It is always interesting to see more organisations with corporate links getting involved in venture investing.
Last week, the latest entrant to early stage investing was UK-based public-private partnership Energy Technologies Institute, which made its first equity investment in a private company by backing UK-based energy storage business Isentropic with £14m ($22m). The Energy Technologies Institute typically commissions and funds its projects working with consortia.
The deal puts six well-known corporates with a presence in the UK, in another corporate venturing-style relationship. Energy Technologies Institute is backed by institutions including the UK government and blue chip businesses BP, Caterpillar, Eon, EDF, Shell and Rolls Royce, and was set up to help the UK meet its 2050 climate change targets.
The trend of such organisations getting involved in venture investing, increases corporate links to start-ups. It will be interesting to see if this kind of corporate venturing-lite, throws up strong links to the corporates which work with such organisations.
Any development which does is likely to be welcomed in the UK. One UK executive at our Global Corporate Venturing Symposium last month bemoaned to this writer the slow speed of corporate Britain to get involved in corporate venturing, compared to investment by European, US and even Asian institutions.
While a cynic might chip in that only two of the companies behind the Energy Technologies Institute are "British" (BP and Rolls-Royce earn the majority of their revenues overseas while Shell is an Anglo-Dutch oil major), it arguably also points to how the UK is a more globalised economy than most of its European peers, and that powerful international groups are keen to join such organisations in the UK suggests a seriousness about mixing business and state.
Mark Wagner, chairman of Isentropic, said corporate involvement in the Energy Technologies Institute meant the organisation both was a more serious investor while at the same time it caused additional hurdles for the transaction. Wagner said: "It makes the investment more credible. They looked at our technical stuff and decided it makes sense. On the other hand, essentially some of them are competitors, which added some legal and intellectual property over-head, as we are generating an awful lot of intellectual property."
So far, he says it is unclear how much benefit the corporate involvement will bring to Isentropic. He said: "We have interaction with them. We see them and talk to them. It is a bit early for us to say what it means."
Isentropic stores energy in gravel, so it can be used later on by energy businesses. Wagner says Isentropic believes its use of gravel to store energy, means it will be an attractive option, because the process is relatively cheap, compared to businesses which use complex chemicals like batteries. He said other more expensive technologies have a market problem. "If you can generate electricity cheaper than you can store it, why would you bother storing it?"
David Clarke, chief executive of Energy Technologies Institute (ETI), said: "The ETI chose to invest in Isentropic based on its confidence that the company has the potential to be successful and deliver a viable project in the future. The technology in development offers huge potential for both energy security and reducing carbon emissions within the UK. Both Isentropic and ETI believed that the best way for the Isentropic technology and company to develop, with our joint aim of the technology being developed and commercialised, was for the ETI on this occasion to take a non-controlling equity stake in this promising company."
