study found. Overall, the sector is characterised by optimism. However, according to the “Oil and gas trends 2018-19” report, commissioned by PwC, the subsector may “very well be moving headlong into a supply crunch” due to growing oil demand.
The OECD forecasts for 2020 that global oil demand is expected to surpass the 100 million barrels per day on an annual basis, to average 101.01 million barrels per day for the year. Under these conditions, oil and gas producers would still have a good reason to adhere to capital discipline, concentrate on productivity improvements and continue reorienting towards lower carbon energy. This implies that oil and gas industry players are still very much incentivised to double down on digitisation. Our data on venturing deals corroborate the strategic interest these technologies have for oil and gas majors.
In recent years, we have seen corporate ventures from the oil and gas majors explore opportunities in low-carbon energy applications, spanning from renewables – like solar and wind energy – to infrastructure for electric vehicles, as the potential disruption of such technologies has serious implications for oil majors on the supply and the 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 and regulation vary from country to country around the globe, technological pressure exerts its impact everywhere. According to Deloitte’s “2019 outlook on power and utilities”, there are three dominant trends that have been at play in recent years, which revolve around the shift in the fuel mix – the displacement of coal-fired generation, the steady growth in natural gas and rapid growth in wind and solar generation. The report noted: “The drivers for this trend are a powerful combination of economics, customer preference and an increasingly central role for carbon footprint reduction along the electricity value chain.”
It is also noteworthy that, while renewable sources of energy are taking their fair share in the fuel mix, capital expenditure by electric power companies has been increasing. The latter implies that incumbents in this sub-sector, much like oil and gas companies, need innovative solutions for more operational efficiency. The Deloitte report points out that “capital expenditures in the power and utilities sector continue to rise, with an estimated increase in 2018 of 14%, to reach an all-time high of $133.8bn for the 50 electric and gas utilities S&P Global tracks annually”. More increases are expected by the end of 2019, which would drive the need for new smart and digital technologies in generation, transmission and distribution. “How power companies balance investment in ongoing operations versus planning for more transformational change will be fascinating to watch,” says the report.
There is a fertile ground for new business models in the power utility space, which are essentially driven by two main trends in that area – customer empowerment and enrichment of technological choice. According to the Deloitte report, this is “opening the way for new business models for incumbents, but also market structures in which new, non-traditional players can enter the market.” The report also notes that “with the rise of behind-the-meter generation, community energy projects and new options for households such as rooftop solar coupled with battery storage, utilities have a tremendous opportunity to develop new profitable businesses around offering services related to these developments”. We have already seen corporate venturers invest in similar emerging business models and expect to continue to see more.
The ever-more diverse mix of energy sources means utilities have to keep pace by making investments in software and advanced analytics tools to modernise existing grids and make distribution more efficient.
For the period between September 2018 and August 2019, we reported 130 venturing rounds involving corporate investors from the energy sector. Many of them (51) took place in the US, while Japan and the UK each hosted 11.
Many of those commitments (61) went to emerging enterprises from the same sector, mostly renewable energy and energy storage tech, as well as into companies developing other technologies in synergies with energy. There were 24 deals in the IT sector, mostly artificial intelligence, big data analytics and cybersecurity, 18 in transport, chiefly connected, autonomous and electric car tech, and 13 in the industrial sector (mostly robotics and unmanned aerial vehicles and agtech).
Energy corporates’ co-investments show a broad variety of investment interests of the sector’s incumbents. The commitments ranged from data analytics and energy software solutions (Maana, Bidgely, Autogrid, CosmoTech) through energy efficiency and measurement (SenseHome and Innowats), clean and renewable energy (EtaGen, UnitedWind, LevelTen Energy), carbon dioxide capture technology (Carbon Engineering) to control valve developers (Clarke Valve) and charging stations for electric vehicles (Chargepoint).
On a calendar year-on-year basis, total capital raised in corporate-backed rounds rose from $1.75bn in 2017 to $2.67bn in 2018, representing a 49% increase. The deal count also increased to 91, up from the 81 rounds reported in 2017. The 10 largest investments by corporate venturers from the energy sector were concentrated mostly in the same industry and in mobility.
The leading corporate investors from the energy sector in terms of largest number of deals were oil and gas majors Shell and Total along with energy utility company RWE Innogy, followed by oil majors BP and Chevron. The list of energy corporates committing capital in the largest rounds was headed also by Shell and Total.
The most active corporate venture investors in the emerging energy businesses were Shell, oil and gas company Equinor and Total.
