Author: John Tough

Pragmatism executed at speed better than perfection delivered too late

Pragmatism executed at speed better than perfection delivered too late

Last week I was fortunate to be part of the Morgan Stanley Sustainable Finance conference. My conversation was a fireside chat with a leading executive at Morgan Stanley and the topic was “Climate Earthshots”.

MS defines Earthshots as more realistic, near-term versions of pie-in-the-sky moonshots. The topics included:
1- Potential scale of technologies that are available today: solar, batteries, wind
2- Nascent but enduring trends: electrification of mobility, carbon markets
3- Emerging solutions: hydrogen, renewable natural gas, fusion, geothermal
4- Blockers to accelerating the sustainability movement: permits, labor, soft costs, cost of capital, risk-off mentalit
5- The opportunities enabled by emerging technologies, like AI and LLM

During the Q&A section I shared my position that non-presently-operating technologies (non-industrial hydrogen, fusion, direct air capture, etc.) are nowhere near market readiness and cost feasibility. After the discussion one of the members of the audience claimed “rare for a climate investor to be so bearish”…

I don’t get swayed by frothy, hopeful headlines and I am fortunate that Energize has access to public and private datasets on the state of the sustainability market. Based on that data I believe the current environment (higher interest rates, recessionary indications, lighter private funding) moves 5 year technology targets to 10 years. But I don’t view this approach as negative because I believe the inverse to the current market opportunity is also true: technologies that are here TODAY are going to be the runaway leaders and far greater scale than anyone imagined. Batteries, solar, wind, industrial IoT technologies,nature-based carbon markets, electrification of mobility, decentralized asset development and management. These technologies are all here today and they now enjoy another 5-10 years of iteration and improvement. The future technologies are not competing with the cost of today’s technologies, but the cost curve of those solutions in a decade. This framework is why I have been using one of my management techniques to discuss the current approach to investing in sustainability: “pragmatism executed at speed is better than perfection delivered too late”…

Energize’s Electrify Everything Top 30 for 2023

Energize’s Electrify Everything Top 30 for 2023

Last summer, Energize released our comprehensive “Electrifying Everything” investment thesis, including our proprietary deep dive research report, the culmination of our 10-part blog series and our list of the top 30 software innovators applying digital solutions to help accelerate widespread electrification. In brief, we believe electrifying everything – and powering those electrons with zero-carbon clean energy – is the optimal near-term strategy to achieve decarbonization. And we believe the software companies helping deploy electrification technologies (from solar panels to electric vehicles) faster and more efficiently are in a prime position to grow their enterprise value.

Of course, anyone who has been following the markets in the last year knows that the startup and technology environment has been turbulent. So how has the landscape of companies “Electrifying Everything” changed in the last year? And how have the climate software companies from our class of 2022 fared? Roughly 12 months later, we’ve revisited our thesis and added 11 new companies to our list in the 2023 Edition of “Electrifying Everything.”

Download the full report here, and read on for a snapshot of the report’s insights.

Energize’s Top 30 Software Innovators of 2022: Where Are They Now?

Despite the last year’s challenging market environment, the climate software sector has shown remarkable resilience. Look no further than our “Top 30 Software Innovators of 2022” list for substantiation. Based on The BVP Nasdaq Emerging Cloud Index’s metrics, the performance of emerging public cloud software providers across the industry has decreased by 24.6 percent year over year, while the performance of the median company on our top 30 list has increased 140 percent. All 30 companies remain in operation, and many have achieved significant performance milestones.

Additionally, in the past 12 months, our 2022 Top 30 cohort:

– Raised $1.8 billion in total capital.

– Had a median YoY valuation increase of 2.4x.

– Achieved an aggregate enterprise value of $19 billion.

Source: PitchBook, Publicly Available Company Filings, Energize Internal Analysis

This resiliency was also evident across the broader market. Software companies launched new products and partnerships that are quickening the pace of electrification, from Aurora Solar’s integration with Mosaic to streamline solar sales and project financing, to Voltus’ and Resideo’s demand response program expansion, to Monta’s partnership with Fastned to make electric vehicle (EV) charging more accessible throughout Europe. And despite a downturn for M&A activity at the macroeconomic level, “Electrifying Everything” companies were involved in eight major acquisitions – either as the strategic acquirer or the acquired – within the last year alone.

