Energize has an Order of Operations and a Standard of Excellence.

I brought these concepts from my days as an operator – these key phrases help define what is important and ultimately what we believe determines long-term success here at Energize. We put them on our kitchen wall in our new office. I really like how forward we make these statements to our network.

The final statement here is “Family is First”. Earlier this week the Tough family welcomed our third child. This alongside three new deal announcements! It is a busy time but time for family. I am going to be offline here a bit – see you soon!

The Energize team is operating at a high level right now. And today, we announce another investment. This announcement is the result of an extended deep dive into the carbon markets. I expect we will make a number of investments in this area, and our team is thrilled to have Zack & Max at NCX as our first area of intense focus! Reach out to Katie or Eileen on my team to learn more!

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Energize Ventures is proud to lead the $50 million Series B investment in NCX—the leading marketplace for quality carbon credits. J.P. Morgan, Intercontinental Exchange (ICE), Dalus Capital, and Clearvision Ventures also joined the round, along with existing investors Scribble Ventures, as well as Marc Benioff’s TIME Ventures. Energize partner Katie McClain joins the NCX board, and principal Eileen Waris joins as a board observer. This investment marks Energize’s first investment in carbon markets and nature-based solutions.

A new wave of demand for voluntary carbon markets

The last two years have been marked by a flurry of climate commitments as corporations increasingly allocate resources and investment dollars towards mitigating climate impact. According to GreenBiz, 38 percent of companies in the S&P 1200 have set or committed to setting a net-zero target. This represents a huge shift from just five years ago, when only one percent of companies had targets in place.

This wave of commitments has had a ripple effect in the global voluntary carbon market (VCM). The leading indicators of a major boom are visible. In 2020, value traded in the VCM doubled. In 2021 it tripled, exceeding $1B for the first time. While the market is still nascent, corporates are already purchasing offsets by the millions (tons and dollars). From tech giants like Microsoft and Stripe who typically lead the curve in sustainability, to heavy emitters like Delta and Shell, leaders across the full spectrum of the global economy are already allocating seven-figure budgets that only promise to get steeper over time.

As demand increases, we’re likely to find ourselves in a supply-constrained market. Let’s take the world’s largest compliance market as a case study— the EU ETS (Emissions Trading Scheme). As parties struggled to meet increasingly stringent emissions budgets, they were forced to buy more emission credits and supply became constrained. Prices tripled in the 2021, from roughly €30 per ton to over €90 per ton today. As pressure mounts on corporates to make progress on their emissions goals, a similar dynamic is likely to play out in voluntary markets. In a market that is not yet regulated, there are major discrepancies in the quality of credits from one provider to the other. All solutions are not created equal. Quality will be a significant driver of price.

A carbon solution that’s ready to scale today

The 2020s will be a defining decade for climate action. Swift action and significant investment will be needed to reach the goals laid out in the Paris Agreement and combat the inertia of climate change. Though there is no silver bullet for achieving emissions reduction, one thing is certain: time is of the essence, and solutions that are proven, readily available and scalable today can capture outsized value.

Enter: NCX – a science-driven forest carbon marketplace that leverages remote sensing and AI to deliver large-scale, immediate impact for climate and communities.

Energize has been researching carbon and emissions platforms for years, and while we’re excited about the novel negative emissions technologies that are emerging, we were hard-pressed to find high-quality emission reduction solutions that were both scalable and could deliver immediate, near-term value…until we met NCX.

As a tech-enabled marketplace for environmental commodities, what stood out to us about NCX were two things: their rigorous carbon accounting methodology and their technology-enabled approach to baselining and verification of carbon credits. NCX’s core business centers around developing high-quality credits which reflect the reality of climate impact through their data-driven, ton-year accounting approach. NCX Basemap, a combination of high-resolution forestry, timber, and climate data assembled over the past decade, can be leveraged to generate incredibly accurate baselines for carbon projects upon which carbon sequestration results can be measured and verified. The resulting high-quality, verifiable credits are directly advantageous to both their corporate customers and the landowners. What’s more, NCX’s marketplace is free for landowners to join and has no minimum acreage requirements, expanding the market and making it accessible to all.