The emerging energy businesses in the portfolios of corporate venturers came from areas like charging stations for electric vehicles (Chargepoint), spectrometry tools (908 Devices), pipes for the oil and gas industry (Aireborne) through energy efficiency and measurement (SenseHome and Innowats), carbon dioxide capture technology (Carbon Engineering), solar energy tech (Omnidian, Off-Grid Electric, Heliatek, Yellow Door Energy), other clean and renewable energy tech (EtaGen, Alphabet Energy) as well as power grid and battery tech (Enbala, Sila Nanotechnologies).
Overall, corporate investments in emerging energy-focused enterprises went up from 90 rounds in 2017 to 98 by the end of 2018, suggesting a 9% increase. The estimated total dollars in those rounds also increased, by 16%, from $1.55bn in 2017 to $1.80bn last year. However, by the end of August this year we had already tracked 78 rounds, worth an estimated total of $2.25bn, suggesting valuations on the rise at the moment.
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.
US-based autonomous driving technology developer Aurora Innovation secured $530m in funding from investors including Shell and Amazon. The round was led by venture capital firm Sequoia Capital and also featured Shell Ventures, Shell’s investment arm, plus Lightspeed Venture Partners, Geodesic, Reinvent Capital, Greylock, T Rowe Price Group and Index Ventures. It reportedly valued the company at more than $2.5bn. Aurora is working on software, hardware and data technology that will be used in driverless vehicles. It boasts a 250-strong team and has struck partnerships with automotive manufacturers including Hyundai, Volkswagen and Byton.
Eversource Capital, the joint venture between solar power producer Lightsource BP and asset manager Everstone Group, led a $330m funding round for India-based renewable energy project developer Ayana Renewable Power. The round also featured the state-owned National Investment and Infrastructure Fund of India and CDC Group, the UK government-owned development finance organisation that set up Ayana. Eversource is participating through its Green Growth Equity Fund. CDC launched Ayana in January 2018 with an undisclosed amount of funding to develop hundreds of megawatts of wind and solar energy projects in India and neighbouring South Asian countries such as Bangladesh, Sri Lanka, Nepal and Myanmar. The company currently has roughly 500 MW of solar power under construction, having won the rights to develop 250 MW in the Indian state of Andhra Pradesh through an auction by government agency Solar Energy Corporation of India.
China-based internet-of-things (IoT) technology developer G7 Networks secured $320m in funding from investors including Total, internet company Tencent and logistics services provider Global Logistics Providers (GLP). The oil major participated through its corporate venturing unit, Total Energy Ventures. Founded in 2010, G7 Networks operates a software platform that relies on IoT devices to track and monitor trucks within a provider’s own fleet and subcontracted vehicles. The system calculates predicted arrival times and tracks driving aspects such as speeding and fuel anomalies and is used to track more than 800,000 vehicles for a total of more than 60,000 clients. G7 is also co-developing an autonomous trucking network through Inceptio Technology, a joint venture established with GLP and Nio Capital, a subsidiary of electric car producer Nio.
US-based electric vehicle charging network operator ChargePoint received $240m in a series H round backed by electric utility American Electric Power and industrial product manufacturer Siemens. Chevron Technology Ventures and BMW i Ventures, the corporate venturing units of Chevron and BMW, as well as Daimler Trucks & Buses, a subsidiary of the carmaker, also participated in the round. Private equity firm Quantum Energy Partners led the round, which also featured VC firms Braemar Energy Ventures, Clearvision, Linse Capital, Singapore’s sovereign wealth fund GIC and state-owned pension fund Canada Pension Plan Investment Board. Founded in 2007 as Coulomb Technologies, ChargePoint operates a network of more than 57,000 chargers working with electric cars, buses and trucks, and serves corporate and public customers, such as cities.
New energy vehicle developer Nikola Corporation, also based in the US, raised a series C round featuring hydrogen energy storage technology provider Nel Hydrogen at $210m. The company had raised $100m at a $1.1bn pre-funding valuation before Nel added $5m. It has now received a further $105m from unnamed investors to close the round, which had a $200m initial target. Nikola provides electric power sports vehicles and energy storage systems but its lead product is set to be a hydrogen semi-truck called Tre, for which it claims to have received more than $380m of orders. In addition to being an investor in Nikola, Nel is also an equipment supplier, collaborating on the construction of a 16-strong network of hydrogen charging stations that will span some 3,200 kilometres in the US.
