Bille Jean King’s autobiography has that title. If you know anything about her, you know that title fits her story arc perfectly.
This phrase is highly relevant for the current sustainable technology environment. Let me break it down:
Pressure(Latin: ‘premere’ -> ‘pressura’ meaning “to push”)
You are pushing yourself. Pressure can be positive: to push for advancement or achievement. Pressure can be negative: fear of letting yourself on others down. Pressure means you are moving away from status quo, or equilibrium. Pressure implies change, and risk.
Privilege(Latin: ‘privus’ + ‘lex’ –> ‘privilegium’ meaning “law affecting one”)
A benefit not equally shared by others. An opportunity. A special right… (whether earned or unearned) Privilege means you have some special position. Select people get complacent with privilege. Others use the benefit as a stepping stone to do more.
My Interpretation of “Pressure is a Privilege”
Being in a position to drive change is a special right
Right now, the climate, sustainability and clean energy industry is under positive pressure. Change is happening. Risks are being taken and entrepreneurs and (yes, I know) investors are driven to be a positive contributor to the industry’s move away from status quo.
It is impossible to work in this space and not feel the momentous changes underway. To be a part of such a high impact arena at such a critical turnover is overwhelming.
We are privileged to be working in this field right NOW – at a point in time when materials, systems and technology advancements provide us an economically viable market for new solutions. We are standing on a century of progress. Now that we are in this favorable position, let’s welcome the pressure and continue to push forward to drive incredible change.
Until recently, sustainability ideology and capitalism were two circles with only minor overlap in a Venn Diagram. Outside of minor fads, the two groups never saw eye::eye and financial returns were (expected) to be sacrificed for an investment in sustainable advancement.
The latest surge of interest in climate solutions, highlighted by:
Tesla’s stock surge
Array Technology’s record breaking IPO and secondary
Record breaking wind, solar and battery deployments
SPACs of new electric vehicle platforms, and autonomous solutions
Hydrogen interest
Additive manufacturing interest
Carbon-free flight
Financial leaders demanding ESG responsibility
…, is what happens when the circles of ideology and capitalism become concentric. As a result of this convergence, the infrastructure of our world is being reconstructed with sustainability technology, solutions, and products. And for the first time, the financing partners are making these investments with no expected sacrifice to returns. In fact, the opposite where these businesses are now the expected source of growth in our economy.
There is arguably no bigger stage than the infrastructure markets. Therefore, the capital required to effect change – and the potential impact of that change is of an unimaginable scale. As a result, the flow of capital into sustainable technology and solutions has moved from a drip to a firehose. If you think about the scale of our physical infrastructure, then the recent spate of SPACs and investor interest is still relatively low compared to the global interest is these new solutions.
I remain incredibly excited about the change underway and believe that the pace and scale of these new technologies will define the (roaring) 2020s and beyond.
I worked with Kevin Stevens at Choose Energy. He is now a Partner at Intelis Capital. According to Kevin’s website, Intelis Capital makes long-term investments in the next generation of energy titans accelerating the widespread adoption of novel technologies creating a more resilient and sustainable energy ecosystem.
Kevin recently wrote an excellent post about C3.AI and the company’s recent S-1. C3.ai is a leading enterprise AI software provider for accelerating digital transformation. The proven C3 AI Suite provides comprehensive services to build enterprise-scale AI applications more efficiently and cost-effectively than alternative approaches.
A company issues a S-1 as a lead into an IPO. Instead of doing my own analysis here, I wanted to elevate Kevin’s work.
Aurora Solar co-founders, Chris Hopper and Sam Adeyemo are ALWAYS heads down. They would be the first to tell you that new financings are mostly a nuisance and the fundraising process gets in the way of growing the business. The cofounders are laser-focused and Aurora Solar has a simple statement:
“We are building the operating system for the solar industry”
Aurora is executing masterfully and is now the standard software platform for one of the fastest growing industry’s in North America. As a result of their growth, Aurora is looking to accelerate product development and market expansion through a Series B capital raise led by Doug Pepper at ICONIQ.
Energize led the Aurora Solar Series A in Q1 2019. We were introduced to Aurora by one of our family office LPs… (man now THAT introduction was major value-add). As Tyler writes in our blog post, we had a “prepared mind” on the space as we had seen most of the solar-related and distributed energy software companies. This enabled us (ahem, Tyler) to work heads down over Thanksgiving 2018 and come in the following week with even greater conviction. We have been thankful to be part of the ride with Aurora to-date and are excited for what the next chapter brings for the company.
