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 2007 movie thriller There Will be Blood portrayed the ruthless quest for wealth throughout the 1920s oil boom. Wannabe oil barons menacingly clamored for land and used any method to extract and convert crude oil to wealth.
Fast forward to 2020 and we have a new script being written as the oil industry moves from thriller to horror story: Oil demand is getting crushed by a COVID-related slowdown. The accelerating electric mobility movement is limiting demand for transportation fuels. En masse corporations are revisiting environmental impact and carbon footprint metrics. Meanwhile the everyday consumer is now face-first with a continuous barrage of oceanic and land-based climate disasters. This confluence of events is leading to an unavoidable event: messy and major consolidation amongst the traditional energy superpowers.
And here is the first move on the oilfield: Exxon should acquire BP.
These two stalwarts are down 50% year to-date. And while both stocks are being decimated by lower demand for oil and expected heavier regulations, BP offers an important lifeline to Exxon. Why?
Renewables are the future, and BP is focused on renewables. Aiming to be net zero by 2050, BP has built up the organizational structure, wind & solar assets, retail sites, and power trading capabilities to capitalize on renewables growth. Exxon doesn’t have any of these assets at scale.
Investor sentiment has declined across the O&G sector and institutions and endowments are divesting from O&G for ESG purposes. Exxon is the largest carbon emitter with no plans on changing. A “bolt on” acquisition of BP would improve ExxonMobil’s carbon footprint and improve investor ESG sentiment.
A focused subsidiary can drive internal change at the larger Exxon: in their most recent annual report, bp references “renewable”, wind, “solar” 124 times. Exxon? only 16 times.
Exxon trades at nearly 3x the scale of BP, meaning the combined company would be bolster an approximate $225 billion market capitalization.
The Energize Ventures team evaluated the prospective joint businesses by analyzing 3 key business units: Low Carbon & Renewables, Retail & Trading, and Oil & Gas framework. Mark Tomasovic brought many keen insights into how a traditional energy firm can use M&A to capitalize on the energy transition.
Renewables & Low Carbon
Wind & Solar: Exxon could operate BP Renewables as a standalone business to get exposure into the growing renewables category, improving investor sentiment, acquiring power expertise, and capitalizing on cost declines in wind & solar
BP currently owns 2.5 GW and wants to develop 20 GW of renewables by 2025
Exxon has no renewables or power generating assets in their portfolio
LNG Portfolio: BP’s strategy to becoming greener includes increasing their LNG portfolio
BP wants to increase their LNG production from 15 MTA to 30 MTA by 2030
Exxon is a leader in the LNG business with over 23 MTA of LNG globally and 4 mega projects currently being constructed
Biofuels: BP wants to increase its bioenergy portfolio to 50 kbd by 2025 to reduce emissions
Biofuel research is a strength of Exxon after announcing a gene editing breakthrough in 2017. Exxon is the only major publicly continuing to talk about biofuels and is targeting the capability to produce 10kbd of biofuels by 2025
However, many people still question if biofuels are commercially viable
Retail & Trading
Retail: BP has a strategic advantage with electric vehicle customers
BP has 10M touch-points with customers every day at 2,870 retail gas stations and 7,500 EV charge points
Exxon exited all of their retail sites in 2008. The Exxon and Mobil gas stations remain because they still license their name to retailers
Margins on BP convenience / electrification are 25% and are expected to increase to 35%
BP’s partnership with Uber and Microsoft position the company to capitalize on its EV charging and digital strategy
Trading: BP has a strong trading division for oil, gas, and power
BP’s trading division has significantly improved company top line – specifically in oil trading – and they want to 2x the size of the power trading division
Exxon has only a small trading organization and could benefit from trading expertise
Oil & Gas
1- Upstream Oil & Gas
BP and Exxon both want to high-grade their investments to the best basins and divest from old dry gas assets; the strategies are aligned here
BP wants to divest $10B of non-core oil/gas assets
Exxon wants to divest $15B of non-core oil/gas assets
Permian-Specific Assets: Exxon’s huge position in the Permian would be accretive to BP’s small position
Exxon is the third largest landowner in the Permian (1.6M acres), whereas BP only owns 83K acres