Source: PitchBook, Energize Internal Analysis

How Software is Electrifying Everything: Energize’s Top Five Themes of 2023

As we look ahead to the next year, we believe the urgency and opportunity for climate software innovators remains, though with new considerations given the current conditions of the climate tech market. At Energize, we’ve identified five top themes that we’re watching as we evaluate the most promising software companies powering climate innovation.

1. Clean energy installers and developers are now heavyweight software buyers.

As renewables installers and developers increasingly outsource functions like project design and management to third parties, companies that offer automated and scalable software solutions for renewables – like PVcase and Pexapark – are quickly growing their revenues and total addressable markets (TAMs). We are seeing renewable energy customers purchase multimillion annual contract value software deals with increasing frequency within our portfolio and the companies we evaluate. Meanwhile, these contracts are expanding at a rapid clip – the top five renewable energy and EV customers for four of our portfolio companies expanded their contracts by 845 percent over the past five years!

2. High interest rate environments put CFO offices in the limelight.

The cost of capital has surged throughout the last year, highlighting the value of technology that can help reduce financing and transaction costs and risks. According to internal analysis, we estimate that a sustained high interest rate environment of more than four percent could add 25 to 40 percent lifecycle costs for electrification projects. And as shakeups in the banking sector continue to underscore the need for fintech innovation, we believe the potential for sustainable infrastructure project finance software like Banyan Infrastructure (an Energize portfolio company), Perl Street and Odyssey shines even brighter.

3. The “soaring soft costs” challenge is replicating across energy technologies.

U.S. residential solar soft costs remain stubborn at 65 percent of upfront costs. The cost breakdown for EV charging is no better – we estimate 80 percent of project costs in EV charging are driven by soft costs. We hypothesize that virtual power plants (VPPs) and residential heat pumps will be the next two emerging electrification technologies to face rising soft costs alongside declining unit costs (for a complete breakdown, see Energize’s mental model for energy technology innovation cycles). Software companies that automate time- and labor-intensive processes in these markets to drive down costs – like Sealed – will be increasingly valued.  

4. Interconnection and siting challenges open the door for software solutions.

Bottlenecks from long interconnection queues and intensive pre-construction processes are currently slowing the pace of renewables deployment. We believe companies that can help open the floodgates by increasing transmission capacity and simplifying site assessments will be rewarded. We have now seen numerous examples of how transmission grid enhancing technologies (GETs) could increase available transmission capacity by 50 to 100 percent (or more) at minimal cost. Climate software companies like Neara are already stepping up to provide streamlined risk mitigation and assessment solutions.

5. Europe is the mad science lab fostering the rapid electrification of everything.

For a glimpse into the future of rapid electrification, look no further than Europe, where adoption rates of solar, EVs, heat pumps and grid flexibility markets are five to 10 years ahead of North American adoption rates. EV share of new car sales exceeds five percent in 15 separate European countries, with many above 15 to 20 percent (the U.S. crossed five percent in Q4 2021). European heat pump sales are outpacing the U.S. by more than two times. We believe the software companies helping increase the scale and efficiency of electrification technologies in these geographies – like our portfolio companies Monta and TWAICE (based in Denmark and Germany respectively) – are poised to grow alongside the booming markets they serve.

Introducing the Top 30 Software Innovators: Class of 2023

With these themes in mind, we present the full list of Energize’s Top 30 Software Innovators of 2023 across each of our “Electrifying Everything” categories. These software innovators are becoming the operating systems for economy-wide electrification. They’re helping deploy today’s climate solutions at scale, and they’re doing so while tagging themselves to top growth trends – helping tackle deployment barriers while serving high-revenue verticals and geographies. We’re excited to track their progress, and we look forward to continuing to support mass electrification throughout 2023 and beyond.