Though not a panacea, natural climate solutions have the capacity to provide up to one third of emission reductions needed to reach 2030 goals. NCX’s leading solution is poised to shift the paradigm and prepare the industry to scale to meet impending demand.

The markets for renewable energy and carbon look alike

As climate and sustainability investors, we have an up-close view of the corporate entities and financial institutions that are leading the charge on climate change. Many of them are among our LPs. This access gives us a close understanding of their budgets, pain points and purchasing decisions when it comes to things like renewable energy adoption and emissions reduction. Many of the same customers who reduce emissions through clean energy purchases are also now looking to remove carbon through solutions like NCX.

As more companies look to high-quality carbon credits as a way to offset their emissions, NCX is focusing on scaling its supply to support this demand. This starts with enrolling more landowners on their platform and leveraging Basemap to lower the costs typically associated with scoping and baselining plots for potential carbon projects – which is how NCX operates similarly to project developer in many regards. This is another reason we were confident in our ability to support NCX’s growth post-investment. Aside from our track record of helping scale climate software companies commercially, Energize also has unique experience in renewable energy project development. Katie McClain, who is joining the NCX board, spent years scaling operations and developing utility-scale wind and solar projects for Invenergy (also an Energize LP) prior to joining Energize. We are excited to bring these insights to our partnership with the NCX team as we support their mission of enabling natural capital to reach its full carbon sequestration potential.

A data-driven approach built on forestry expertise

NCX, formerly known as SilviaTerra, was founded by Zack Parisa and Max Nova, a forester and a computer scientist who saw a gap at the intersection of the forest industry and legacy carbon projects. Through Microsoft’s AI for Earth program Zack and Max were able to build the world’s highest-resolution map of all forested acres in the contiguous U.S. This dataset was the foundation upon which NCX was built. Today, the platform leverages this data with expertise in forestry, timber, economics and technology to unlock the full carbon potential of our forests by enabling every landowner to be part of the climate solution.

NCX’s track record of building strong relationships with landowners positions them to develop and scale other natural commodities, such as those related to wildlife habitats and biodiversity. This latest infusion of capital will enable them to scale their product to reach new natural capital markets, expand geographically and grow their team with more mission-driven talent. We’re thrilled to partner with Zack, Max and the rest of the NCX team in carrying out their mission to connect every landowner to net-zero pioneers.

Yesterday we announced our growth equity investment into Aurora. We launched our growth platform because we listened to our entrepreneurs and ecosystem: our ongoing capital and time investment is a signal of belief and strength in the team and market. The Energize team aims to be a real partner along the journey delivering strategic insights and commercial advancements alongside our capital investments.

Our journey with a company usually starts much much earlier in the company’s life. We tend to invest at the inflection of commercialization – when we believe we have a “secret”. We leverage our market access and investment experience to identify the leading companies and then go all-in on supporting their growth. Our investment process begins with a research deep dive where we look to uncover how digital solutions will accelerate the sustainability movement. In 2021, Juan and Eileen led our team effort on a supply chain visibility deep dive. Today we announce the first investment from that process!

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Energize Ventures is excited to announce we are leading the $10 million Series A investment in Sourcemap, joined by existing investor E14 Capital. Sourcemap is an expert-developed software platform providing end-to-end supply chain traceability to a wide variety of industries, from food and agriculture to luxury goods. Energize Ventures partner Juan Muldoon will join the Sourcemap board of directors, and principal Eileen Waris will join as a board observer.

Supply chain traceability is becoming table stakes

The recent spotlight on global supply chains has exposed what many insiders have long known to be true—the goods and materials we useevery day depend on a dense yet fragile web of providers that can be difficult to track and trace. With global supply chain disruptions and regulatory crackdown on social and environmental implications at an all-time high, supply chain visibility is now of utmost importance to business operations. From chip shortages to commodity price spikes, procurement departments are facing new challenges every day – and many of them culminate at the border. In 2020 Customs and Border Protection detained $50M worth of goods at the border. In 2021, that number grew to $486M, and the U.S. is already on track to exceed $2B in goods detained this year. With the latest ban on all imports from Chinese manufacturing hub Xinjiang, these problems are not likely to improve any time soon.