BHP Gas Assets: BP has top-tier gas assets in the Haynesville and Eagle Ford that they acquired in 2018 from BHP; these gas assets will significantly improve XTO’s net acreage position in these basins
BPX (BP’s U.S. division) and XTO (Exxon’s U.S. division) both operate as semi-autonomous organizations within BP and Exxon and would be easy to merge
2- Downstream & Chemical
Refining: BP’s refining business is performing better than Exxon’s. Combined downstream organizations will increase purchasing power, add procurement synergies, and improve the efficiencies in BP retail networks
Exxon refining margins are at historic lows and Exxon refining has not been profitable during COVID
BP refining is still profitable
Chemicals
Exxon Chemicals is still growing and profitable due to the company’s strength in plastics and olefins manufacturing
BP divested their chemical company this year, which mainly focused on aromatics and acetyls
The cheap gas from BP would certainly benefit Exxon’s $40B Grow the Gulf chemicals initiative
The energy landscape is changing, and Exxon’s acquisition of BP would provide a pathway towards owning the future of energy. Through the acquisition, Exxon would improve their base business by acquiring strategic U.S. assets while also adding exposure to renewables, retail EV charging sites, and a strong oil/gas/power trading division. During this time of consolidation in the O&G industry, Exxon can use the opportunity to bolster its core business, reduce its carbon footprint, and prepare for renewables growth. With volatile oil prices and historically low margins in O&G, the future remains unknown. But there is one thing for certain: it will be a messy transition and there will be (more) blood.
An Energize Theme: Electrify Everything (Guest Post from Tyler Lancaster)
The link can be found here. The original post was written by Tyler Lancaster, a Principal at Energize Ventures.
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Electrifying Everything: The Key to Decarbonization & A More Sustainable Future
Electrification is a key theme to Energize’s investment thesis. We invest in software and business model innovations, many of which directly contribute solutions towards decarbonization by means of electrification. This is the inaugural post in a blog series where we’ll explore this critical transition and the technologies driving and enabling it.
Addressing climate change is the existential challenge for our generation — and decarbonizing human activity is an essential first step. How do we get there? Put simply: Electrify everything.
Rewiring America argues that to effectively decarbonize (limiting global temperature rise below 1.5°C, consistent with the Paris Agreement), we must electrify…everything, and power those electrons with renewable energy. What does electrifying everything look like? It’s transitioning to fully electric cars, converting home appliances like heating and air conditioning to electric heat pumps, installing efficient LED lights instead of wasteful incandescent bulbs, and even using electricity to create heat for industrial processes. Powering an electrified world with zero-carbon energy means primarily generating electricity with the sun and wind. Electrifying everything is the most important climate imperative of the next 20 years.
As an investor in clean energy technologies, I agree with Rewiring America’s thesis that electrifying everything is the most viable path towards decarbonization. Here’s why:
1. Renewable power is the only carbon-free, cost-effective solution readily available at scale today.
Solar and wind are highly efficient electricity production technologies that represent the largest potential energy sources available on earth. The entire human population consumes approximately 19 terawatts (TW) of energy today. The global solar resource available is 85,000 TW, or 4,500 times the current energy demand. Wind is a 3,600-TW resource, or 190 times demand. As a population, we can afford to both consume much more energy and be incredibly selective about where we put solar panels (rooftops, parking lots, deserts) and wind farms (pastures, fields), while still comfortably covering our energy needs.
Source: Rewiring America
Not only are these renewable resources readily available, they’re also cost-effective. Solar and wind are now cheaper than coal, natural gas and nuclear almost everywhere. Lazard’s 2020 Levelized Cost of Energy (LCOE) update estimates in many cases, even unsubsidized solar and wind are less expensive than the marginal cost of operating existing conventional generation. Yes, that means it is cheaper to build new solar and wind systems than to continue operating fossil fuel power plants. Renewable energy’s economic lead will only grow with further innovation and scale.