Source: Energize Internal Data

Per our election criteria, each company in the list should have the following characteristics:

  • Private company that has not announced intent to IPO or SPAC
  • Software or asset-light business model. This does not include pureplay manufacturers, novel chemical or material processors, project developers, installers, etc. but does include firms that have developed a novel software or digital architecture to scale a non-SaaS business model
  • Significant portion of revenue comes from “Electrifying Everything”-specific use cases
  • Should not be recently acquired or a subsidiary of a larger company
  • Should have a clear GHG (greenhouse gas) reduction impact via “Electrifying Everything”
  • In our belief, these firms should be most likely to achieve highest enterprise value over the course of time by internal Energize analysis

Full List of 2023 Top 30 Software Innovators in Electrifying Everything:

Bold italics denotes new entrant

*Denotes Energize portfolio company


– PVcase

– Anderson Optimization


– Aurora Solar*

Battery Storage


– KoBoldMetals



– LevelTenEnergy

– SkySpecs


– ‍Neara

EV Charging

– Smartcar*

– Monta*


– WeaveGrid

– ChargerHelp!

– Stable

Clean Firm Power

– None currently

Building Electrification & Efficiency

– Runwise‍

– Sealed‍

– Convex

– cove.tool

Demand Flexibility

– Voltus

– Enode

– Uplight‍

– David Energy


– ‍Arcadia‍

– Orennia

– Palmetto

– Pexapark

– Perl Street

– Banyan Infrastructure*

Not included in our list of the Top 30 Software Innovators “Electrifying Everything” but think you should be? Let’s talk.

Recorded a Podcast with Chris Wedding

Recorded a Podcast with Chris Wedding

I was on a podcast this week with Chris Wedding and his Entrepreneurs for Impact. Here is his summary below, and the links to the podcast are here:

On Spotify and on Apple Podcasts

Here is the summary from Chris

Want access to $1.2B for investing in climate software? What 4 megatrends are driving climate investment? What is the PMTEDI model? Ask this guy. 😎 [details and podcast below]

My guest on this Entrepreneurs for Impact podcast is John Tough, Managing Partner at Energize Ventures.

Energize Ventures is a leading climate software investor that manages $1.2 Billion across two strategies: #venturecapital and #growthequity.

In addition, John is the former Chief Revenue Officer at Choose Energy, the largest online energy marketplace in North America, and a former investor at Kleiner Perkins Caufield & Byers.

🎙️ In this episode, we talked about:

– How they make investment decisions using the PMTEDI model (gotta listen to unpack that one)

– The size of checks they write for Series A through C stage companies, and what revenue targets they aim for

– The four megatrends they’re investing in

– How they develop investment theses with deep dives and active pursuit of 60-100 companies that might be the sector winner

– The benefits of investing in climate startups in the EU

– The importance of asking “Why now?” when picking the right CEOs to back

– Why he’s read 200+ biographies as a way to be a better investor

– The reason that you shouldn’t be so concerned with your competition

– How scarcity creates clarity (I know, sounds like a verse from the Tao Te Ching)

– Why “problem first, technology second” is their preferred approach

– And lots more

🙏Hope you enjoy it!

📣And please give John and Energize Ventures a shout-out on LinkedIn, Slack, or Twitter by sharing this podcast with your people.

👍 Finally, please leave a review or rating on your favorite podcast player. This is the #1 way that more listeners can discover the amazing climate CEOs and investors I get to interview here.

Energize – 2022 Year in Review

Energize – 2022 Year in Review

A link to the post on the site for the full post can be found here). Below is also the text. My two cents:

At Energize we have 5 ethos written on the wall. One of those core tenets is “We choose to grow, together”. 2022 was a great year for Energize Ventures and our year-end figures show the early results of the major, deliberate internal investments we are making to better scale and deliver value for our team, our portfolio companies, and our LPs.

We are scaling our team, our value-add methodologies, our approach to impact, and our investment strategies to meet the climate opportunity. Generational firms in climate are being built right now and Energize is motivated to scale with our portfolio and be an enduring investor for decades to come!