Here is Energize’s statement on Aurora’s Series B that was announced this morning:
Today, Energize Ventures is thrilled to announce its participation in Aurora Solar’s $50M Series B led by ICONIQ Capital. This funding brings Aurora’s total capital raised to more than $70M. Existing investors Fifth Wall and Pear VC are also participating in the round. Along with this funding, Tyler Lancaster (Principal, Energize Ventures) and Doug Pepper (General Partner, ICONIQ Capital) join Aurora co-founders Christopher Hopper and Samuel Adeyemo alongside existing board member Shvet Jain on Aurora’s board.
Here are the key quotes from the Press Release:
“After weathering the economic challenges this year, there is a tremendous opportunity for the solar industry to serve as a growth engine to spur the development of a global clean energy economy. The outlook for solar has never been more promising, and we are thrilled to continue to support resilient, catalytic digital solutions like Aurora that play a critical role in powering the build-out of sustainable infrastructure and accelerating the clean energy transition.”
Tyler Lancaster, Principal at Energize Ventures
“Solar has emerged as one of the key future energy sources, and Aurora is increasingly the go-to solution for solar installers who are looking to affordably deploy solar at scale. The pandemic has accelerated trends towards remote processes, and we are delighted to have the resources to build all the tools that will help the industry thrive in this new environment.”
Samuel Adeyemo, Co-founder of Aurora Solar
“Aurora has become the preeminent software platform for solar installers, with product functionality and an end-user experience that is far ahead of the competition. We’re looking forward to joining the board and supporting Chris, Sam, and the Aurora team on their exceptional growth trajectory to enable the solar industry to scale for a more sustainable future. Aurora Solar joins ICONIQ’s leading vertical software investments including Procore, ServiceTitan and Relativity.”
Doug Pepper, General Partner at ICONIQ Capital.
“This fundraise is not only a big milestone for Aurora, but for the solar industry. It will allow us to continue to build best-in-class tools for solar professionals in the U.S. and internationally, and help us achieve our mission of creating a future powered by clean solar energy.”
Christopher Hopper, Co-founder and CEO of Aurora Solar.
At Energize we are fortunate to see many next-generation technologies. As an investor with a commercial focus, I usually ask the entrepreneur something along the lines of: “what budget or line item at the customer do you think funds this technology purchase?”
Less commercially aware CEOs will answer this question by proclaiming of a new line item or a new approach to the customer’s budget. In my years of venture, this “create a new budget” approach typically leads to sales pain and capital inefficient growth.
The start-up’s technology may be next generation. And the start-up may be using NEW technology to solve an old problem in a NEW way.
However, the most experienced execs will do everything in their power to jerry-rig their technology solution to an existing budget.
Seasoned execs know that if a line item budget exists at a customer, the customer has previously determined they will pay (internal or external resources) for value delivered. By aligning the new technology solution to the outcome-validated budget, a startup backs into budget access and approval.
I call this product-budget fit.
The best start-ups think through product-budget fit from the earliest days of the company. With this awareness, a company fine tunes product development, go to market, and commercialization techniques accordingly. I enjoy seeing this narrative come together at a high growth company and Team Energize thrives in working alongside entrepreneurs at this stage.
Digital Industrial Partnership: Honeywell Forge + Nozomi Networks
Honeywell CEO, Darius Adamcyzk, was also recently on CNBC touting Honeywell’s capabilities around control systems and digital technologies that blend hardware and software. At the bottom of this post is my framework for Honeywell’s approach to digital technologies. In their digital goals, Honeywell has stated interest in OT and IoT cybersecurity.
So what is a tangible example of Honeywell leaning into digital industrial solutions? Perfect timing…!
Last week Honeywell announced a partnership with Nozomi Networks to strengthen HCE’s Forge OT cybersecurity offering. Nozomi is a portfolio company of Energize Ventures and is the leader in OT and IoT security and visibility. Through a software platform, Nozomi accelerates digital transformation by unifying cybersecurity visibility for the largest critical infrastructure, energy, manufacturing, mining, transportation, building automation and other OT sites around the world.
I am very excited to see how Nozomi will succeed within Honeywell’s industrial network. Here is a screenshot of the press release.