The root cause of many of these challenges can be pinned down to lack of visibility and understanding of global supply chains. Businesses cannot foresee disruptions in their supply chains until they have a more complete picture of who their suppliers (and their suppliers’ suppliers) are. More andmore, companies are seeking solutions that help them map and manage their supply chains, from direct suppliers all the way down to the raw material. To contextualize the complexity of this task consider this—a major CPG manufacturer might have anywhere from 5,000 to 15,000 direct suppliers. Each of those suppliers has hundreds of their own suppliers. As companies try to map down to the source of raw material, the number of suppliers becomes dizzying.

This is where Sourcemap comes in. Sourcemap’s software platform digitizes end-to-end supply chain due diligence and customs compliance, enabling an unprecedented level of enterprise observability. Their universal ETL (extract-transform-load) data platform enables source-to-store traceability for any physical product. Sourcemap uses proprietary algorithms informed by decades of data to detect human rights violations, fraud, waste, and other risks throughout the supply chain. Customers across a broad swath of industries rely on Sourcemap’s solution to improve sustainability efficiency, resilience, and competitiveness.

The energy transition calls for a more transparent supply chain

As the race to decarbonize accelerates, the buildout of renewable energy infrastructure will require significant investment – to the tune of $4 trillion by 2030. Supply chain plays a critical role in the deployment of the next generation of energy. Why? An energy system powered by clean energy is fundamentally different from one powered by fossil fuels. The volume and type of materials needed to build and maintain gas plants and coal-fired power stations have little in common with those used in the deployment of solar PV and electric batteries. Displacing existing energy infrastructure with renewable energy assets will require further development of new supply channels in addition to higher upfront materials costs, even though the variable costs are significantly lower. With this shift comes a slew of new challenges related to responsible sourcing.

The renewable energy industry is well-aware of these challenges and prepared to face them head-on by investing now in solutions that help ensure their supply chains are resilient and responsible. We see a direct opportunity for Sourcemap’s traceability software platform to accelerate the deployment of renewable energy by helping developers and operators gain line of sight into their supply chains and address potential disruptions before they happen, all while ensuring environmental and social sustainability remains at the forefront.

Expert-led team primed for expansion

Supply chain compliance is not a space for tourists. And the team behind Sourcemap are no tourists. CEO Leonardo Bonnani has assembled a team of missionaries that have spent over a decade with boots on the ground, collecting data on the world’s most complex supply chains—from cocoa to conflict minerals. With minimal outside capital, they’ve been able to bootstrap the business that has grown to serve dozens of Fortune 500 companies.

With this most recent infusion of capital, Sourcemap will continue to invest in their core business, securing their position as the leader in supply chain transparency for food and CPG brands. As an investor, we will also support two major growth initiatives: expanding Sourcemap’s presence in Europe by building out their new Paris office and developing their offerings across new verticals including energy, auto, and pharma.

I’ve written on here about how Energize will continue to support our companies from Series A to IPO. This week the first of a few major growth equity investments we are leading is being announced. The press release is pasted below and an early article on Bloomberg found here.

Energize is the largest shareholder in Aurora and we’ve grown our position over time. We’ve partnered with Aurora since 2019 and the company is a pinnacle example of how software can accelerate innovation for energy and sustainability. Chris Hopper and Sam Adeyemo are excellent leaders of the company and quickly becoming stewards for the solar market as a whole.

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Climate Tech SaaS Leader Aurora Solar Secures $200 Million in Series D to Further the Digital Transformation of the Solar Ecosystem

Funding Round Co-Led by Coatue and Energize Ventures, underscores the rising importance of software in the energy transition

SAN FRANCISCO, CA, Feb 28, 2022 / PR Newswire / – Aurora Solar, the industry’s leading software platform for solar sales and design, announced it closed a $200 million Series D funding round co-led by current investors Coatue and Energize Ventures with participation from Fifth Wall, ICONIQ and new investors, Lux Capital and Emerson Collective. With this funding, Aurora Solar can accelerate its mission to create a future of clean energy by enabling solar contractors with a powerful, accessible and reliable platform to power every step of the solar adoption process. 

