Category: All posts

Welcoming Kevin Stevens to Energize Ventures

Welcoming Kevin Stevens to Energize Ventures

By |

In the summer of 2014, Kevin Stevens joined the Choose Energy team to help us develop our go-to-market for the commercial business. He came to us with a hunger and intensity that immediately delivered results.

Over time his responsibilities and knowledge-seeking grew. After the sale of Choose Energy he partnered up with Jonathan Crowder (also Choose-alum!) to launch Intelis Capital. Intelis focuses on seed-stage companies within the energy transition. Intelis is a great firm, and has a great portfolio. (And I am a LP!)

At Energize we believe there is an incredible opportunity to create an early venture capital firm that focuses on the energy and sustainable industries… AND that also has a pivotal presence in the growth equity market. The latter half of this statement is not a surprise for anyone who has followed my writing over the past few months. And so while we cannot say too much yet about our Growth Fund efforts, we are making a major investment into the opportunity. And Kevin is leading that effort.

You may also know Kevin as the co-host of PowerDown. To commemorate his joining Energize, we recorded an episode about a week ago… hope you enjoy it!

—

Here is a link to the Energize Ventures press release. The main paragraph for whey Kevin will be incredibly successful to the Energize portfolio and team can be found here:

While holding positions in business development, product marketing and head of product, Kevin was exposed to the growing pains companies in this stage experience as they scale. He developed a deep understanding for how products get built, how internal processes evolve and what it takes to preserve team culture amidst growth. Put simply: Kevin’s superpower is the ability recognize when companies are ready to scale and systemize operations.

“The energy transition is a generational opportunity in one of the world’s most important industries, and climate change is one of the greatest challenges of our lifetime,” said Kevin. “I’m humbled to work alongside some of the brightest minds working to solve this problem.”

Kevin Stevens, Principal at Energize Ventures
4 years at Energize

4 years at Energize

By |

I saw this tweet come across my feed this morning from the @EnegizeVC twitter handle, run by Kelly on our team.

4 years at Energize. Wild ride. I joined as the third member, after Amy and Juan. It took us a few months to get to the first close of the fund and within the first year I led my first few investments (Nozomi, Volta, DroneDeploy).

Time flies when you have fun. And I feel like we are starting to hit a groove. I am excited to see what happens over the next 4 years. We have an absolutely incredible team with some recent new hires that are turbocharging our talent and vision. Our team looks at the Energize opportunity as a decades-long run.. so hopefully the platform & results continue to compound.
Thinly sliced salami!

Thinly sliced salami!

By |

The best of breed don’t grow on thinly sliced salami!

Eugene Kleiner

Eugene Kleiner made this statement in reference to negotiating fair deals and ensuring companies are adequately capitalized without onerous terms. Today there are standard terms in VC: invest $ for preferred equity. But 4-5 decades ago that was an innovative structure compared to debt or other more restrictive structures.

But I look at this quote as having different meaning today: the best companies don’t just happen. They need a whole lot of substance and quality to grow upon. The best companies are robust throughout their entire organization:

  • Leadership
  • Recruitment and talent management
  • Diversity and inclusion
  • Customer engagement
  • Product development
  • Operational process
  • Culture

And of course, there is a financial capitalization and balance sheet angle that is very relevant today as well. That capital does not create the “substance and quality” investment mindset, but can strengthen the organization as it grows.

Excellence doesn’t just happen. It takes intentional, hearty investment. The best businesses are not growing on thinly sliced salami.
Kleiner’s Laws – And the time to eat the tarts

Kleiner’s Laws – And the time to eat the tarts

By |

When I first joined KPCB, I got a detailed history of the firm and how a small group of pioneers became technology-first VC investors.

The ‘K’ in KPCB stands for Eugene Kleiner. Beyond being an incredible investor, he had a knack for catchy statements and frameworks that are still applicable today.

Joe Lonsdale, now of 8VC based in Austin, wrote this summary that can be found on Medium.