Portfolio ⚡️

In 2023, we honed our investment themes at the intersection of software and renewable energy, industrial operations, electrification and mobility, infrastructure resilience, and decarbonization. We grew our climate software portfolio through seven new investments out of our second venture fund:

– $10M Series A in Sourcemap, the enterprise software for end-to-end supply chain visibility

– $50M Series B in NCX, the data-driven forest carbon exchange

– $10M Series A in Handle, the software platform for construction payments and notice management

– $55M Series B in Patch, the platform scaling unified climate action

– $30M Series A+ in Monta, the operating platform powering the EV charging ecosystem

– $22M Series A in SINAI Technologies, the decarbonization intelligence software to measure, analyze, price and reduce emissions

– $25M Series B in  Banyan Infrastructure, the sustainable project finance software platform

We continued supporting our portfolio through four follow-on fundings:

– $200M Series D in Aurora Solar, the cloud-based software transforming solar design, sales and delivery

– $30M Series B extension in TWAICE, the predictive battery analytics software platform

– $66M Series D in Sitetracker, the intelligent deployment operations software for sustainable infrastructure

– $50M Series C in Beekeeper, the all-in-one frontline success platform for the deskless workforce

Firm 🏢

We doubled our headcount throughout the year as we doubled down on our efforts to provide our portfolio with operational and commercial expertise. We welcomed 12 new team members with diverse backgrounds – from seasoned software operators to ESG experts and energy industry professionals. Learn more about our team.

In an important milestone for our firm, we published our first Annual Impact & ESG Report. We believe that by more actively managing our impact and prioritizing ESG issues, we strengthen our firm, add value to our portfolio and help scale the next generation of sustainability leaders. We also became members of VentureESGResponsible Innovation Labs (RIL) and ESG4VC and signatories of the UN PRI. As we progress in this journey, we’re excited to engage with new partners and collaborators to raise the bar together.

What’s Next? 🔮

We’re excited for the enduring growth we’ve seen so far in 2023 for industries like solar and electric mobility – and for the opportunities this growth can yield for our portfolio of climate software companies. On the firm side, we’re continuing to productize our commercial, operational and impact initiatives to accelerate value creation within our portfolio. We also have some exciting events planned throughout 2023 to convene our climate software network!

Finally, our portfolio companies are hiring! Check out our job board to keep up with the latest openings – 176 as of this writing – across our portfolio and work on the front lines of climate action.

This article represents the views of the author and is provided for informational purposes only. It is not intended to be, and should not be construed as, an offer, solicitation or recommendation with respect to any transaction and should not be treated as legal advice, investment advice or tax advice. Readers should not rely upon this information as a substitute for obtaining specific legal or tax advice from their own professional legal or tax advisors. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities.  Information is subject to change based on market or other conditions.

Energize leads $25M investment in Banyan Infrastructure

Energize leads $25M investment in Banyan Infrastructure

At Energize we have proprietary data sources that reveal the types of assets being deployed within the energy & sustainability movement. We also have the benefit of focus, and our team has been tracking the funds flow of renewables projects for close to 5 years. While utility scale projects capture the headlines and are a major driver in market growth, the number of small-to-mid scale projects has grown at a stunning annual pace. The constituents in that ecosystem (developers, owners, operators, banks, tax underwriters) have grown in parallel as has the complexity of monitoring and optimizing the number of active transactions.

Enter Banyan Infrastructure. Led by Amanda Li and Will Greene, Banyan is the defacto software platform to help manage the project finance ecosystem. For those that know the startup ecosystem, think of Banyan as the Carta for renewables. Energize led the $25M Series B and Juan Muldoon is representing us on the board. And as is common with all of our investments, we also have a board observer…. with Honour Masters taking the seat. Honour has a specific skill set in/around the financial services and technology landscape and she and Juan are going to be powerful partners to the Banyan cofounders. In addition to Juan, we already have our operating team fully engaged with the company. Exciting times ahead.

The Energize team is always looking a few steps ahead and this investment is years of hard work and I am excited for us to partner with the Banyan team for the next stage of their growth.

The press release is here and the Energize “Why We Invested” post is here.

Axios had a good summary and I have pasted that below, as well:

How it works: Banyan Infrastructure uses its customers’ data to analyze potential returns for different projects and recommends different types of financing structures for project developers, CEO Will Greene tells Axios.

Between the lines: Project financing is poised to become another lucrative asset for investors working with sustainable developers.

  • Banyan Infrastructure is planning for that shift already, Greene says, with long-term goals to move from a SaaS subscription model to a transaction percentage revenue model down the line.

The bottom line: Billions of dollars in newly available funds will pour into project development over the lifecycle of the IRA, and fintech startups are looking to get a piece of the action.