“As a trusted partner to the fastest growing solar companies, we have a unique vantage point from which to deliver customer-centric innovation,” said Christopher Hopper, Co-founder and CEO of Aurora Solar. “We are thrilled about our next chapter and accelerating innovations that enable every member of the solar organization to benefit from data and AI, and ultimately deliver on the promise of solar.” 

The solar industry is at a strategic inflection point. According to the Solar Energy Industry Association (SEIA), solar has experienced an average annual growth rate of 42% in the last decade and accounts for 54% of all new electricity-generating capacity in the U.S. This exploding growth in demand, along with the dramatic shift to a digital-first business environment, further accelerated by the pandemic, has highlighted the need for the solar companies to double down on digital transformation.  

“Software is increasingly becoming a mission-critical part of every solar organization’s technology and operating strategy,” said Samuel Adeyemo, Co-founder and CRO of Aurora Solar. “Aurora’s focus is to help our customers tackle some of the industry’s biggest challenges head on: accelerating sales cycles, scaling up design operations, and transitioning costly and ineffective manual processes to automated and integrated workflows.”

With more than 7.5 million solar projects designed in its software platform, Aurora is the de facto standard for solar design and revenue operations. Currently, 90% of the top solar contractors in the U.S., including Freedom Forever, POWERHOME Solar, and Momentum Solar depend on Aurora daily to power their sales, design and operations teams, and deliver meaningful business outcomes. Building on this momentum, this funding will help Aurora accelerate its product development, expand outreach, and build lasting, trusted relationships with their customers while also increasing Aurora’s collaboration with the broader solar community. 

“Solar is a $100 billion industry and the fastest growing power generation source in the world. At Energize, we believe the key to accelerating solar adoption at scale is through software and automation,” said John Tough, managing partner at Energize Ventures, which is Aurora’s largest investor. “Aurora is building the operating system that will support this growth, and we’re thrilled to make our fourth consecutive investment in the company as they continue to expand their platform and build upon their world-class team.”

Aurora Solar is committed to supporting solar companies, big and small, global and local, as they lead society toward a sustainable future, and will continue to work toward its mission of providing all solar professionals with leading-edge tools ​to efficiently ​sell​, design, and install​ high quality solar projects. 

Aurora Solar will highlight its latest innovations at the Sunrise Demo Day event on March 2, 2022. To register, visit sunrise.aurorasolar.com.

About Aurora Solar Inc.

Aurora Solar is a fast-growing technology company whose digital platform enables solar professionals to streamline complex and costly manual processes, so they can focus on what matters — driving solar adoption at scale. The award-winning San Francisco-based company powers over 5,000 of the solar industry’s most successful organizations and was voted the best solar software by Solar Power World in 2021. Over 7 million solar projects have been designed in Aurora globally. For more information, visit www.aurorasolar.com and follow us on Twitter @AuroraSolarInc.

About Energize Ventures

Energize Ventures is a leading global alternative investment manager focused on accelerating digital transformation in energy and sustainability. Founded in 2016, Energize now holds nearly $750 million in assets under management and has funded 18 companies to date. Energize is backed by institutional and strategic LPs including CDPQ, Credit Suisse, Invenergy, SE Ventures (corporate venture arm of Schneider Electric), GE Renewable Energy, Xcel Energy, and more. With an unmatched depth and breadth of industry and operational expertise, Energize works in partnership with its portfolio companies to realize their full potential from early commercialization to growth scaling and into the public markets. For more information on Energize Ventures, please visit www.energize.vc.

About Coatue

Coatue is one of the largest technology investment platforms in the world with more than $35 billion in assets under management. Our dedicated team of engineers and data scientists work closely with investment professionals to add value to founders and executive teams in our portfolio. With venture, growth and public funds, we back entrepreneurs from around the globe and at every stage of growth. Some of our private investments have included Airtable, Ant Financial, Anaplan, ByteDance, Chime, Databricks, DoorDash, Instacart, Meituan, Snap, Snowflake and Spotify.

