Startups and VCs in the era of energy transition
We see unprecedented changes of the energy market. And we believe startups will surely accelerate the energy shift to renewables under such key words as digitalization and optimization using smart meters; the IoT; AI technology; the shift to EV; and the decentralized smart grid. It is the age of energy transition.
Some visionary venture capitals (VC) have already started to back them up with a long-term perspective and patience. It was a big news when Bill Gates, Jeff Bezos, Masayoshi Son and other investors founded Breakthrough Energy Venture (BEV) to back up startups in the energy storage in 2016. Last year they announced investment to two energy storage startups; Form Energy and Quidnet Energy.
- Form Energy, a startup founded by a former MIT professor and a Tesla engineer, is developing a new type of battery that can store renewable energy for months at a fraction of the current cost.
- Quidnet Energy, on the other hand, like conventional energy storage efforts, uses hydro to do so, but pumps the water into underground shale rock wells to create pressure instead of moving the water up to reservoirs (both ways then release the water to power turbines).
Part of BEV's mission is to provide "patient capital." That means BEV is willing to forgo returns on investment for up to 20 years to give the scientists and engineers at startups a reasonable lead time to develop world-changing technologies. BEVs portfolio includes also Fervo Energy who is developing geothermal power plants using cost-effective techniques and new technology based on research from Stanford Univ. and Quontum Scape, developer of solid-state batteries, among others.It is said the fund‘s total investment amount is $1 billion.
According to 2019 edition of the "Forbes 30 Under 30", annual list chronicling the brashest entrepreneurs, about half of 30 young entrepreneurs listed in the "energy" category deals with energy storage. Timothy Latimer(28), Cofounder of Fervo Energy, is in the list.
In the field of autonomous driving, Aurora, a self-driving technology startup created by three marquee researchers in that field, raised more than USD 530 million in a funding push that brought in retail giant Amazon as an investor.
In Germany, collaboration between energy/utility giants and startups who develop innovative technology is becoming common. The Oxygen Initiative is a joint venture with German leading energy company innogy and KnGrid, an American startup that is looking to integrate the grid and EV. Using an electronic wallet, Oxygen’s service Share&Charge enables people to share their charging stations with drivers who pay for usage via blockchain technology.
In Japan, we would like to showcase two startups born from universities. Exergy Power Systems is a startup originating from Tokyo University developing, producing, and providing next-generation energy storage systems that make use of its uniquely developed hydrogen cells. They will contribute to the realization of stable energy systems and the introduction of renewable energy systems, which are seeing increased demand due to the Paris Agreement. UTEC, (The University of Tokyo Edge Capital Co., Ltd.) is a seed/early stage technology focused VC associated with academic institutes such as Tokyo University and invested in Exergy. (Invest amount is not disclosed.) The "Future Creation Fund" operated by Sparks Group and invested by Toyota Motor and Sumitomo Mitsui Banking Corp., executed investment of approximately JPY 500 million to Exergy Power Systems in 2016 and it is their first investment to energy storage startup.
ENECHANGE, an energy management and meter IoT startup, is based in Tokyo and is currently the largest online energy-switching company. Its group company, SMAP Energy, is based in the UK, born in the Cambridge Energy Data Lab and is a software platform for energy utilities to gain customer insight from energy big data. Both companies help to reduce the cost of energy by using the energy AI algorithms. Yohei Kiguchi serves as CEO of the two companies and was listed as one of the Forbes ‘30 Under 30 Europe’. SMAP Energy received GBP 22.000 funding from E.ON and will develop a pilot for future collaboration between the two firms. ENECHANGE raised JPY 700 million from Showa Shell, Sumitomo Corporation, et al in October and JPY 100 million from VCs consisted with local financial institutions in November, 2018.
Though their origin is in Japan, both startups look quite the same as they think global. We expect seeing more VCs support brash startups and help them develop world-changing technologies with “patience.”
ESSJ will showcase promising startup(s) as a speaker to our conference and seminar on June 5. Don’t miss it!
・Backed by Bill Gates and Jeff Bezos, Breakthrough Energy Ventures places first bets on power storage
・Forbes 30 under 30 2019 -Energy-
・Aurora Innovation self-driving startup scores big Amazon investment
・Exergy Power Systems, Inc.