4Paradigm, the China-based creator of an AI software development tool, received more than RMB1bn ($145m) in a series C round featuring power producer China Three Gorges. The deal, which valued 4Paradigm at approximately $1.2bn, included holding groups Citic Group and China Poly Group, government-owned banks Agricultural Bank of China and Bank of Communications, Tsinghua University Science Park, Sequoia Capital China and China Reform Holdings. Founded in 2015, 4Paradigm has designed a software platform called Prophet that enables enterprises to easily create AI and machine learning-powered applications to improve the operational efficiency and decision-making of their businesses. The company is now working on a bespoke processing chip that will be bundled for sale with its software, and which is intended to handle its algorithms more efficiently.
US-based fusion power technology developer Commonwealth Fusion Systems (CFS) closed a $115m series A round that included oil and gas producer Eni, which invested $50m. Eni joined Breakthrough Energy Ventures and the Massachusetts Institute of Technology (MIT)-owned The Engine as existing backers in the second close, alongside new investors Future Ventures, Khosla Ventures, Lowercase Capital, Moore Strategic Ventures, Safar Partners, Schooner Capital and Starlight Ventures. Founded in 2017, CFS is working on high-temperature superconductor magnets that are expected to facilitate the creation of smaller and less expensive fusion power plants. It is collaborating with MIT’s Plasma Science and Fusion Center to develop the technology. The funding will enable CFS to demonstrate its technology at full scale as it aims to build the world’s first net-energy gain fusion system, Sparc, by 2025. Sparc will serve as the basis for a fusion power plant, dubbed Arc, that is expected to provide electricity to the grid.
UK-based solar cell developer Oxford PV completed a £65m ($81.8m) series D round after adding £34m from investors including solar semiconductor technology producer Meyer Burger. Meyer Burger took an 18% stake in the company and was joined by undisclosed new and existing investors. Wind turbine producer Goldwind led the £31m first tranche investing with Equinor and Legal & General Capital, the insurer’s corporate venture capital arm. Oxford PV produces solar cells that make up larger photovoltaic modules for use in solar power generation. It utilises perovskite, a mineral that gives the cells a larger theoretical efficiency limit than traditional silicon-only cells, making them potentially more efficient.
Canada-based carbon capture technology developer Carbon Engineering has closed a $68m funding round featuring petroleum suppliers Occidental Petroleum Corporation and Chevron, mining group BHP and property developer Bethel Lands Corporation. Occidental and Chevron participated in the round through respective subsidiaries Oxy Low Carbon Ventures and Chevron Technology Ventures. BHP reportedly contributed $6m. The round also included First Round, Lowercase Capital, Rusheen Capital Management, Starlight Ventures, Thomvest Asset Management, Carbon Order, private investors Bill Gates and Murray Edwards and the Benjamin, Hodgkinson and Hutchison families.
Founded in 2009, Carbon Engineering is developing technology intended to capture carbon dioxide directly from the atmosphere and convert it into ultra-low carbon fuels that could be used to power cars, trucks and airplanes. The company claims its direct air capture technology can capture and purify atmospheric carbon dioxide at a price of less than $100 per tonne. The funding will support the expansion of its pilot plant and the engineering of its first commercial facilities.
United Arab Emirates-based solar power provider Yellow Door Energy secured $65m in a series A round that included diversified conglomerate Mitsui and Equinor. The round also featured International Finance Corporation, the private investment arm of the World Bank, as well as development bank Arab Petroleum Investments Corporation and private equity firm Adenium Energy Capital, while Equinor invested through its Equinor Energy Ventures unit.
Founded in 2015 as a spin-off from founding investor Adenium, Yellow Door designs, builds and maintains solar energy plants on behalf of corporate customers in the Middle East and Africa who then pay for their power on a monthly basis. The company also installs energy efficiency equipment for businesses, in effect charging them a proportion of the money they save each month. The series A funding will support the planned construction of 300 MW of solar capacity in the next two years.
There were other interesting deals in emerging energy-focused businesses that received backing from corporates from the energy and other sectors.
ReNew Power, the India-based renewable energy provider that counts energy utilities Chubu Electric Power and Tokyo Electric Power as investors, raised $300m from existing backers. Investment banking firm Goldman Sachs, pension asset manager Canada Pension Plan Investment Board and Abu Dhabi Investment Authority, the emirate of Abu Dhabi’s sovereign wealth fund, each provided $100m of the capital. Founded in 2011, ReNew runs a 4 GW portfolio of solar power plants and wind farms in its home country, with a further 3 GW of projects under development.
Diversified conglomerate SK Group closed a $250m investment in Shenzhen Londian Electrics, a China-based developer of electric equipment such as energy meters. The investment will form the basis of a joint venture between the two companies, as Londian looks to become the top international producer of copper foil and enhance its presence in the advanced batteries and communications technology materials fields. Founded in 1996, the company produces a wide range of power equipment products, from smart meters and distribution network automation technology to 5G communications power supply and solar photovoltaic equipment to lithium battery components and energy storage technology.