According to Joe, here are 8 of his most well-known “laws”

  • Make sure the dog wants to eat the dog food
  • Build one business at a time.
  • The time to take the tarts is when they’re being passed.
  • It’s difficult to see the picture when you’re inside the frame.
  • Even turkeys can fly in a high wind.
  • After learning some of the tricks of the trade, some people think they know the trade.
  • Venture capitalists will stop at nothing to copy success.
  • Invest in people, not just products.

At different points every year one of these themes seems to outshine the others. Right now, it feels like one of them is coming forth:

“The time to take the tarts is when they’re being passed”

Eugene Kleiner

Right now, for a host of reasons: low interest rates, energy transition going mainstream, big growth in new technologies, policy…. deep tech/cleantech is being served a main course of capital. The most seasoned investors and operators recognize this opportunity and are ramping up balance sheets to make massive technology, team and market share investments in the coming years.

(PS: my favorite Kleiner statement isn’t actually on this list and I will cover it another day!)
Deeptech and Cleantech: No Country for Growth Equity

Deeptech and Cleantech: No Country for Growth Equity

By |

“Price is what the market pays”

In business school the phrase was a reference to Eugene Fama’s “Efficient Market Theory”. But in today’s market it feels like this statement is now the valuation expert’s way of throwing their hand in the area and saying “who knows!?!”

I am not going to comment on Gamestop. Instead I am going to focus on how there is no real private market for late stage growth equity serving deeptech and cleantech businesses.

Cleantech and deeptech are generally long-horizon investments with sizable step-wise technical and commercial gains. In many ways these investments resemble pharmaceutical-related investments cycles and payouts. A number of high profile and developmentally expensive drugs don’t move to the next stage… but when a mass-market drug is FDA approved, the windfall covers the costs of the lost trials elsewhere.

There are many high-growth sustainability, electrification and broader deeptech-themed investments hitting the market at high profile valuations. As a private market investor, the valuation jumps these companies earn from the private-to-public move can be surprising.

A lot of people are pointing to public market froth as the logical explanation. The reality of SPAC transactions is that they are a big source of cash … and dilution for the target companies. But these same hi-growth private companies have been mostly starved of capital in the private markets. As a result, executives in the deeptech field are now trained to view financing risk as the primary barrier to investing in IP and subsequently hitting the big payout events.

Meanwhile, the SaaS vertical has every valuation metric meticulously analyzed around pricing. It’s the closest to a liquid market I’ve seen in the private markets: there are indices and the multiples are tracked religiously. There are still bumps when these SaaS companies go public, but the range is knowable. The reason this path to public is more streamlined for traditional SaaS companies is because there is a very healthy and robust late-stage growth equity market acting as a pre-public pool of capital.

The SPAC is effectively becoming the late-stage growth equity vehicle for the deeptech markets. As a result in some cases the future year valuations are being pulled (slightly) forward. And while it is easy to point to froth, I take the opposite view. These are clearly important and valuable companies with aligned economy, humanity and shareholder upside. I am glad that public market investors will be able to participate in the asset appreciation.

But, it’s a shame that our private growth equity markets weren’t able to help these companies grow a bit longer outside of the public eye. And so while it is helpful to have the SPACs in market, I actually believe the story here is the incredible opportunity for growth equity capital that serves the deeptech and cleantech environment.

Knowing the Energize team’s entrepreneurial approach, I expect we are going to do something about this…
Tyler Lancaster’s podcast on Point 01 – a must listen

Tyler Lancaster’s podcast on Point 01 – a must listen

By |

Tyler Lancaster is a Principal at Energize Ventures. In this Point 01 episode he covers his background, our portfolio approach… and a BUNCH of great details about some companies in our portfolio.

A few themes:

1- Our renewable industries are already way bigger than most people expect… and a huge job growth engine

2- Digital technologies (the shading engine!) are creating massive advancements for development, deployment and maintenance of the new energy economy

3- New administration tailwinds for climate technology are going to be massive: new R&D investments, FERC, DOE and agencies stepping up to reduce red tape, EV charging infrastructure!

