The Fund Betting on Technologies That Have Derisked Since CleanTech 1.0

The Fund Betting on Technologies That Have Derisked Since CleanTech 1.0. (Image: Energy Transition Ventures)
The Fund Betting on Technologies That Have Derisked Since CleanTech 1.0. (Image: Energy Transition Ventures)

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Energy Transition Ventures (ETV) is a new climate venture fund dedicated to investing in and advancing technologies directly impacting the shift towards a clean energy future. ETV focuses on five major themes in the clean energy transition: distributed energy, electrification, mobility, resource efficiency, and enabling technologies. The fund likes to take on engineering risk, technologies with reasonable timeframes for development and deployment, business model innovations, hardware and software, and will bet on technologies that have derisked themselves from Cleantech 1.0.

Fund Snapshot

  • Stage: Seed – Series A, with select later stage
  • Check Size: $1-5mm
  • Geography: North America focus, but not restricted
  • Lead/Follow: Lead or Follow
  • Revenue/Valuation Threshold: None

About the Fund

Why was the fund created?

Craig and Neal have both been in the clean energy field for 15+ years, prior to launching the fund in March 2021. Both previously worked in venture funds (Accel Partners, Jane Capital Partners, and Shell Ventures) and startups during Cleantech 1.0, and the two came together during the pandemic on strategy and philosophy, around the belief that the energy sector had substantially changed.

Renewables had gone from the most expensive source of energy to among the cheapest in a decade. And that would create opportunities for a whole new set of companies to be built on top of cheap, clean energy. In particular, there was a true gap in true early-stage venture funding after the exodus from Cleantech 1.0. Cleantech 1.0 focused on making renewable energy cheaper, with much of the money invested going into the core sciences and advanced materials that promised cheaper clean energy. Many of those advancements did not materialize at the performance and cost points promised, and incumbent technologies, like silicon for solar and lithium-ion for batteries, ultimately won. With those technologies at scale and, the time for accelerating the transition with novel businesses on the backs of cheap, clean energy is now, with those inventions ready to shine.

What are Energy Transition Ventures’ core beliefs?

Energy Transition Ventures believes that there is no single formula for startups and companies. As previous successful investors in Cleantech 1.0 and operators at startups and large companies in these sectors, the team has a significant amount of experience working in the space and understands the role of R&D, advancements in learning curves for previously risky hardware, and engineering risk vs. science risk. Additionally, the capital stack for climate technologies is now complete with private capital flowing from early-stage startups through growth capital, private equity, corporates, and public markets. VC funds no longer have to foot the entire financial burden for technologies in the industry.

What domains does Energy Transition Ventures have expertise in?

The Energy Transition Ventures team has a wealth of experience in energy technology, startup development, and investing in energy transition technologies in both hardware and software. Craig brings to the table years of experience working in solar at leading companies SunEdison, SolarBridge, and SunPower, building and delivering both software and hardware solutions to the industry. Neal is a true investor, understanding the ins and outs of startup viability and investing, and can help portfolio companies structure themselves to be poised for success.

What type of portfolio support does Energy Transition Ventures provide?

Energy Transition Ventures aim to help drive the development and commercialization of their portfolio companies by leveraging the resources of each individual partner. Energy Transition Ventures helps their portfolio in the following ways:

  • Streamline the process for acquiring and launching pilot projects, particularly in Asia, through their anchor limited partner, the GS Group.
  • Business development, customer introductions and pipeline development
  • Access to ETV’s network, including, one of the largest professional networks in cleantech, managed by ETV.
  • Product and manufacturing strategy

About Investments

What is Energy Transition Ventures’ investment process and timeline?

Energy Transition Ventures’ investment process is fairly straightforward. The team functions as a tight group and can move very quickly with their investment decisions. Startups engaging with ETV can expect an introductory call with one of the partners to establish a fit, followed by pitching to the team as a whole. From there, ETV will dive deeper into due diligence – team, technology, market – and request customer interviews prior to a term sheet. This whole process can be fast (days) or slow (weeks to months), depending on the company, technology, and the market. ETV prefers to lead, and is not swayed by the opinions of other investors. But, they will also follow if there is a strong lead they trust, and alignment on the path forward.

The most important element of ETV’s decision-making process are the customer interviews. In these calls, the partners look to understand why customers choose to use the startup’s product and what exactly the customers’ pain points are. Cross-referencing this information with the partners’ industry experience, the investment team will move to look to see how strong/credible the team is, look into how big the market truly is, and evaluate whether or not the pain points the startup is trying to solve are real and impactful.

ETV are selective investors, and judge their investments through the lens of the broader venture capital asset class – not just the climate sector. They believe success in climate and energy can yield just as good returns as general technology.

What would make Energy Transition Ventures deviate from its typical criteria?

Given that ETV has a broad mandate for what the team can invest in, nothing is contrarian to its thesis. If the potential company either drives or benefits from the energy transition, ETV may consider investing in a materials science company so long as the technology and team have reached an inflection point in its development and traction, and the learning curve for the technology is already sufficiently advanced. There are a lot of technologies that have been around for 10-15 years that are still poking around and are just starting to gain maturity and traction. ETV is opportunistic and flexible in finding investments and would be willing to deviate in stage, role, investment area, and investment type. They believe that this wave of investment will create a handful of huge companies that will change the world, and they want to be a part of all those companies.

About The Author

Matthew Morris Impact

Matthew Morris

Partner @ The Impact

Matt is a Senior Associate with ADL Ventures, helping build the future of energy, transportation, and building materials through his consulting and business development work. Outside of his day job, Matt helps bridge the gap between startups and investors across all disciplines in climate.

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