Daimler led a $170m series E round for US-based advanced battery materials developer Sila Nanotechnologies which included industrial technology and appliance producer Siemens’ Next47 unit. The round also featured 8VC, Bessemer Venture Partners, Chengwei Capital, Matrix Partners and Sutter Hill Ventures, and it boosted the company’s overall funding to $295m. Sila Nano is developing materials for use in lithium-ion batteries that are intended to be lighter and safer than existing batteries that use graphite while also providing higher energy density. The series E funding will support an increase in manufacturing volume as the company prepares to commercialise its technology, beginning with partnerships with Daimler and BMW.
Telecoms and internet group SoftBank’s Vision Fund led a $110m series B round for Energy Vault, a Switzerland-based developer of grid-scale renewable energy storage systems. Founded in 2017, Energy Vault has created a modular, gravity-based system designed to store large amounts of solar or wind energy, in theory allowing it to be used as a baseload power source 24 hours a day. The system is powered by the company’s proprietary software and involves a renewable energy-powered crane which lifts 35-ton composite bricks into a tower structure. The kinetic energy generated when the bricks are returned to the ground is then released for use at the other end.
US-based sustainable chemicals and fuel producer LanzaTech received a $72m series E investment from pharmaceutical firm Novo Holdings in connection with a strategic partnership. Proceeds from the investment will be used to accelerate the development of the company’s carbon recycling platform and commercialise its carbon smart products. It has created a system that converts waste and residues into fuels such as ethanol, as well as chemicals such as butadiene and propylene using a gas fermentation process.
Exits
Corporate venturers from the energy sector completed three exits between September 2018 and August 2019 – two acquisitions and a stake sale transaction.
An undisclosed investor bought the stake in Norway-based provider of specialist well intervention services for the oil and gas industry Ziebel held by Investinor, EV Private Equity, Viking Venture, Jebsen Asset Management, Chevron Technology Ventures, Energy Technology Ventures, Torvald Klaveness, GE Ventures, ConocoPhillips Technology Ventures and Verdane Capital.
Shell agreed to acquire one of its portfolio companies, Germany-based energy storage technology provider Sonnen, for an undisclosed amount. Sonnen will operate as a subsidiary of Shell, working with its New Energies division, and expand its virtual battery system into grid services. Founded in 2010 as Sonnenbatterie, the company produces smart energy storage systems for customers in Europe, the US and Australia, allowing them to store surplus energy. Users in some European markets can also band together into a local community to pool their energy through what the company calls a virtual battery.
Innogy Venture Capital, the investment fund backed by RWE Innogy and wind power producer Conetwork Erneuerbare Energien, sold its stake in Sweden-based heat exchanger technology producer Airec for an undisclosed amount. Airec divested its brazed plate heat exchanger business to industrial product maker Alfa Laval in January 2019, and the rest of the company has been picked up by Sveper Heat Transfer, a vehicle owned by Airec founder and chief executive Sven Persson. Founded in 2015, Airec manufactures and developers plate heat exchangers, a device that allows heat from a fluid or a gas to pass to another fluid or gas through metal plates.
Global Corporate Venturing reported only one exit from emerging pure play energy-related enterprises that involved a corporate investor.
Shell agreed to acquire Limejump, a UK-based virtual power plant developer backed by energy utility Statkraft, for an undisclosed amount. Founded in 2013, Limejump provides a cloud-based software platform that can create virtual power plants where isolated renewable energy systems can link together to join the UK grid and earn money by providing energy when necessary. The system uses machine learning technology to help smaller renewable generators and battery storage units access the balancing mechanism market, a tool used by the UK’s national grid to balance electricity supply and demand.
Funds
For the period between September 2018 and August 2019, corporate venturers and funds investing in the energy sector secured over $2.32bn in capital via 26 funding initiatives, which included 16 VC funds, eight newly launched CVC subsidiaries and two other initiatives.
On a calendar year-to-year basis, the number of funding initiatives in the energy sector stood at 25, much like the 25 registered in 2017, and only slightly down from the peak (27) reported in 2016. The total estimated capital increased more than six-fold from $565m to $3.69bn.
France-based energy management and automation technology producer Schneider Electric launched a dedicated corporate venturing unit to invest between €300m and €500m ($340m to $565m) in startups. Schneider Electric Ventures, as the unit was dubbed, will target energy efficiency and sustainability, in areas such as energy use and industrial management, and will deploy the capital in direct investments in startups, dedicated strategic funds, incubation initiatives and partnerships with entrepreneurs. The unit has so far invested in real estate modelling technology developer Habiteo, building management platform KGS Buildings, energy management device producer Sense, industrial data system developer Element Analytics, industrial security software provider Claroty and electric vehicle charger installer Qmerit.