He also gives hints on where we are looking to make our next investment. Not only should you listen, but you should connect with Tyler and follow his writing.
Sitetracker’s $42M Series C: Energizing the Future

Sitetracker’s $42M Series C: Energizing the Future

By |

The best part of my job is getting to meet with entrepreneurs who share with me their vision of the future. At Energize we meet around 500 qualified companies every year. We look for a CEOs storytelling ability and his or her conviction around what will be different and new in the coming years.

Through our own experience, our LPs and our continued learnings, we also develop ‘prepared mind’ theses to our areas of focus. One of those areas is the future state of our critical infrastructure. At Energize we thoroughly believe that our centralized critical infrastructure is dispersing to the edge. Big power plants are being decentralized into wind and solar farms. Rooftop solar and electric vehicle charging infrastructure are infiltrating houses, apartment buildings and commercial buildings. Cell towers are going from huge structures to rooftop cell relay sites. Critical infrastructure is atomizing and distributing. And the new energy economy is at the heart of this change.

When we first met Giuseppe Incitti and the Sitetracker team in 2018, we knew we had an Energize thesis-entrepreneur-future vision match. In addition to that thesis alignment, we also learned that the Sitetracker team had the level of customer respect and sales gumption required to win over the traditionally slow-moving critical infrastructure verticals. Critical infrastructure decisions move slowly by design: there can be no downtime and… once the product is in place… it is probably in place for a 20+ year relationship! The long-term investments that Sitetracker was making in 2018 into product and sales cycles drove us get creative when we led the Series B-2.

Since our investment, Sitetracker has continued to masterfully execute their plan to be the de-facto software platform for the next generation of critical infrastructure. We are thrilled to double down on Sitetracker and their progress. We are co-leading the $42M Series C alongside H.I.G Capital and are thrilled to bring them into the company. We are also happy to welcome new investors Deutsche Telecom Capital Partners, Energy Impact Partners and Clearvision Ventures to the cap table. Existing investors NEA, Wells Fargo, National Grid, and Salesforce Ventures also participated.

I joined the Sitetracker board during the Series B-2 and am excited to announce that our Energize Partner, Katie McClain, is joining the board as well. This is the first company where Energize holds two board seats and we are excited to double down Sitetracker’s growth efforts in the new energy economy.

Here is a link to the:
EV Charging: Throw away the Yo-Yo!

EV Charging: Throw away the Yo-Yo!

By |

I have been watching the electric vehicle charging market since 2010. Back then there were a few businesses kicking around with the idea. Boy have times changed.

Over the past few months we have had some major announcements:

  • ChargePoint going public and is now >$10 billion company
  • EV Box going public and is now >$2 billion company
  • EVGo going public and is now >$4 billion company
  • Ubitricity getting acquired by Shell
  • Volta raised $125M Series D (Energize an investor, participant)

It is easy to look at these numbers and say “of course”… but I can assure you that even while EV adoption felt inevitable… it is agonizing being “early” to a market. In this “too early?” stage, executives and investors are looking for any signs to double down or accelerate investment… while always being mindful of cash. I call this the yo-yo effect. And this yo-yo effect of being early is very hard on founders and their employees.

I am glad that the industry has tipped. And that all of these firms can firmly and perpetually lean into growth and investment. Let’s throw the yo-yo away.

SunRun Rising: A Top Energy M&A Target Emerges

SunRun Rising: A Top Energy M&A Target Emerges

By |

I posted this post to Forbes as part of my regular M&A and energy transition observations. Link here. Re-posting here.

We all know TeslaTSLA is the current crown jewel of the automotive industry. And investment analysts know of the budding traditional energy business growing like a weed within the Tesla income statement. Alongside their sleek cars, Tesla has rooftop solar and consumer and utility-scale batteries. Tesla makes energy tangible and cool.

While Tesla’s market position in the EV space is strong now, the competition is coming. Sure, they will be able to maintain slightly higher margin than their historical automotive peer set. I argue, however, that being the energy company of the future is a much more lucrative position.