Source: Lazard Levelized Cost of Energy, 2020
Attaining a 90+ percent clean energy power grid powered primarily with wind and solar is achievable in the next 15 years if we move quickly. Energy Innovation and Policy, an excellent nonpartisan energy and environmental policy firm, recently published the 2035 Report outlining a cost-effective pathway to 90 percent decarbonized grid by 2035. I will caveat that energy storage and flexible zero-carbon generation (hydro, geothermal and nuclear) become even more valuable — and essential — for a 90+ percent clean energy grid with increasingly large amounts of variable wind and solar. If you are interested in the tradeoff of going “all in” on solar and wind, I would encourage you to read the work of Jesse Jenkins, who has conducted extensive research on an optimized and decarbonized energy system.
What about alternatives like carbon capture, advanced nuclear, and green hydrogen? In our experience, these energy resources are not technically feasible or economic at scale today. The clean energy sector is experiencing rapid innovation, and new tools to aid the fight against climate change are emerging every day. We’re excited to add these technologies to the mix when the time is right — but wind and solar are ready to go now.
2. Electrifying everything will create a massive renewable energy economic boom.
Rewiring America estimates that electrifying everything would increase U.S. electricity demand by 3 to 4 times, from 450 GW to 1.5 to 1.8 TW. A mostly electric energy system would necessitate a massive investment in renewable generation, storage, high capacity power lines, and demand-side flexibility. As we electrify the U.S., we need to rapidly scale up investment in renewables to the tune of 1,200+ GW in new wind and solar capacity, injecting $1.7T of investment into the power grid.
The benefits of solar and wind extend beyond the direct investment. Solar and wind reduce local pollution, create jobs, generate revenue for municipalities and landowners, improve public health, increase home values, and preserve the natural landscape. Energy Innovation and Policy estimates a 90% clean power grid would support a total of 29 million job-years cumulatively from 2020 to 2035. Electrifying everything and thereby increasing electricity demand by three to four times would further multiply employment related to decarbonization efforts. The U.S. can employ a generation of workers by powering our economy with renewable electrons.
Clean energy entrepreneur Jigar Shah has argued for years that addressing climate change is the single greatest wealth creation opportunity of our lifetime, to the tune of a $10 trillion economic impact. We agree, and a growing body of interdisciplinary research is forming a clear pathway to unlocking climate wealth in the U.S. by electrifying everything — and powering everything with renewable energy.
3. There is incredible inertia in carbon-based energy consumption systems, and we must start NOW.
Shayle Kann, Managing Director at Energy Impact Partners, recently tweeted a simple framework to focus decarbonization efforts. Eighty-six percent of global greenhouse gas emissions come from five sectors: electricity and heat (25%), agriculture and land use (23%), industry (18%), transportation (14%), and buildings (6%). Decarbonize each quickly, and we are well-positioned to limit global temperature rise below 1.5°C. The problem? Today’s equipment base is heavily committed to future emissions. We need to act now by electrifying quickly.
A furnace lasts 18 years. A car or truck? 20 years. How about a power plant? 50 years. Every time we build or continue to operate a fossil fuel-consuming machine, we are creating “committed emissions” for the entire lifetime of that machine. Energy consumption systems face remarkable inertia from replacement cycles, even with exponential adoption of new technology. If we do not rapidly achieve 100% adoption of electric, renewable, zero-emission machines sooner than later, we cannot prevent global temperatures from charging past 1.5 degrees Celsius.
Let’s use electric vehicles (EVs) as a thought experiment. To keep things simple, we’ll assume that EV adoption as a percent of all annual vehicle sales will reach 100 percent by 2030 — much faster than even aggressive forecasts by Bloomberg New Energy Finance. To provide another baseline, we’ll use the data point that in 2018, there were approximately one million EVs in the U.S. market, making up 0.4 percent of all vehicles on the road. In our scenario, when we reach the incredible milestone in 2030 of making every new vehicle sold an EV, cumulative EV adoption would still be just 35 percent. Why? On average, vehicles are replaced once every 20 years (the average vehicle in the U.S. is now 12 years old). We currently have about 280 million gas-burning vehicles on the road. Even after achieving 100% annual EV adoption in 2030, 193 million fossil fuel combustion vehicles would remain on the road.
We have a long journey ahead to fully electrify and decarbonize the machines and equipment that make the modern economy hum. However, I am optimistic sustained market and technology tailwinds behind electric machines and renewable energy will catalyze exponential adoption. Acting now is pivotal to combat the inertia in our energy-consumption systems, from power to transportation, buildings and beyond.