UK-based investment firm Ahren Innovation Capital closed its inaugural vehicle at more than £200m ($253m) from limited partners (LPs) including consumer goods conglomerate Unilever, insurance firm Aviva and broadcaster Sky. The LP list also featured diversified holding group Wittington Investments, undisclosed US families and individual investors including André Desmarais, Carlos Rodriguez-Pastor and the eight scientists who co-founded the vehicle.
Founded in 2017, Ahren Innovation Capital focuses on technologies covering energy and environmental technologies, the brain and artificial intelligence, genetics and biotechnology as well as space and robotics. The firm both invests in and helps build companies, offering access to the expertise of its founding science partners. It is seeking out opportunities that take a multidisciplinary approach to tackle challenges.
Energy utility National Grid, which is based in the US, officially launched corporate venturing unit National Grid Partners (NGP) with $250m under the leadership of Lisa Lambert, an alumna of corporate venturing unit Intel Capital, the venturing vehicle of chips and semiconductor maker Intel. NGP will operate as National Grid’s investment and innovation subsidiary, combining corporate venturing with innovation and business development activities. It is based in Silicon Valley with offices elsewhere in the US and in the UK. The fund will target investments in companies developing technologies that can support the transformation to an energy distribution network more heavily based on renewable energy.
US government-owned research laboratory Argonne National Laboratory formed a research agreement with a $180m US-based battery technology fund backed by speciality chemicals supplier Albemarle and energy companies Equinor and Exelon. Hanon Systems, a distributor of energy management technologies for automotive vehicles, has also committed to the fund, which was founded in 2017 as Volta Energy Technologies. It was launched to uncover promising battery-related technologies which could potentially be of use to its LPs, which hope to complement their in-house research and development in the area. Argonne’s role includes providing resources to help Volta’s portfolio companies develop their applications. It also claims to have access to research from prominent US national laboratories and major universities, in addition to institutions in the UK, Germany, Japan and China.
US-based venture capital firm Valo Ventures reached a $175m final close for its debut fund, securing capital from LPs including electricity producer Fortum. The Finland-based corporate agreed to commit $170m to the firm, which was founded by Scott Tierney, a co-founder of CapitalG, the corporate VC subsidiary of internet and technology conglomerate Alphabet formerly known as Google Capital. Founded in 2018, Valo Ventures is focused on investing in early and growth-stage technology startups that could bring about long-term social, economic and environmental benefits. The firm will target North America and Europe-situated companies tackling global trends, such as empowered consumers, autonomy and mobility, urbanisation, climate change and the circular economy.
Philippines-based diversified conglomerate Ayala unveiled plans to launch a $150m corporate venture capital fund. It intends to raise the capital from its subsidiaries, which cover sectors such as retail, education, financial services, telecoms, water utilities and renewable energy, IT, public transport, car manufacturing, healthcare, logistics and business process outsourcing. Kickstart Ventures, the investment arm of telecoms firm Globe Telecom, will manage the fund. Globe Telecom is a joint venture between Ayala and telecoms provider Singapore Telecommunications, and Kickstart currently has more than 20 companies in its portfolio. The fund will be the largest in the country if it reaches its target. It will seek out opportunities in areas such as fintech, automation, AI and battery technologies, as well as other areas relevant to Ayala’s subsidiaries.
China-based appliance manufacturing group Midea raised $104m for an investment fund with a targeted close of RMB1bn to RMB2bn ($147m to $293m). Guangdong Midea Smart Technology Industrial Investment Fund’s initial raise includes a $44m commitment from an unnamed, wholly owned investment arm of Midea. The other LPs were not named. The fund will focus on areas such as intelligent manufacturing, smart home, retail and new energy. It will be managed by an asset management vehicle.
Founded in 1968, Midea has grown into a conglomerate with more than 200 subsidiaries covering consumer appliances, heating, ventilation and air-conditioning systems, supply chain logistics and robotics and industrial automation. Its corporate venturing portfolio features US-based SoundHound, the corporate having participated in a $100m round for the voice intelligence technology developer in 2018.
Manufacturing conglomerate Mitsubishi contributed to the second fund being raised by UK-based venture capital firm AP Ventures. AP Ventures II reached a $90m first close earlier, with commitments from mining company Anglo American Platinum and the South African government-owned Public Investment Corporation (PIC). The vehicle invests in businesses that employ platinum group metals of the kind produced by Anglo American, for use in sectors such as energy storage, water purification and durable electronics. The first AP Ventures vehicle officially launched in July 2018 with $100m each from Anglo American Platinum and PIC.