And Tesla’s real competitor in that next-generation energy business is SunRunRUN. They have a strong brand, a growing book of business, and they have a direct line of site to their customer with up to 20-year contracts.

Nearly 4 GW of solar installs projected in 2021

Presently only about 3%, or 2.3 million homes in the US have installed rooftop solar. But rooftop solar is growing: SEIA and Bloomberg New Energy Finance guide that installation will grow from ~500,000 per year n 2020 to 2-4 MILLION per year by 2024. Yes, you are reading that correctly: we should be adding more solar rooftops in 2024 than we have throughout the entire history of our country leading up to that point.

Solar is a “long-tail” industry meaning that there is an incredible number of small, regional installers doing the majority of the work. As a result, SunRun is the leader but actually only owns ~10% of market share in the US, with a 60,000 installation run-rate in Q3 2020. And most interestingly, SunRun’s installation base is nearly 2x the size of Tesla.

If SunRun can hold or expand their market position as the rooftop solar industry grows, the firm should become one of, if not, the largest energy companies in the country. SunRun currently has 500,000 current customers and a customer book that could start growing by 250,000 per year. Within the decade they will be a “top 5 utility equivalent” in North America. Since SunRun will “own” that customer relationship, I expect that they will be well-positioned to be more active in the other home solutions including electric vehicle charging, batteries and other resilience solutions.

From a M&A perspective, I believe SunRun is an incredibly strategic asset within the North American energy markets. They have a strong and growing brand and are well-positioned for other distributed energy services. SunRun should be on the top of the target list for any forward-thinking traditional energy company. Similarly, if any enterprising automobile company is looking to create the next bundled mobility + energy company, they don’t have to look any farther than SunRun as their optimal partner.

The Energy Transition Makes Power & Utilities Pro-Cyclical?

The Energy Transition Makes Power & Utilities Pro-Cyclical?

By |

Look up any historical investments book and pretty early on there is are definitions of cyclical, defensive, and counter-cyclical businesses.

A cyclical business is inherently discretionary and peak and bust at an economic cadence. Within my focus, this is oil & gas, airplanes, jewelry, construction, etc. A defensive business is easier to define: a staple where demand is consistent and swings more muted. By its’ regulated design, the power and gas utility business are inherently defensive.

What I find fascinating is how technology and the energy transition is going to move the overall power and utility markets from defensive stock characteristics to more cyclical in nature.

How? There are two reasons, I detail below:

1- Time To Value -> Mismatched Supply -> Cyclicality

Generally, the longer it takes for a good to go from raw materials to value delivered causes imbalances in the supply chain. Historically this delay in oil and gas has resulted in mismatched supply to the market due to decisions made under a different economic assumptions. (Other industries include airlines: the time from order to delivery may look quite different!)

What Changes? As the electrify everything mantra grows, I have been vocal how “the firm that controls demand will win the market.” And as power prices continue to plummet amidst an overbuild scenario, the firms that have demand are the ones that will set the terms. And those terms won’t be fixed rate, like they are today. The energy consumer will tie the power price to their underlying product demand and margin profile.

This moves the standard power contract from a more proximate and certain customer relationship to distanced and uncertain value payout. Power investments will have less certainty and mismatched capital allocations will occur as these power companies gain more exposure to their customer’s cyclical demand.

2- Technology Transition results in Power Quality Pricing

Most energy transition professionals assume some future rosy grid that is self-balancing amongst renewables, EV charging, consumer adjustments, etc. Maybe 50 years from now. But the intermediate steps are going to be messy. And

What Changes? I believe this “intermediate messiness” will result in greater awareness around power quality (Californians get this with the blackouts) and the ability for quality-based pricing around uptime, power quality (data centers, etc.) and source. This transition happens in most verticals: a commodity product ultimately leads to a premium version. That hasn’t happened in electricity yet but I suspect the new energy economy (wind, solar, batteries) and consumer willingness to pay for quality will happen here as well.

And when a product has multiple price points, the premium offerings are naturally more susceptible to economic swings and cycles.