Fast Radius is a company that provides manufacturing services in four main areas: application discovery, product design and testing, production-grade manufacturing, and global fulfillment. Team Energize is a big fan of Lou Rassey, cofounder & CEO, and we invested in the company through both our ventures and growth equity platforms. Below is a post from the Fast Radius corporate account today:

Fast Radius is now on Nasdaq! Thank you to all of our team members who have helped us get to this day. We look forward to many more years of growth and continuing to #MakeNewThingsPossible for our customers and the world. #NasdaqListed

Today marks my 5th anniversary of working at Energize. In 3 months it’ll be the longest tenure of my professional career, then surpassing my time at Choose Energy. I loved my time at Choose- I learned from the best and learned what decisions really mattered. I learned from a great leader in Jerry Dyess about working with every level of the company and staying grounded amidst the highs and lows of entrepreneurship.

This 5 year run at Energize has a slightly different feel. When operating a (non-IPO) startup you generally know the path to exit is 4-7 years. With Energize I realistically think I’ll be here the rest of my career. The team is too good. Our opportunity so available. The tailwinds towards digitization and sustainability so strong. The entrepreneurs and talent focusing on these solutions so promising.

We’ve gone from 1 to 20 portfolio companies since I joined. From 3 to nearly 20 great employees. In 2017 we wouldn’t have our first close – a $50M one- for 4 more months. We now have over $750M of capital under management and this quarter we are investing $100M into a single company. Our companies are delivering tremendous financial and impact returns.

I’m excited for the next 5 years and to share those updates with you all. The stakeholders we have on board (employees, entrepreneurs, LPs) are going to take us to entirely new levels.

Over the past year, the markets have gone all-in growth and a “growth-at-all-costs” drove valuation multiples higher. Well, for a number of reasons, the market’s position on growth has somewhat broken free from that unconstrained mentality.

Guggenheim releases a great monthly report on these market trends and the takeaways on the second page below show the most important update: the market is finally re-aligning to cash efficient growth. At Energize we like to say either “Cash is King” or “Cash Efficiency is King” … so we welcome some of this return to normalcy.

Funding news!! Links to the Press release and the Energize blog post, and the blog post on Why We Invested in pasted below.

My two cents on the commentary: Two of the largest industries in the world are colliding: mobility and digitization. 40% of the cost of today’s cars are electronic systems and 90% of cars sold in 2022 will be internet connected. The application layer to serve the drivers or owners of these vehicles is taking off, and Smartcar’s API plays a foundational role at connecting these applications to the car, and driver. Applications in EV charging, insurance, new mobility business models are all emerging, and Smartcar is enabling that growth. With this investment I joined the board and am thrilled to work alongside the legends of Bill Krause (now with Andreessen Horowitz) and Forest Baskett of NEA.

Sahas and Sanketh are the type of founders you dream about partnering with as an investor. Smartcar is their passion and they saw the future of mobility well before anyone else. They have the bold goal of wanting to advance the mobility ecosystem and Team Energize is going to do everything we can to help them accomplish their goals.

Why We Invested in Smartcar

Energize Ventures is proud to lead the $24 million Series B investment in Smartcar, the API developer platform for connected vehicles. Existing investors Andreessen Horowitz and New Enterprise Associates (NEA) also participated in the round. Energize Ventures managing partner John Tough will join the Smartcar board of directors and principal Eileen Waris will join as a board observer. This investment marks Energize’s fourth investment in the future of mobility.

Today’s vehicles are driven by data

The automotive industry is undergoing a period of rapid technological change.

Vehicles are evolving to provide better performance, comfort, and convenience—all while auto manufacturers are facing environmental pressure to reduce emissions and transition towards electrification. Driving this shift are innovations in software and an increasing number of electronic components in vehicles.

More and more, cars are resembling computers on wheels. Never has this been more clear than now, as the auto industry grapples with new car shortages and production halts caused by a heavy reliance on increasingly scarce semiconductor chips. Today, more than 40 percent of the cost of a new car can be attributed to its electronic systems. These systems are spitting off hundreds of gigabytes of data per car per day, creating rich fodder upon which an ecosystem of connected car applications can be built.

