A profound review of what startups should know about the energy CVCs and their investment policies
Helen Ventures' Vice President Terhi Vapola and Inventure's Managing Director Sami Lampinen were discussing about the investment opportunities in the energy sector together with Helen's CEO Juha-Pekka Weckström in Helen's "Uutta Voimaa" -podcast. Read below the recap of the discussion or listen the episode.
It’s all about the team and its drive
What are the most important things that venture capitalists pay attention to in the energy sector? In Lampinen’s opinion, when looking at any startup, it is all about the team and entrepreneurial drive. Venture capitalists always invest in teams and give them the energy to take their business forward.
Lampinen himself looks for very simple mechanisms of impact: bottomline reduction or topline growth. He says that the energy sector is not the most typical industry in which venture capitalists work but that revolutionizing existing value chains in the energy sector is a huge opportunity. The most exciting opportunities for startups that Lampinen sees are close to the customer, and especially addressing a global consumer potential for example in energy efficiency.
Helen Ventures provides startups the means to transform energy industry
Helen Ventures is Helen’s corporate venture capital arm. How does our work differ from venture capitalists and what do we invest in? According to Vapola, the same rules, methods and approaches apply than in the venture capital investments. However, energy sector corporate venture capital firms, CVCs, bring something more to the equation: sector insights, networks, ability to manoeuvre in the energy sector, and also piloting opportunities, data and customer access. The objective is to bring about fundamental change and transform the energy industry.
Helen Ventures invests 50 million euros in the European startups in e-mobility, renewable energy technology, smart energy solutions, distributed energy solutions, circular economy, decarbonization and digital solutions applicable to the energy sector.
Tolerating risks to enable innovation
How can startups make an impact in the conservative, even dull utilities? Utilities are not dull, but of course regulated, Lampinen says. One of the enablers of success is building ecosystems as open as possible. Startups can play a role in initiating these ecosystems, and bringing competing utilities, corporations, integrators or software players together. Initially, the ecosystem may not be a big business for the startup but it can be a way to build awareness and momentum.
But what about the risk of failures? Venture capital and corporate venture capital firms alike filter through a huge number of companies, select a top few, and build portfolios of startups over time. Vapola says that anyone investing in early phase companies is playing in a world that is highly uncertain and is betting on trends that are happening in the industry. The investment timeline is 5‒10 years ahead and anything can happen. Therefore, it is expected that failure is a part of the innovation process.
More focus on sustainable investment
When it comes to the current global situation and its impact on venture capitals and startups, Lampinen is optimistic. Everyone has become more conscious of the environment, the use of energy and sustainable investing. These themes are becoming more valid than just a few years ago.
Also, despite the global pandemic, funding has not dried out. There is a lot of money in venture funds, corporation and family offices, and they are constantly looking for new opportunities.
Deal-making is currently taking slightly longer, as investors do not get to meet the teams face-to-face, but new tools are utilised to get references, to get to know the teams, and to make the investment decisions.
Startups are all about promise for the future
What differentiates the most potential companies among hundreds of startups? Vapola emphasises the product/market fit.
You need to be smart and able to spot the opportunities in the changing environment that are big enough in the market, growing fast and scalable. You have to develop a product that solves a fundamental problem that is important enough that people are willing to pay for it.
But once more, Vapola emphasises the team, its vision and its execution capabilities. Startups are all about promise for the future, and it takes exceptional people to make it happen.
Do you have a promising idea and an excellent team? We are interested in hearing about you!
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