Chernova’s Take: Energy, Clean-Tech Investors Widen Perspective
Firms are expanding beyond their traditional sectors
The Wall Street Journal
Clean-tech and energy investors are redefining traditional definitions of the sector.
Case in point: Last week, car-sharing startup Getaround Inc. raised $45 million. “Transportation is one of the biggest users of energy,” said lead investor in the deal Neil Suslak, managing partner at Braemar Energy Ventures, which previously invested in solar, fuel cells, biofuels and batteries.
Mr. Suslak said the traditional model of energy investing in transportation has been difficult, including long timelines that often didn’t pan out for venture investors, until the emergence of connected-car and autonomous-car technologies.
Braemar Energy is hardly alone in expanding horizons for its stakes. Kleiner Perkins’ Green Growth Fund has backed companies like Getaround competitor Turo. The team is splitting off to form a new fund, as WSJ Pro Venture Capital first reported. Silver Lake Kraftwerk, meanwhile, invested in an online platform for booking train, bus and flight tickets, GoEuro.
“It’s not so much a shift in focus but a move to where the market is going,” Mr. Suslak said. He added that Braemar Energy has existing relationships with fuel and auto companies that are coming in useful for Getaround.
Getaround says that it’s helping solve the inefficiency problem in transportation, and claims that every car on Getaround takes 10 cars off the road. Likewise, Uber says it is reducing traffic by minimizing cars.
This raises a basic question: what doesn’t constitute an energy-related investment?
Getaround’s business is certainly not focused on using or producing energy. It wouldn’t be included in, say, the S&P 500 Energy Index. Rather, it’s a type of an online marketplace—a promising area for many VCs.
Meanwhile, the team behind Kleiner Perkins’ Green Growth Fund’s new fund will focus not on cleantech but rather on industrial technologies. The new firm on Monday filed with the Securities and Exchange Commission to raise a $275 million fund under the name of G2VP I LLC.
It’s natural for these firms to go after startups they like, even if they don’t fit squarely into their original theses. Their expertise in energy can bring useful connections to adjacent sectors.
But doing such deals can also undermine their raison d’etre. The firms will need to justify how they are differentiated, as well as admit that the opportunities they expected in clean-tech and energy haven’t quite materialized.