Chevron Technology Ventures launched a $90m Fund VII. It will invest in early and mid-stage, high-growth companies developing innovative oil and gas technologies. Chevron will also continue to participate in external funds as an LP. Founded in 1999, CTV backs companies developing technologies that could be applicable to its parent business, in addition to making strategic commitments to selected venture capital funds and has made more than 90 investments. Barbara Burger, its president, said: “CTV serves as an excellent source within Chevron for new business models and novel technologies that can deliver value to the enterprise through their integration.”
Japan-based electronics manufacturer Toshiba set up a ¥10bn ($89m) corporate venture capital fund. The vehicle is part of a plan that will involve it investing up to $8.3bn over the next five years, focusing on areas such as renewable energy technologies, power electronics, robotics and medical technologies covering treatment, screening and diagnostic testing. Shiro Saito, the chief technology officer, said: “In terms of creating new business, we will release the seeds of businesses created in the R&D department into the world at an early stage.” Part of the investment mandate will also go towards bolstering the company’s rechargeable battery technology, dubbed SCiB, which has been used for vehicle, industrial and infrastructure applications such as buses, rail cars, elevators and power plants. Toshiba is also collaborating with universities and research institutes such as Stanford University, Chinese Academy of Sciences and Indian Institute of Science.
People
David Hayes was promoted to chief investment officer and managing director (Americas) for BP Ventures, the corporate venturing unit of the UK-listed oil major (see p. 82). Hayes had previously spent a decade at BP Ventures and has worked at the oil major since 2002. His promotion comes after a similar reorganisation elsewhere for BP Ventures over the past year with Ignacio Gimenez becoming MD for Europe and the Middle East and Graham Howes having the same role in Asia from Singapore, after Akira Kirton moved to become Commercial Director at BP European Acetyls
Lisa Lambert is leading the National Grid corporate venturing unit National Grid Partners (NGP). Lambert worked for Intel for 19 years and was a managing director at Intel Capital by the time she left in 2016 for a managing partner role at venture capital firm Westly Group. She joined NGP in January 2018.
NGP’s founding team also included National Grid vice-president of business development Kareem Fahmy, who joined after four years as senior director of global business development for Intel Capital, and Pradeep Tagare, formerly an investment director at Intel Capital India, who is heading the corporate VC fund. The team is filled out by vice-president of incubation Dillon McDonald, who was managing partner at roadside assistance provider AAA’s A3 Ventures unit, and VP of innovation Brian Ryan, who was general manager of emerging technologies for data infrastructure technology producer Vector.
Michael Lübbehusen left Innogy Venture Capital but did not reveal his next move. He joined the firm in 2016 and headed it in partnership with Frank Starrmann, who took over sole management of the unit as managing director. The fund invests in renewable energy, energy efficiency and energy storage technology developers from seed to expansion stage. Its portfolio includes solar film producer Heliatek, renewable energy forecasting platform Enercast and materials analysis technology provider Mantex.
Engie Electro Power Systems (EPS), the energy storage subsidiary of France-headquartered energy group Engie, promoted its Italy-based chief of staff and head of new business, Giovanni Ravina, to chief innovation officer. Prior to joining Engie EPS in March 2018, Ravina spent four years as part of the founding team of Engie’s corporate venturing initiative, Engie New Ventures. During that time, Ravina led financing efforts for smart grid technology developer Opus One, geospatial data technology developer StreetLight Data, nanosilicon-based multigas analysis system provider Apix Analytics and electric scooter provider Gogoro.
Netherlands-based energy utility Eneco’s corporate venturing arm, Eneco Innovation & Ventures, promoted investment director Leonie Baneke to head of the unit. Baneke joined Eneco as an M&A adviser in 2014 prior to becoming an investment director at Eneco Innovation & Ventures in 2016, six months after its launch. The vehicle focuses on investments in smart home, intelligent building and domestic renewable energy technology developers. During her time at the unit, Baneke has helped it invest in digital heating installation service provider Thermondo, electric mobility management platform GreenFlux and virtual power plant operator Next Kraftwerke.
