Fund in the News: Statoil Energy Ventures

Statoil Energy Ventures (SEV), the renewables and low carbon-focused corporate venturing fund recently launched by Norway-based energy company Statoil, will look to build a portfolio of up to 25 companies in its lifetime, managing director Gareth Burns has told Global Corporate Venturing.

“We have set out that we are looking to invest $200m over a period of four to seven years,” Burns said. “What we anticipate is we will build a portfolio of 15 to 25 companies in that time, so an average investment size will be about $10m. Saying that, it will depend on the investment stage of the company, so we expect our individual ticket size to be in the range of $1m to $20m in a company.

“We are looking to invest in early and growth-stage companies so we are not really looking at seed funding as such, it is slightly later than that. We would want to take a minority equity interest in the companies, but then actively support and engage with them to help them succeed. We are generally looking at maybe a series A round, but probably also a series B round and beyond.”

Statoil has long been a participant in corporate venture capital through its Statoil Technology Invest unit, which will continue to fund traditional energy technology, but the formation of SEV earlier this year reflects Statoil’s desire to introduce a specialised fund capable of focusing entirely on cleaner energy innovation in order to maintain a foothold in a developing part of the energy industry.

Although it will by necessity target companies where there is a realistic chance of an exit, SEV has a wider strategic brief that can essentially be broken up into three distinct areas, Burns said, citing the fund’s first investment, in distributed wind energy company United Wind, as an example.

“The first is around working our existing renewable operations,” he explained. “We have built up our position in offshore wind over the last five years or so and we want to help maintain that position through new venture capital investments.

“The second purpose is growth, and the growth needs of Statoil. We want to evaluate new business opportunities, for example within the solar and onshore wind value chains, and we will look to identify and develop business models that drive investment and demand for our core products. United Wind is in that second bracket a little bit, and it is giving us hands on insight into the onshore wind market.

“The third purpose would be impact; we want to explore the high-impact technologies and business models that could potentially disrupt the utility market in the future. United Wind with its distributed generation and the new business model around it links nicely into that, so again United Wind in that respect was an ideal first investment for us because it was able to hit two of our investment purposes.”

Statoil’s approach to energy still centres on oil and gas, though Norway’s location and the company’s experience in offshore infrastructure makes offshore wind a natural fit, and it is co-developing some considerably sized projects off the coast of the UK.

The group is seeking to invest in companies with technology that could facilitate those offshore wind activities, with software and new turbine designs being considered as options, but it is also looking to boost its solar and onshore wind capabilities as well as its presence in other sectors more directly related to the grid.

“If you look at transportation, we anticipate a significant increase in the penetration of electric vehicles,” Burns said. “At Statoil Energy Ventures we want to evaluate the entire value chain to understand how that is going to impact the demand for our core products in the future.

“Another area we are looking at is around energy storage. If there is a way of combining energy storage with solar or wind that is scalable and commercial, that has the potential to turn the grid green and it is something we are looking at to see how we could participate in some way.”

– Photo courtesy of Statoil ASA