By now you know that Energize straddles two different arenas: digital solutions and the sustainability transition. The ideology of each of these groups is quite different and, interestingly, we are perceived quite differently by each set of stakeholders.
Our digital friends look at us like we are the Pope and are making investments exclusively for impact returns. They don’t really grasp our approach and most assume we are sacrificing returns along the way. (We don’t mind them thinking that as it has kept excessive competition away!)
Our sustainable co-investors think we are Gordon Gecko and taking the easy way out by only focusing on digital solutions. To this group we are not fighting the “hard” problems that require adjustments to atoms (not bits) and may have big capital intensive needs.
Ultimately this misunderstanding between the groups is our opportunity. We believe great financial and impact returns can be accomplished by addressing digital solutions that accelerate the energy and sustainability transition.
Within our first fund, Aurora and Volta use digital solutions to drive gargantuan financial and impact returns. In our second fund, Urbint and TWAICE are already accomplishing similar outcomes.
I think that over time we can serve as a bridge between these two different groups and that Energize’s central position is going to continue to be quite valuable for our firm, portfolio, and LPs. Ultimately, we can be greedy and accelerate positive change at the same time.
Want to see a sign of the current state of the energy transition? First Solar is one of the largest solar panel manufacturers in the world. Check out this headline from them a week ago:
That’s right – the largest order of solar modules in history is going to bp. Yes, that bp.
Yesterday I talked about how Energize is looking to hire a Head of Legal. We are growing our team to complement our existing strengths. We began that more broad evaluation of our human capital investments earlier this year with two important hires. Those details are below:
Energize is excited to officially announce Shariq Syed and Vishnu Amble as the two newest members of our team!
Shariq, our Chief Financial Officer, brings experience in both traditional finance and investing as well as operational expertise, having led finance and operations for a number of growing tech companies. As CFO, he will have an active role in fundraising, IR, due diligence, and portfolio support.
Vishnu is our new Head of IR & Capital Markets. With two decades of experience managing capital market activities at the intersection of infrastructure, energy, technology, and sustainability, Vishnu brings a wealth of industry knowledge and an institutional investor mindset to our team. He will add value to our growing portfolio in need of capital as they scale.
Both men have already been incredibly helpful in providing value and insights to our team, our portfolio, and our LPs.
At Energize we are making the necessary people investments to become the leading investment firm at the intersection of technology and sustainability. We know that to deliver the best insights, value, and returns to our employees, investments and LPs we need to continue to hire world-class individuals who are skilled in complementary areas to our current team. Therefore, I am excited to announce that we are now hiring for in-house counsel. Please see the job details below:
Energize is hiring again! We are looking for a Head of Legal to lead legal and compliance efforts in support of our investment firm. This is a great opportunity to join a collaborative team and have a role in shaping business in the fast-growing sectors of energy, sustainability, technology and infrastructure.
Become a part of the Energize Ventures team to deliver excellent returns and contribute to firm’s reputation as the premier energy and industrials technology venture investor. We are a small team with an entrepreneurial spirit, and this role requires flexibility, a diverse skill set, and an ability to perform at a high level on multiple fronts. We are looking for a driven, hardworking, and experienced professional to help us with fund formation, contract negotiation, and portfolio-level support.
The Head of Legal reports to the Chief Financial Officer at Energize Ventures. In their role as Head of Legal, the individual will be a part of our collaborative team and lead all legal and compliance efforts in support of our firm. This person will help shape our business. After developing a deep understanding of priorities, opportunities and challenges you will identify areas to strengthen and grow our business and take a proactive approach to supporting the firm’s objectives. The Head of Legal will serve as a critical source of experience to advise executives on important decisions to add value to the firm and minimize risk.
This is a full-time position located in Chicago. The intended start date for the role is Jan-Feb 2022
Responsibilities
Provide legal support and advice across funds, segregated account mandates, special purpose vehicles, carried interest vehicles and other products that relate to this asset class.
Advise the business on a wide range of legal issues relevant to the formation and maintenance of fund products, including negotiation of side letters, legal and regulatory matters as they relate to funds and separately managed accounts, as well as transactional work for such products.
Advise investment staff on key portfolio-related documents: initial term sheets, follow-on financing documents, and ultimately exit strategy considerations
Work closely with other members and functions (e.g., Finance, Compliance, Risk) to identify and resolve issues.
Provide legal support for special projects and cross-alternatives initiatives.
Perform all other duties as necessary or assigned to provide high caliber line of business legal support.
Qualifications
Strong foundation of trustworthiness, ethical responsibility, transparency, credibility, and humility; team-player mindset
Self-motivated, highly productive, and execution-oriented; commitment to the highest quality of standards and ability to deliver value-accretive outcomes
JD from an ABA-accredited law school and in good standing with Illinois State Bar.