Argentina-headquartered oil and gas producer Yacimientos Petrolíferos Fiscales (YPF) chose Tomás Ocampo to lead its corporate venturing arm, YPF Ventures, as US-based managing director. Ocampo helped the corporate set up YPF Ventures, having served as an adviser to Japan-headquartered utilities J-Power and Osaka Gas on corporate venturing initiatives in advanced mobility and renewable energy in 2018. YPF Ventures’ two vehicles – US-based growth equity fund Argentina Energy Bridge and the Argentina-based, seed-stage YPF Early Stage Fund – will concentrate on global and local deals respectively, and the company has invested in scooter rental service Bird Technologies and renewable energy provider Sustentator.
Germany-based energy utility Eon has hired Thomas Birr, a member of Global Corporate Venturing’s 2019 Powerlist, to oversee its innovation initiatives. Birr has been chief executive of Innogy Innovation Hub, energy utility Innogy’s startup accelerator and corporate venturing arm, and senior vice-president of innovation and business transformation at Innogy, since September 2016. Birr had held several senior positions at RWE, Innogy’s parent company since 2000, including head of strategy and corporate development. Innogy was formed in 2016 by the amalgamation of RWE’s network, retail and renewable energy subsidiaries.
PTV International Ventures Americas (Piva), the US-based corporate venture capital subsidiary of Malaysia-headquartered petroleum supplier Petronas, hired Bennett Cohen as a partner. Cohen had been a principal at Shell Ventures, the strategic investment subsidiary of the oil and gas provider. He joined the unit in 2015 and his areas of investment included blockchain, advanced cleantech and mobility technology. Piva’s $250m fund targets early-stage, North America and Europe-based developers of artificial intelligence, machine learning, applied robotics, speciality chemicals, advanced materials and clean technologies centred on the industrial and energy sectors.
Cassio Carvalho Pinto Vidigal, previously head of Portugal-based energy utility EDP’s corporate venturing arm, EDP Ventures, joined financial services firm Deutsche Bank as Brazil-based head of global subsidiary coverage. Vidigal joined EDP subsidiary EDP Brasil as executive manager in 2013 to handle the group’s capital structuring in the country and manage cashflow, before he was promoted to run its nascent EDP Ventures unit in 2018. Vidigal had spent a year as a Brazil-based senior trader for food provider and commodities trader Cargill, overseeing structure finance operations and been director of corporate banking at financial services firm BNP Paribas for a decade.
Jim Sledzik joined Saudi Aramco Energy Ventures (SAEV), the corporate venturing unit for Saudi Arabia-based oil producer Saudi Aramco, to head its US team. Sledzik spent nearly a decade as senior partner and president of venture capital firm Energy Ventures, helping it raise about $1bn for its funds. SAEV hired Sledzik to work under unit CEO Majid Mufti, at a time when it has been increasing its activity.
Imran Kizilbash has resurfaced adter a career at oil services firm Schlumberger and joined energy-focused private equity firm CSL Capital Partners as a senior adviser. Kizilbash had left his position as vice-president and treasurer at US-based oil services provider Schlumberger in May 2018. STI had expanded into categories like renewables, software and IoT under Kizilbash’s leadership and its function essentially comes down to “being ready to transform if and when required”.
Tyler Williams left Shell Ventures to become an executive committee member of Canada-based investment partnership Natural Gas Innovation Fund (NGIF). Williams had been an investment principal at Shell Ventures since 2017. He joined the corporate in 2013 before taking a Canada-based global technology leader position in 2015 to lead the development of its industrial IoT strategy. Deals in which Williams was involved include a $2.8m round for Canada-based oil and gas infrastructure platform developer Osprey Informatics.
Shell Canada joined six other Canada-based gas producers to pledge C$3m ($2.26m) to support NGIF’s initiative to back companies attempting to develop cleaner methods of power generation using gas. NGIF’s portfolio includes gas turbine-enabled heat and power system developer NextGrid, renewable hydrogen energy system developer Hydrogenics and adsorption-based cooling technology developer Enersion.
Marc Sabas, previously head of business development and partnerships of global core innovation at telecoms firm Telefónica, became venture principal at Centrica Ventures, UK-based energy utility Centrica’s corporate venturing subsidiary. Sabas told GCV he had spent five years at Telefónica, and in 2018 he co-founded an intrapreneurial unit called Internet para todos, where he identified and partnered technology companies disrupting the telecoms space. Sabas had been investment adviser for Europe and the US regions at Spain-based business-to-business (B2B) technology venture capital fund Mundi Ventures from 2015 to 2017, helping to structure and launch its fund management firm and raise two funds.
Johanna Schmidtke stepped down from her position as investment director at SAEV to join private equity firm Ara Partners Group as a principal. During her time at SAEV, she focused on investments in companies developing technologies for upstream and downstream oil and gas exploration, petrochemicals, water, energy efficiency and renewable energies. SAEV hired Schmidtke in 2013 and she held board seats at portfolio companies ConXtech, Novomer, Vere Technology, Maana and Siluria Technologies on behalf of the unit. Schmidtke came to the unit from professional services firm PwC previously worked on corporate development and strategy at solar module producer First Solar and as an analyst at research and advisory firm Lux Research.