Digital Tech + Energy Transition: Drones Helping Build The Largest Solar Farm
The scale of this project is astounding. The largest existing solar development is 650MW, meaning this site nearly doubles the previous record. I suspect we will be seeing many more in this new scale band over the coming years.
To me, perhaps one of the most enjoyable parts of this transaction is that DroneDeploy enabled this scale. Energize led the Series C in 2018 with a thesis that aerial mapping and analytics will positively impact renewable development. Over the last few years DroneDeploy worked with Invenergy to improve the DD product so that the mapping and analytics solution could go from mapping hundreds of acres to tens of thousands of acres. This is exactly the intersection of digital technologies driving scale that otherwise could not be possible.
Here is a photo of the DroneDeploy team at an Invenergy site in 2018!
The Nuvve Micro-Spac: Most Intriguing Energy Transition Deal of 2020?
Nuvve is a technology company that has a “Vehicle to Grid” aka V2G technology system that optimizes EV charging between the car owner and the local/broader electric grid. The product’s software optimizes electric vehicle (EV) charging, lowers the total cost of ownership for EVs, and increases the positive environmental impact of EVs. Electric vehicles and their highly distributed batteries are (usually) dormant assets that can help balance the grid with on-demand requests as intermittent renewable energy sources become more dominant portions of our energy supply.
This type of technology is clearly the future. Car owners will opt in to communications that earn them revenue by helping balance the grid. Buildings will look to use EV batteries sitting in their parking lot to manage load as building air conditioners ramp up. School buses returning to their parking lots at 4pm will be ready to provide power to the grid right when the evening power jump occurs. Simply put, the embedded power resource within EVs will do wonders for our power grid. The issue, of course, is the ability to communicate and automate the balancing process with the millions of chargepoints around the country.
In my opinion, the main question for this technology is not if it is required, but when it is required. For Nuvve to be effective and needed, the company requires the existing market conditions:
Millions of EVs being sold per year, including personal vehicles, fleets, or route vehicles (school buses, etc.)
Millions of EV charging ports installed, including fast charging and high power sites where fleets are stored
Major utility grade investments to handle the communication layer and handle the supercharging power requirements needed for many of these vehicles
We as a country are making progress on point #1, primarily due to Tesla but we are still years away from the “millions of charging ports” and years to a decade away from utility-scale readiness. Select other European countries are more ready for this technology and the company is also exploring use cases in Denmark, Netherlands, UK, and Sweden.
Nuvve has a very long horizon before their product is therefore ready for primetime, mass-market usage. And usually when a technology company is years away from commercial use, private market investors remain the sole financing entity. And yet, Nuvve is going public via SPAC with Newborn Acquisition Corp in a sub $150M enterprise value micro-SPAC.
And I believe this SPAC is a great idea. As mentioned in earlier posts, with a low interest rate environment and public market appetite for new energy solutions, this is a company that WHEN it is scalable, should be a very valuable and important part of our energy narrative. So the public investor’s ability to invest at this lower price point (around $130M in equity value) may provide a compelling return as the EV and smart building/utility market develops to allow for this control layer.
If the public market shows interest in this “micro-SPAC” then I suspect many more companies may emerge.
(Please note: none of this is meant as investment advice!)
About a month ago I wrote about Rockwell’s M&A ambitions. That post can be found here. The theme of my research was that Rockwell has software ambitions and is specifically interested in bolstering their topline growth through M&A in 3 areas:
This week’s announcement that Rockwell is acquiring Fiix is another data point that Rockwell is committed to M&A in the areas they previously highlighted.
The Fiix Fit and Strategic Rationale within Rockwell Automation
Fiix is a developer of a cloud-based maintenance and asset management platform designed for companies to schedule, organize and track maintenance activities. The company’s platform mobilizes the maintenance workforce with a mobile experience and interfaces with enterprise software to connect the entire organization, enabling businesses to implement preventive maintenance strategies to increase production and decrease unplanned downtime.
Within the Rockwell framework, Fiix falls perfectly into the Digital Information Services target zone. Given how the Fiix platform also helps manage customer asset management and work orders throughout the product lifecycle, Fiix gives Rockwell reach into inventory management, product reordering and asset management intelligence.