Knowledge of financial services regulations (SEC, NFA), private fund governing documents and private investment agreements.
The ability to engage, inform and influence decisions at senior levels of the organization with a solutions-oriented mindset.
The ability to work independently in a fast-paced environment and manage multiple projects simultaneously.
A proactive, thoughtful learner who’s confident in handling new projects and responsibilities and takes an ownership mentality in their work.
Must maintain a high level of professionalism and discretion, maintaining confidentiality of sensitive information.
Strong written and oral communication skills.
Prior Experience
5-10+ years of experience as a practicing attorney within the investment management industry with at least 2 years in a leadership role.
In-house legal experience at a venture capital, private equity or hedge fund firm is strongly preferred.
Energize Ventures embraces diversity and equal opportunity. We are committed to building a team that represents a variety of backgrounds, perspectives, and skills.
Last week I spoke with Aaron Gordon of Vice. He was asking why the market is rewarding the newest batch of electric vehicle OEMs, like Rivian. It is a good article with varying viewpoints. I also commented on a trend that I believe gets overlooked: the convergence of the electric drivetrain and the digital-first nature of these new OEMs. My comments are below:
Some investors also see EV-first companies like Rivian and Lucid as much more than car companies, which can be seen as an advantage. “New mobility firms like Rivian and Lucid are not only EV leaders but also digital leaders,” argued John Tough of Energize Ventures, a venture firm. “They were born in the digital age and have no legacy technical systems to weigh down their platforms. The EV driving experience is superior and cheaper [at least when it comes to mileage and maintenance costs]. And now the in-car entertainment and engagement is also superior to any incumbent automobile company. That combination should enable the new firms to win market share and create more value”” than original equipment manufacturers.
Tough thinks a few legacy firms will “retain share,” specifically name-checking Ford, but expects most of them “are running an uphill race with a parachute behind them while EV-first firms are sledding downhill.”
Public market valuations are near all-time highs. There are many studies that show how valuation multiples are tied to growth rates. But the public market investor is getting wiser to the cost inputs required for growth.
This week I saw a great report from Guggenheim on the correlation between valuations and growth efficiency.
On page 1, we find that sales efficiency, specifically the magic number (the ratio of new revenue generated to Sales & Marketing spend) has a strong correlation to valuation. The more efficient the sales motion (higher the magic number), the greater the valuation.
On page 2, they line up magic numbers across software and find that the median is 0.8x, meaning that on average software companies generate $0.80 of new revenue for every dollar they spend on S&M. Driving sales efficiency above $0.80 should also drive above average valuation, holding all else equal.
Basic stats but helpful framing as growth-stage companies consider going public.
At least twice a year the Energize team hosts a “demo day”. The demo day is meant to cover a suite of companies that represent a specific theme that our team has been reviewing recently. One of those recent themes is “Building the New Economy” and focuses on software platforms helping accelerate the next generation of infrastructure.
The graphic for the invite, and the select companies we have asked to present, are below. The event is not being openly broadcasted… but as readers on this site I consider my invite to you as semi-private.
If interested in joining the event, please register here.
Sustainable Transition: $34 billion+ in software spend
I saw this below chart posted on a McKinsey report. The image summarizes how 5 key areas will require $2 trillion of capital to decarbonize / be more sustainable.
Totaling the 3 areas aligned with Energize’s investment thesis (electrification, power grid, agriculture) equates to around $1.7 trillion per year.
Most of the capital will go to physical infrastructure. However, at Energize we track the % of project spend going to digital solutions.
That spend number is currently ~2% of total project capital for these more antiquated & analog verticals. We believe that this digital figure will climb to around 4-5% of total budget by 2030.
In today’s numbers this means that the sustainable transition of these 3 areas equates to approximately $34 billion to $68 billion in annual software spend. This is the market opportunity for the Energize investment thesis, and the value for our portfolio to capture.
We appear to be near the end of the negotiations around the latest White House spending plan. The White House released a summary of the bill, and there is a sizable climate provision: $555 billion of the $1.75 trillion plan. The list below shows how that $555bn is spread out between extended tax credits, resiliency solutions, and other areas. Nearly every company I work with will be positively impacted by this outcome. The sustainability tailwinds were already strong and this should provide an even bigger oomph. Renewable generation and electric transportation are going to be major winners here.
Sam is the cofounder & Chief Revenue Officer of Aurora Solar. Sam is an incredible individual with the right combination of humility, drive and mission. While Aurora and the solar industry is flying high right now, the industry was overlooked as recently as 2019. Sam talks about the struggles of early bootstrapping and how the solar market is evolving.
Check out the podcast below with Emily from Powerhouse