2 Senior Roles in the Portfolio (Not yet public!)

2 Senior Roles in the Portfolio (Not yet public!)

A company in the Energize portfolio with a focus on renewables is in a big GROWTH mode to meet the market opportunity. As part of that internal investment, the team is hiring for two key positions. The roles are not yet public but if you know of any candidates (or you yourself are interested) please do reach out! We are helping the company identify the right candidates prior to a more broad reveal.

The company is based in Europe and prefers European to Central US candidates for time zone balancing.

VP of Engineering: Reporting to the CEO to develop technical aspects of the company’s strategy to align with its business goals, oversee architectural decisions, evaluate and advise M&A targets from an IT perspective, lead organizational initiatives and grow and develop the technical team.

Looking for 5+ years as a B2B SaaS hyper-growth startup environment with a prior “Head of Technology” and/or CTO title. Technical expertise in platform scaling, API platforms, integrations and M&A.. with commercial acumen as well! This is a technical athlete in a high impact role.

VP of Product: Reporting to the Chief Product Officer to lead a team of product managers on new products that align to the strategy and business goals . The role is primarily operational in focus (build out new and improve existing product managed processes) and the remainder will be strategic (translate business goals into product goals!). Coaching, training, and hiring will be a big part of the role.

The right candidate here has 8+ years of digital product management experience and 4+ years in a VP of Product role with required experience in the B2B SaaS business model.

Track Record Attribution: Relay Races vs. Sprints

Track Record Attribution: Relay Races vs. Sprints

To deploy capital as a professional investment firm, first the firm must raise capital for the specific Fund strategy. The capital contributors in a Fund vehicle are called “Limited Partners” and tend to be institutional asset managers, family offices, corporates or individuals. There are several ways these firms evaluate a prospective firm (aka “Manager”), the investment Partners making investment decisions, and the strategies being executed.

A common early request that a Manager receives during evaluation is: “Can you please share your track record, by Partner?”

The Energize answer to this specific question is – and always will be – “no”. For the life of me I can’t understand how in a modern, collaborative investment firm there is such an isolated way of evaluating team performance. Do we have a firm-level track record? Of course. But in the excel column(s) where most LPs want to see deal attribution, we leave it blank. For us that ownership and attribution concept simply doesn’t match our culture and our strategy.

At Energize every investor and most members of our operations platform are involved in EVERY investment opportunity… both before the investment is executed, and especially during the investment period.

How? The investor tracking a theme may not be the individual who has the most interest in the topic by the end of a deep dive. The Energize board member(s) and observer that we and the entrepreneur agree upon may be an entirely different individual who has the best founder-firm match. Furthermore, the board seats at Energize tend to rotate every few years as a company’s scale and opportunities/barriers change with the market. We also have two strategies now: ventures & growth, and each strategy feeds off the other, enabling enduring success.

As a thematic investor, the ability for our entire team to bring a “communal prepared mind” to an investment opportunity is one of our greatest assets. Any attribution or compensation structure that rewards or implies individual deals is a flaw in the system. My point here is that when an Energize team member is on the board of a company there is no “my deal” in the association. Rather, you will hear Energize team members say “I represent the Energize team on our investment into [company].

I can see how attribution works at more horizontally spread firms. But even in those situations, I struggle to see how that investment partnership isn’t more than the equivalent of a shared dentist office business model, with Partners renting out the available chairs. Our approach to this attribution is non-standard and the structure has pushed several high-profile LPs away because we are not fitting the regular mold. The most common criticism we receive is the inability for us or the LPs to identify potential or future underperformers. We understand the discomfort with our communal approach, and we are OK with this being a meaningful barrier for new stakeholders (new employees, new investments and new Limited Partners) to consider before opting into the team.

We believe that value creation and business building is a long-term game and the best teams are running “relay races” vs the single runner sprints. As Energize scales, we intend to maintain this team-first approach and I think it will be a positive contributor to the portfolio performance in the long run, regardless of who represents the firm at any given time.

The Targets of Big Balance Sheets

The Targets of Big Balance Sheets

Goldman Sachs has a podcast called Exchanges at Goldman Sachs. They kicked off their 2023 series with a summary on the M&A outlook for 2023, titled “Complex but Optimistic Outlook for Deal Making”

There were 5 topics in here that jumped out to me for their relevance in the current environment. I also thought these were helpful in simplifying what megatrends the biggest balance sheets in the world are focusing on right now.

