EDITOR's NOTE: Something unusual is happening in the Chicago energy world. An innovative utility, a forward-looking mayor and his team and a growing ecosystem of entrepreneurs and creative suppliers and vendors are whipping up an electrical renaissance. One facet of the story is presented here by Jason Blumberg of the Energy Foundry. The entire Chicago scene will be explored in great depth at our landmark gathering, Empowering Customers & Cities, in Chicago November 4-6. Do be a part of it.
We hear a lot about how the land of magic unicorns (aka Silicon Valley) is the source of all new innovation and how the cleantech (aka energy) venture capital business model is dead.
Everyone in Silicon Valley can tell you why we need that 102ND social sharing site that sells excess inventory because it leverages an Uber-like approach and is built on a disruptive machine-learning virtual cloud-based big-data platform. And, everyone can tell you a war story about someone who lost a bundle of money during the cleantech boom and bust.
However, the energy industry is a $6.1 trillion industry where global demographics drive ever increasing demand. It is an industry with major companies spread across the United States and deep roots outside of Silicon Valley, anchored in the industrial Midwest, and it spends heavily on research.
Moreover, the energy industry was a sleeping giant that has recently been awoken by the noise of new innovation impacting its future. Combined this creates a valuable, untapped opportunity.
Energy Foundry was formed taking into account this massive opportunity and the many hard lessons learned by others, including that you cannot simply take the web & digital venture capital model and apply it to energy.
Supported by energy thought leaders from corporations, research institutions, nonprofits, investors, and Illinois government and funded with a $22.5 million investment from ComEd and Ameren Illinois, Energy Foundry has a new model for energy venture capital.
Only a few years old, Energy Foundry is already starting to show real results, turning innovation into high growth companies, changing the industry landscape and debunking the idea that energy venture capital investing is a bad idea. Our companies have gone on to raise over $100 million in direct and indirect capital, we’ve had a triple digit IRR exit and our portfolio looks strong.
We invest venture capital in the most promising energy innovations and take a unique approach to unlocking their potential. We invest capital at the right time and in the right amounts, which solves some of the pain points that have plagued cleantech & energy venture capital in the past. We don’t expect unicorn ($1B+) acquisitions in our industry and so we capitalize our companies accordingly.
In addition to capital, we provide our companies with a complete set of support resources designed to accelerate progress, and help entrepreneurs focus on their core offering.
These resources include a centralized suite of over 20 plug-and-play tools that makes it easy for start-ups to manage administrative hassles; access to and advice from over 30 partner organizations; and testbeds that offer lab-to-living room environments to test out technology and garner 3rd party validation.
We also co-founded a physical hub, “Coalition: Energy,” which houses over 35 companies, a few of which have raised an astonishing amount of money, and which hosts numerous events and has over 10,000 visitors a year.
To foster the next generation of potential investments, we’ve made our support resources open to all energy entrepreneurs. Further, we provide business model feedback to about 125 companies each year and, through our partnership with the SBA-funded Smart Grid Cluster, we actively mentor 40 companies.
With support from ComEd we’ve built an “Entrepreneur- and Executive-In-Residence” program where accomplished experts donate their time to provide advice to budding entrepreneurs. Lastly, we help support and enable over a dozen business model development platforms as board members, judges, mentors, sponsors, and advisors.
Energy Foundry’s new approach to energy venture capital is grounded in building a better path forward. We consciously harness our ability to be the connective tissue, bringing together players from across the industry to transform it, by investing venture capital and launching the next great energy innovations.
Interest from across the globe is allowing us to expand our impact, so we see a bright future for energy innovation and we hope you will, too.
Jason Blumberg , @JasonBlumberg, is the Energy Foundry chief executive officer and managing director.