The German energy company E.ON, which counts over 50 million commercial, residential, and industrial customers, has created a new EUR250 million ($265 million) investment fund called Future Energy Ventures to invest in “asset-light” tech startups.
As utilities move to decarbonize their sources of energy generation they’re coming to the realization that they will need exposure to a range of technology companies that can orchestrate, integrate, and manage power that’s coming from increasingly distributed sources. It’s a shift away from a century’s worth of energy infrastructure that relied on large coal and natural gas plants for generating the electricity that powered homes and businesses. And it’s a change that requires exposure to a range of new technologies being developed by early stage companies, according to E.ON executives.
At E.ON, the new fund will be led by Ines Bergmann-Nolting and Jan Lozek, two longtime company executives who have been investing off the company’s balance sheet into early stage businesses already. In fact, the fund launches with five companies already in its portfolio — Bidgely, Holobuilder, Intertrust, Thermondo and T-Rex.
The move to create a formal venture fund rather than just investing ad hoc off of the company’s balance sheet means that E.ON can ideally create a consortium of large investment partners that will be able to roll out and commercialize the technologies being developed by the companies in the portfolio, Lozek said.
“We will need more capital and more partners to invest in the best companies globally. That’s why we made our structure to potentially embed other partners,” Lozek said.
The company sees a breakdown between the networks that startups need and the traditional model of venture capital, Lozek said. Large industrial partners like E.ON can provide not just investment, but access to a whole range of commercial and industrial customers and the regulators whose support startups need to bring new technologies to market.
“Businesses need more than just money to succeed,” said Bergmann-Nolting, managing partner at Future Energy Ventures, in a statement. “They need collaboration, mentoring and the opportunity to partner with other organizations that can help them achieve scale. We seek to actively create value by bringing together dynamic and innovative start-ups, E.ON and affiliated businesses, and a growing set of partners and to create meaningful impact for mutual financial and strategic benefit. Use-case potential forms a key part of our investment decision-making and we aim to facilitate and support pilots and use case roll-outs within E.ON and across our ecosystem of partners for systematic scaling across the portfolio.”
Future Energy Ventures will look to lead deals and will take as much as a 10% equity stake in the companies it backs, according to Lozek. The firm will focus its investment activity on Europe, the U.S. (primarily Silicon Valley) and Israel and will look to back asset-light companies developing technologies in three areas.
Lozek defines these areas as “future energy”, or the interconnected system that will sit on top of existing energy infrastructure; cloud cities, the integration of that energy infrastructure into urban environments; and finally frontier technologies, which could include new machine learning models, or new cybersecurity technologies to protect increasingly digital assets.