Corporate Simplification: investors are looking to invest in companies that have exposure to specific sectors. The economy is being affected and rebounding quite differently depending on the sector and investors are heavily using a lowest common denominator approach to multiples if a company has a sector with material headwind exposure. This is causing spin-outs at larger corporations and firms with more clear growth opportunities to receive more attention.

The Trend of Technology Shift is Still Accelerating: technology companies that help corporates meet strategic goals are still high on the priority list- COVID made clear where certain companies were unprepared in their technology stacks, supple chains, customer engagements. Corproates are still trying to reposition their companies for the increasingly digital economy and finding ways to drive customer value through technology acquisitions.

Focus on ESG is Still Accelerating: most large corporates have long-term strategic goals to better incorporate ESG targets into their businesses. Activists are beginning to launch ESG-specific campaigns.

Private Market Liquidity is High: Private market investors have record cash levels. But these investors are very comfortable, and already imposing, heavy structure on investments. Europe is also more favorably priced (both due to valuation multiples and currency fluctuations) and this is creating US private equity firms increasing deal interest in those markets.

Financing and M&A: Record high cash balances at the Fortune 2000 and investment grade debt is still reasonably priced and available. The ability for large corprorates to get creative with their balance sheets will create a wave of M&A opportunity IF sellers are willing to come down to market on pricing. Rate volatility is currently hurting deal volume, but higher rates wont crush volume – so long as the rates settle at those higher levels.

A summary topic is “Confidence” at the C-suite level. Executives are thinking longer-term and trying to prepare companies to be more resilient so that there is near-term quarterly hits but as well as long-term risk preparation for resilience.

Drivers to “Confidence” at the Fortune 500 level and Series A-D level can be quite different. The startups that successfully emerge from the last few chaotic years will be strong and resilient. Many of our investments that have exposure to “technology”, “ESG” and have “simple” industry and customer value propositions are happy with their current market position.

The Current State

The Current State

Hello everyone… I hope your 2023 has been starting well! Our team is back and already geared up for another tremendous year. But first, a quick look at the current market.

2022 was a tumultuous year with dramatic public market swings. There are now daily announcements of sizable layoffs from technology giants like Salesforce, Amazon, and Facebook. I believe that these foundational companies have firm grasps on their businesses and foresee top line softening in 2023. With those weakening indications, many software companies are now cutting personnel costs to manage 2023 free cash flow. As a result of muted growth expectations, Energize is now seeing public market valuation declines for technology companies find their way into the earlier stage.

Across the technology markets, we are seeing (whether publicly announced or not) nearly every company reduce current workforce by 10-20%. These adjustments are happening through Reduction in Force events, standard performance reviews, or more managerial tactics (return to office requirements, etc.) I personally believe this “trimming” is probably healthy for the market as cost of capital stabilized to more traditional levels and is forcing more focus at every maturity level.

There is also a bifurcation in the market. While technology budgets and valuations are currently under more scrutiny, corporate support for sustainability and energy transition related budgets has grown materially over the past 12 months. Companies with direct exposure to renewables, the electrification of mobility, materials efficiency and the carbon markets are overachieving. The corporate demands in these areas are overcoming interest rate and recession concerns and we expect that these sustainability markets will be rare greenshoots for the entrepreneurial ecosystem in 2023.

The holding horizon for an investment in the venture and growth investing markets is guided to be 5-10 years. With that long duration, great companies compound value in good and hard years. The best companies compound value and maintain cash efficiency so that they can identify the optimal time to create liquidity for shareholders. 2023 is going to a tougher year in the markets and I do not see many liquidity events. But, energy and sustainability will be uniquely positioned to grow amidst the broader macro concerns. I’m both an optimist and a realist and am cautiously optimistic for our portfolio and investment pipeline.

The Annual General Meeting

The Annual General Meeting

Yesterday Energize hosted our 5th annual investor day. While these events can be high stress, I enjoy them because they give the team the ability to show our LPs all of the work going on behind the scenes.

The sentiment was positive but cautious. On one hand we have macro concerns and on the other we have a sustainability and renewables market with roaring tailwinds. Execution will drive the best companies to win and will anoint the enduring companies.

At the end of the day portion of our scheduling we took a team photo. I thought it was worth sharing.