What does “electrifying everything” entail for the energy and industrial start-up ecosystem?
I expect in the next 20 years, most new machines, equipment and appliances will be electric. Increasingly, electricity will be zero-carbon and renewable. Massive growth tailwinds in the U.S. and abroad will create a new class of climate unicorns, generating venture-scale returns for entrepreneurs and investors. Solutions that are technically viable, economic, and simply a better product and customer experience will capture disproportionate market share.
At Energize, we believe the following solutions are best poised to capitalize in the 2020’s:
Energize will continue its focus on asset-lite, software-enabled firms. We believe a multibillion enterprise value software company will be built in each of these categories in the next 20 years.
We are bullish on all nine of the above solutions to decarbonize by electrifying (everything). The ensuing blog series will dive deeper into how we believe software and business model innovation will accelerate each. In my next post, I’ll dig further into solar software…stay tuned!
I recently wrote a post about Honeywell’s digital aspirations. The anchor to the digital transformation is Honeywell Connected Enterprise’s ‘Forge’ Product. The Forge Product is an enterprise performance management system meant to be an operating model for industry. I wrote my post about Honeywell here: Hungry Honeywell.
I also recently wrote about Microsoft’s “Energy Wildcatter” presence. Microsoft is partnering up with the leading firms of the energy landscape. Through a mix of power purchase agreements and algorithmic treaties, Microsoft is locking in its’ IT operating system within the new energy OT environment. The moves are very smart. The article can be found here: Microsoft the Surprise Wildcatter.
Well, the two firms are now colliding. Honeywell has selected Microsoft’s Azure cloud platform and Dynamics 365 Field Service platform architecture to be the backbone of Honeywell Forge. This move makes sense for two key reasons:
1- Microsoft suite tools are already the standard IT platform for most energy, industrial and manufacturing customers that Honeywell serves. Defaulting to Microsoft is really just meeting the customer where the customer already is…
2- Honeywell is a leader in OT. Pairing subject matter expertise in OT with the traditional leader in IT brings topical and architectural expertise together.
The initial use cases where Honeywell and Microsoft will collaborate are on: digitized maintenance, energy optimization, and OT cybersecurity. Energy & industrial customers are quite savvy on these topics and the market is ready for them now – meaning these should be good launching points for the Forge-Azure partnership.
Finally, this move is very smart for Microsoft. They are clearly not intent just being a player in the energy transformation. Microsoft has set its’ sight on being the IT backbone for the industrial transformation as well. This Honeywell contract and the downstream effect for how Honeywell and their customers are committing to the Azure framework will pay dividends to Microsoft for decades to come…
Distributed Assets = Better and More Accessible Software
Software that serves the physical environment is usually highly customized. For every $1 of software sold, there is anywhere from $1 to $10 of accompanying implementation and professional services revenue.
Just how much money gets spent in customization?
The average utility has an asset management platform contract that costs $20 million + per year. These asset platforms track everything from substations to big power plants and much of the data is static upon entry. Contracts are usually a baseline price for the software and then tens of thousands of hours of pre-booked professional services. The existing leaders in this asset management space are IBM Maximo, Oracle Primavera, or Infor ERP. These firms offer both the software and the professional services revenue.
Like the long-standing assets they manage, these software platforms are not built for iteration. This is why Energize is incredibly bullish on new asset management platforms like Sitetracker that are purpose-built for more distributed assets. Energy and industrial customers require a new software experience. In the past, critical infrastructure execs looked to solve problems by adding more people and billable hours. The tide is turning. Now the default in the energy and industrial verticals is to attempt to solve a problem with software.
Platforms like Sitetracker (and others) all bring world-class asset management solutions to the new asset bases with an easier onboarding schedule and a lower price-point. These suites are also all built with newer technology stacks allowing for faster iteration and response to customer needs. And the best of these new solutions are enabling applications to integrate with their workflows. Want a predictive AI application for your engine? Here is SparkCognition. How about computer vision detection for QA? Check out Matroid. Worker safety and communications? Beekeeper hits the mark, Just check the box and new applications integrate into field operations. This is the future, happening now. New software giants will take over the asset management vertical.