For developers working with this data, integrating across dozens of brands’ operating systems is repetitive and tedious work. Smartcar offers a developer-friendly suite of APIs making it easy for businesses to seamlessly connect apps to cars across 22 different vehicle makes with a single integration point. This is the largest selection of any connected vehicle API, providing access to 112 million vehicles globally.

Smartcar’s customers build software applications that leverage data or create actionable outputs from the functionality of the Smartcar API network. Examples of Smartcar’s rapidly growing customer base includes developers of applications that verify vehicle mileage, issue digital car keys, manage EV charging, track fleets, track driving behavior, and more.

The electric vehicle ecosystem will require a software backbone

At Energize we invest in solutions that further the energy transition. When it comes to electrification of transportation, we’re still just getting started. As electric vehicle adoption scales, the load burden on the power grid becomes greater. In order to achieve the full decarbonization potential of electric vehicles, we need to unlock managed charging—and Smartcar’s API platform is the key.

Managed charging refers to the utilization of electric vehicle batteries to optimize the flow of electricity and reduce emissions. This means charging up when renewable energy supply is high and pausing charge when demand on the grid is high elsewhere or when renewable output it low— all while making sure you’ve got a full battery in time for your morning commute.

This balancing act requires utilities, consumers or third parties to remotely control the charging process using software applications—something that is now possible thanks to Smartcar. Through their API platform, solution providers can remotely measure a vehicle’s state of charge and overlay that with real-time grid performance to determine optimal charging time. They can then leverage Smartcar’s charge/discharge function to control the charging process. This leads to higher grid efficiency and enables more renewable energy to be directed towards the world’s growing fleet of electric vehicles.

Built with developers in mind

Smartcar was founded in 2015 by brothers Sahas and Sanketh Katta. While attempting to build a software application for connected vehicles, the two discovered a gap: there was no standard way to connect applications across multiple OEM interfaces.

The cofounders created a developer-friendly API platform to minimize the work and frustration of building, integrating, and launching applications across multiple car brands. Their suite of APIs enables developers to build new products and services and their Smartcar Connect platform streamlines user consent so that customers can safely and securely authorize applications to access data generated by their vehicles. When they began building the Smartcar platform, fewer than 20 percent of new vehicles were connected vehicles. In 2022, 90 percent of new cars will be connected vehicles. As the digital ecosystem around connected vehicles grows, their solutions will pave the way for developers to build the future of mobility.

What’s next for Smartcar + Energize

Smartcar will use this fresh round of funding to further improve their platform and secure their position as the leading API platform for connected vehicles—building new capabilities and better developer tooling to unlock new functionality in the world of connected vehicles. They will continue to grow operations in the U.S. and accelerate expansion in Europe, adding more makes and models to reach even more connected vehicles.

Earlier this week I flew down to the Nozomi Networks 2022 SKO (“Sales Kick-off”). The event, a 4-day gathering, including great talks from company and industry leaders. I was excited to be the voice of the investor and spoke to the company’s sales & marketing teams for about an hour. I really enjoy speaking to sales teams. Why?

The phrase “product sells itself” is not true when you are selling to enterprise accounts. Even the best products require great sales execution: from demand generation, pre-sales, proof of concepts, sales conversion, post-ops, and account management. Sales teams at Nozomi, along with most of the companies in our portfolio, are global. These primarily distributed teams rarely get unified time. This is the SKO’s impactful opportunity: where the company mission, culture, goals, lessons,… and compensation structures can be communicated.

I believe most start-ups begin having SKOs far too late in their development. Alignment for a growing sales team on customer messaging, company values, product roadmaps, successful and failed sales stories… this is how the fabric of a revenue operation grows. I had my first talk to Nozomi back in 2017 when there were 10 people in the room. This year Nozomi had over 100 in the room or dialed in. Building a values-aligned (and non-mercenary) sales team elevates a company’s likelihood of commercial success and is a great investment of internal resources. My guidance is for our portfolio to start those SKOs early, and have them every 6 months into perpetuity.