Danilo Leite, formerly a strategy and innovation specialist at Brazil-based electricity supplier CPFL Energia, joined industrial conglomerate Votorantim Group’s energy unit, Votorantim Energia, as an innovation manager. He had responsible for CPFL Energia’s open innovation and corporate venture capital initiatives. Leite also oversaw the Emotive project, an electric mobility R&D scheme backed by CPFL, along with telecoms and information technology R&D centre CPQD, University of Campinas and R&D-focused engineering firm Daimon.
Andrea Course left US-based oil and gas services provider Schlumberger to join Shell Ventures as a venture principal. Course spent approximately 18 months in the same position at Schlumberger and was named one of Global Corporate Venturing Rising Stars in January 2019. She sat on the board of Norway-based cable condition monitoring products provider Wirescan and participated in a deal for US-based cybersecurity software provider Onapsis.
Alexander Hain left his position as head of Wincubator, Germany-based water pump system maker Wilo’s corporate innovation subsidiary, to join Sweden-headquartered energy company Vattenfall as senior venture development manager. Hain will help devise innovative business models for Vattenfall in renewable energies, digitisation and decentralised energy generation through the Germany-based open innovation platform, Greenfield, which was launched by the company in November 2016. Hain joined Wincubator in late 2016 and oversaw strategic investments in building automation and water innovation. The unit provides startups with between €500,000 ($560,000) and €1m ($1.1m) of funding plus business and technical advice and industry contacts.
John Egil Johannessen, investment director at Norway-based Equinor’s corporate venture capital unit, took 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. Johannessen joined Statoil in 2005 and moved to its CVC unit in 2013. At Equinor, his deals included Norway-based underwater imaging company Ecotone, software developer Sharp Reflections and Soiltech, a local drilling waste handling company, as well as 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%.
University backing for energy companies
By the end of 2018, we registered 30 rounds raised by university spinouts developing energy-related technologies, much like in the previous year. The level of estimated total capital deployed in 2018 stood at $212m, up from $36m in 2017. By the end of August this year, we had already tracked 14 rounds, worth an estimated total of $368m, which suggests that valuations of such enterprises emerging from academia are rising.
Form Energy, a US-based energy storage technology spinout of Massachusetts Institute of Technology, completed a $40m series B round backed by the university’s affiliate venture fund The Engine. Eni Next, the corporate venturing arm of Eni, led the round with participation from cleantech-focused VC fund Breakthrough Energy Ventures, Capricorn Investment Group, Prelude Ventures and Macquarie Capital. Founded in 2017 as Baseload Renewables, Form Energy is developing lithium-sulphur batteries that can be used as energy storage to help manage peaks on electricity grids. The aim is to provide low-cost grid storage for renewable sources of energy, such as wind and solar, which tend to have more erratic output than conventional fossil fuels.
Nanograf Technologies, a US-based battery materials developer spun out of Northwestern University, secured $4.5m of capital from chemical products supplier JNC. The funding will allow Nanograf to build its production capabilities and pursue development of other advanced materials. JNC will grant the company access to production capacity and staffing in its home market of Japan, as well as distribution resources, research facilities and more than 50 patents. Founded in 2013 as SiNode Systems, the developer is working on a graphene and silicon-based battery anode which improve circuit flows in lithium-ion energy storage units frequently used for consumer electronics and electric vehicles despite concerns about their stability and effectiveness. Graphene’s properties have allowed Nanograf to boost the energy density and ionic diffusion of its anodes, meaning batteries based on the technology could recharge faster and offer greater storage.
Forge Hydrocarbons, a Canada-based renewable fuel producer spun out of University of Alberta, raised $4m in funding from aerospace company Lockheed Martin. The investment helps Lockheed meet its obligations under Canada’s Industrial and Technological Benefits Policy, which stipulates recipients of defence procurement contracts conduct business within Canada. Founded in 2012, Forge Hydrocarbons is commercialising a hydrocarbon production technique that converts organic lipid compounds into renewable fuels with similar qualities to petroleum. Forge claims the approach could reduce greenhouse gas emissions by more than 70% compared with crude oil-based petrol. The capital will go toward building a 19 million litre-per-year capacity lipid-to-hydrocarbon production plant in Sombra, Ontario, and Forge also plans to fund further research into lipid-based fuels and other renewable feedstocks.