Better software and faster feedback cycles will drive greater efficiency in our operating environment. It will be a fun space to watch over the coming years.
Yesterday I mentioned how there is an increasingly special group of software companies laying the digital groundwork for the OT market.
With each Energize investment we do our best to put together a framework on market size and near-term opportunity for our prospective investments. Looking back at our Fund 1 portfolio companies there are now a few, clear examples where we underestimated the TAM.
The top 3 consistent themes for underestimating TAM are:
1- Product-led growth allowed the companies to expand into other soft-cost opportunities in the vertical
2- Situational-driven budget expansion as a forcing function to try new products to maintain business operations (COVID, workforce turnover, etc.)
3- Distribution channels built into product accelerate go to market and open up new verticals
Notably, there is no “a-ha” moment from a customer group. Markets get unlocked as small wins compound, team grit persists, and effort-driven “luck”all collide. As the tailwinds for the energy and industrial verticals continue to blow, the winning firms are going to be the ones that continue to iterate and hustle as the market develops.
Big growth, cash flow positive… and raising equity?
Over the past few months I have seen a few software companies serving the energy and industrial verticals with this head-turning profile:
+ $5-10M of revenue
+ >200% YoY revenue growth
+ Profitable
+ Sizable cash balance
My first thought when seeing these companies? Wow, this scale of efficient growth wasn’t happening before.
My second thought: This firm won’t be raising money, right?Wrong.
COVID changed the energy and industrial verticals. All software purchases are accelerating and new budgets are being formed and consumed. The smartest start-ups realize that these energy & industrial software relationships could extend decades.
These digital-focused start-ups have two early advantages that compound:
access to historically buried and undiscovered data assets that are revealed as firms move from analog to digital-first operations
license for product-driven growth as industry’s new knowledge workers realize the potential to digitize industry’s soft costs
Given the potential to entrench within the customer and iterate with non-transferable assets, software firms serving the energy and industrial vertical are attracting new investors. These investors, it seems, believe that there is potential for the Law of Accelerating Returns in heavy industry’s digital layer. In this structure, winning companies far escape their peers and should continue to invest early and often to capture market share to solidify the #1 market position. I have seen this accelerating return profile in other verticals, but it is a relatively new phenomenon for software companies serving the historically analog verticals.
As a result, the race is on to build the new software operating platforms for the Operating Technology network. I suspect we are at the beginning of a 10-year+ trend in this purchasing cycle and there will be many head-turning financing rounds in the coming quarters for software companies addressing this theme.
Over the weekend I asked Twitter if I should cover Joe Biden’s Climate Plan by writing a blog post, tweeting a Tweetstorm, or hosting a ZOOM call. As you’d expect, Twitter followers wanted a Tweetstorm!
As you will see, I also tried to have some fun by including relevant Clark Griswold memes. 🤓👍😜
Without further ado, here it is:
OK, here goes: The @JoeBiden $2.2TN Climate Plan impact in 9 parts
– Wind – Solar – Utility & Rooftop – Weatherization – Batteries, SMR & Research – Electric Vehicles – Transmission – JOBS – Winners -Summary
Weatherization: Goal is 4M buildings, 2M homes via retrofit & efficiency incentives. I'm bearish on achieving these goals, esp with energy getting cheaper.
Achieving 50% is success. Jobs growth is key benefit, esp as a complementary geography to utility wind/solar + 1M jobs pic.twitter.com/3divA4RJLc
Ambiguous language on "breakthrough tech" needed to hit 2035 targets. But: 1- Batteries are already here and deserve more sophisticated tax credits. 2- $ to grants/universities is going to feel like a tidal wave vs past 4 yrs
Utility scale wind farms in the midwest and solar in rural areas means huge T&D investment to move green power to cities. Plan also addresses climate-hardening local assets.