Fiix previously indicated that the company grew topline revenues 70% in 2019 with more than 85% of that revenue being recurring revenue. It is also said Fiix has more than two million assets under management, with more than six million work orders each year. What makes Fiix so intriguing is that it is a multi-tenant SaaS offering that will be able to integrate other digital offerings into its’ core platform. This will allow the application to deliver other digital insights and products from Rockwell to the end-customer.
Rockwell had stated interest in acquiring up to $250M of software revenue and Fiix clearly is a great anchor within that framework. As detailed below, I suspect that Fiix will provide between $25-30M in near-term, annual software revenue to Rockwell.
The Fiix History
Fiix was founded in 2008 by Marc Castel and is headquartered in Toronto, Canada. The company was bootstrapped and capital efficient from 2008 until 2016, when Fiix raised a $5M Series A in January 2016. The Series A and the $12M Series B in 2018 were both led by BuildGroup. Canadian grants also helped capitalize the company’s earliest growth needs.
Alongside the Series B in 2018, James Novak became CEO and has held the title ever since. He was previously President of the company.
In June 2019 the company raised $40M in a Series C round led by Georgian Partners. Alongside that round Fiix acquired Alchemy IoT, an industrial intelligence asset company, adding AI to the startup’s maintenance and asset management software. The price for that acquisition was undisclosed, but Alchemy has raised $4M.
The Exit
Fiix was projected to have approximately $25-30M of revenue in 2020. Using AVEVA’s acquisition of OSIsoft as a comparable exit multiple, we should apply a 10-12x revenue multiple on the Fiix revenue. This implies an acquisition price range between $250M to $300M+/- in exit price. For sake of averages, I will estimate this is a $275M acquisition.
As prices are not disclosed on the earlier financings rounds it is hard to know the precise returns for each stage of the company. The Series A and Series B investments likely purchased BuildGroup ~35% of the company, yielding a nice return. If the 2019 Series C purchased a standard ~20% of the business, then the company had a post-$ value of $200M. A $250-300M exit would not be a homerun but a nice IRR.
Of note, however is that the company was founded in 2008 so it was 12 years to exit. But, interestingly, only 4 years from the Series A until this major financial milestone. It appears that the commercial scale truly ramped up with the Series A capital.
I have now updated the “Industrial Tech Exits” Google Doc with this deal. Found here
A few days ago a new coalition was announced. The Zeta2030 program is the Zero Emissions Transportation Association that is looking to accelerate adoption of electric vehicles here in the United States. As summarized by Axios, ZETA is calling for five key policy pillars that can, in aggregate, put American on the pathway to full EV adoption by 2030. Those pillars are listed below. Here is my take:
MY TAKE here is that this 2030 goal is likely aggressive. But most importantly, this narrative is simply the arc of our future. Whether it is 2028, 2030 or 2035… this electric transportation movement is happening. I wouldn’t have made such a bold claim even 18 months ago. But here we are: technology is driving down the costs of batteries, more countries are realizing the economic and health benefits of EVs alongside renewable energy mandates, and automakers are finally jumping two feet into the EV movement. Our charging networks are being built and utilities now have clear paths to monetize and participate in the buildout.
It is not a question of IF electric vehicles are the future of mobility. It is merely a question of WHEN the FUTURE is here. I am pleased with the logos endorsing this movement and suspect we will see many more utilities and energy transition firms added to this list in the coming months.Of note, an Energize Ventures portfolio company, Volta Charging, is on this list.
1. Outcome-driven consumer EV incentives. Point-of-sale consumer incentives drive adoption, provide cost reductions and achieve real results in pushing transportation electrification. In addition, incentivizing early retirements while encouraging EV adoption will speed the transition and meet the urgency of the moment.
2. Emissions / performance standards enabling full electrification by 2030. Emission targets are a key piece of protecting public health and sending the correct market signals to support and accelerate the transition to zero emission transportation.
3. Infrastructure investments. Strong federal charging infrastructure investments will drive the electric transportation transition and ensure that the United States is leading the way in a clean recovery where everyone is better off.
4. Domestic manufacturing. We should not only accelerate U.S. transportation electrification, but also work to ensure that we secure domestic economic growth and leadership in EV manufacturing. Federal policies must encourage job creation and economic activity across the entire EV supply chain and lifecycle, from critical materials to vehicles.
5. Federal leadership and cooperation with sub-national entities. Federal support should invest in research and development, provide an aligned vision for electrification, and ensure local leaders are empowered with the expertise and resources to support full vehicle electrification.