TOP 3 WINNERS – US residents: 6-10M JOBS – Climate: US is >2x renewable gen over next 4 years – Utilities: Rate-base new assets, new demand as EVs grow, monetize EV infrastructure, climate spend – Banks / Infrastructure Firms: Massive financing and Public Private Partnership opps pic.twitter.com/LVedRIHnpx
First thing’s first: it is pretty rare for an energy transition M&A event to be on CNBC or Mad Money- but this deal did make primetime TV and the segment can be found here)
Strategic Rationale: Why Generac is now in the software business
Every Wednesday at 10am my house’s Generac generator roars to life for its 2-minute check. The generator is fed by a natural gas line and in the 2.5 years of living here it has been used twice to back-up the house when a storm knocked out the power lines. All the while, sitting in my garage is my Tesla. It has a 100 kWh battery pack mostly sitting idle and plugged in every day.
The cost declines of batteries and the continued progress of distributed energy resources like rooftop solar and at-home batteries mean that the residential back-up power system of the future will look quite different than the past. Instead of supersizing a generator we may just need a better software system to source and route power throughout a house during storms or peak energy hours. And the best software system will then aggregate a neighborhood of household profiles and work with the utility to manage area-wide load.
This narrative is exactly why Generac had to buy Enbala. Based in Waukesha, Wisconsin, Generac sells more than $2 billion of backup power generation products for residential, light commercial and industrial markets. Given how our power systems are decentralizing, Generac has a unique opportunity to capitalize on their distribution network and brand to be a key player in the distributed energy electric hardware and software market. The majority of Generac’s current generators are powered by diesel, gas, or oil. So in addition to building a battery business, the firm has to accelerate its’ software development. The CEO of Generac said this in the deal’s press release: “The deal solidifies Generac’s position as a market leader in Smart Grid 2.0 technologies and opens opportunities for the Company as a grid services provider.”
Enter Enbala, a leader in the Virtual Power Plant vertical
Enbala is a developer of a real-time energy-balancing technology designed to transform energy system operations. The company’s technology captures and aggregates available customer loads, energy storage and renewable energy sources to form a network of continuously controlled energy resources, enabling clients to control, optimize and dispatch distributed energy in real-time.
In simple terms, Enbala’s software helps market participants (utilities, large energy consumers) manage the increasingly distributed load of our power grid. This is called Distributed Energy Resource Management, or ‘DERMS’
Enbala was founded in 2003 and is based in Denver, Colorado. The company’s CEO, Bud Voss, has been at the helm since 2014.
The Financing History
There are a few “fasle-starts” in Enbala’s history that resulted in a recapitalization somewhere along the line. While data shows a 2003 founding, the company’s trajectory meaningfully changed when Bud Voss took the CEO job. With Bud leading the company, Enbala raised about $38M since 2014. The most recent round was an ~$8M Series B-1 with a post-money valuation of $60M. Existing investors included: ABB Technology Ventures, GE Ventures, National Grid, Obvious Ventures and ZOMA Capital.
The Exit
While the exit price-point was not given, it is widely accepted that investors made a nice return on their capital – although that may have been preference driven. Using the last post-$ valuation of $60M as a reference, I am going to assume the purchase price was somewhere between $50-70M. The revenue profile for the company was not detailed but I suspect that Generac paid a very sizable multiple given the strategic and complementary importance of the Enbala asset as detailed earlier.
What are the themes?
1- These businesses take time. A 2003 launch with a 2014 re-launch is a long horizon.
2- Remaining capital efficient is paramount. Most VC investors aim to achieve at least 3x+ cash on cash return. With an upside $100M transaction, this means you would target $30M of invested capital.
3- The buying universe is expanding! Generac is now in the software business. This isn’t your grandpa’s generator company anymore…
Today, Energize Ventures announced our latest investment. The company is Matroid, the category leader in computer vision software. Matroid plans to leverage the new funding to accelerate product development and go-to-market expansion in manufacturing, industrial IOT (IIOT), and video security markets.
The Energize Ventures “Why We Invested” post can be found here. And is also re-posted below for ease.
This investment is an emblematic “Energize investment” with excellent leadership, technology-enabled product advantages, and clear commercial & market awareness. I am thrilled to be working with Reza Zadeh over the coming years.
If you are a reader and in the energy and industrial vertical, you should explore how Matroid can make computer vision accessible and valuable to your organization. We have been showing the power of Matroid to our LPs and energy & industrial network and the adoption is very strong.
Quotes from the Press Release
“Enterprises have tasted the value that software-defined sensors can provide, but are also feeling the pain of rolling out a conventional computer vision team,” said Reza Zadeh, CEO and Founder of Matroid.“Deployments of CV are constrained by Machine Learning engineering time, operator training time, camera interoperability, scaling AI computations, and the difficulty of iterating on neural networks performing important tasks like detailed inspection. With the Matroid product, we set a new standard for ease of use in deploying sensors. With this funding we are excited to take the next steps to bring software-defined sensors to manufacturing and industrial IOT enterprises.”
“Reza and the Matroid team are building a world-class platform that marries the expertise of engineers and operators with next-generation computer vision technologies and machine learning algorithms,”said John Tough, Managing Partner of Energize Ventures. “The Energize team is excited to deploy our financial, operational and industry capital to help Matroid capture market share in energy, industrials and IoT.”
“As the renewable sector continues to grow, we must be on the forefront of new innovations and tools to push us into the future —new digital technologies like Matroid will expedite the energy transition”said Michael Polsky, Founder and CEO of Invenergy. Invenergy is a leading privately held, global developer and operator of sustainable energy solutions, and currently uses video data captured from drones to analyze the state of its wind turbines and other renewable energy sites.
WHY WE INVESTED
Energize Ventures is thrilled to lead the $20M Series B investment in Matroid, a category leader in computer vision software. Existing investors NEA and Intel Capital also participated in the round. Energize Managing Partner John Tough joins Matroid founder and CEO Reza Zadeh along with existing board member Pete Sonsini on the company’s board.
Matroid’s platform makes it simple for enterprises to rapidly deploy computer vision solutions to help automate the process of analyzing imagery data. In a “drag-and-drop” fashion, the software enables domain experts to train machine learning-based detectors that can automatically analyze vast visual data sets, eliminating the need for a data scientist.
Unlocking value in energy and industry
In energy and heavy industry, the physical world is increasingly documented by drones, cameras, satellites and other remote sensing technologies, creating a new bottleneck in analyzing the volume of imagery. Currently, many firms turn to teams of overly-qualified technicians and engineers to manually review troves of images – which is not only inefficient and costly, but also non-scalable and oftentimes inaccurate.
Computer vision is primed to dramatically improve efficiency and safety in these verticals. All energy and industrial companies perform inspections of their infrastructure, plants and equipment on a regular basis to conduct preventative maintenance and pre-empt failure. For example, wind farm operators typically inspect each wind turbine once every three years to identify cracks, lightning strikes, corrosion and other defects that might cause failure. Worker safety and compliance are also core principles for firms operating in dangerous environments. Computer vision can help ensure workers are wearing protective safety gear or identify dangerous gas or chemical spills invisible to the human eye.
Matroid: Making computer vision simple and accessible to everyone
CEO Reza Zadeh launched Matroid in 2016, applying decades of research on computer vision and machine learning approaches to deliver a simple and intuitive solution for enterprises. Reza and the Matroid team recognized early on that typically only internal experts at a company possess the knowledge required to create, tag and deploy well-functioning computer vision solutions. However, most firms lack the experience and/or resources in data science and machine learning to integrate computer vision into their operations in a scalable, repeatable manner. To make better use of their imagery data, they needed a better computer vision tool. Enter Matroid.
An award-winning team obsessed with customer needs
Today, Matroid serves customers across manufacturing, energy, government, retail and security by helping reduce operating costs and increasing efficiency, safety and regulatory compliance. Its growing team of nearly 20 software engineers and data scientists draws from leading machine learning institutions such as Stanford, Carnegie Melon and MIT. In 2019, the company was named a “Cool Vendor” in AI Core Technologies by Gartner. Matroid currently partners with corporates such as Dell, HP Inc. and Eagle Eye Security offer a fully integrated solution across vision hardware, compute, networking and Matroid’s software.
Energize believes computer vision will play a central role in harnessing the expertise of engineers and operators to digitize inspection, compliance and safety, quality assurance, construction and more. With the Series B investment, Matroid will continue developing its enterprise computer vision product features, expand sales, marketing and customer success, and double down on industry-leading research in applied machine learning. We are excited to help Reza and the broader Matroid team build the future of computer vision!
