INNVOTEC GREENBACKERS CLEANTECH FUND MESSAGE FROM ROBERT HOKIN - GREENBACKERS INVESTMENT CAPITAL’S CEO
Dear Investor, Resource pressure is an ongoing and intensifying challenge. By 2050 our global population will increase to an estimated 9.7 billion (vs 7.5 billion in 2017) with half of us living in cities. Meeting the clean water, clean air, power, heating/cooling and transport needs of such a global increase will put enormous pressure on how we utilise our resources across sectors as diverse (and not limited to) energy, food production and distribution and the management of waste. Many of today’s most forward-thinking companies have recognised and are responding to the challenges and opportunities this expansion creates, not least because the market for CleanTech Investment is changing. A decade ago, CleanTech Venture Capital investment focused on funding risky inventions, backing companies attempting to solve big, scientific problems, eg. building efficient solar panels or creating clean biofuels. This proved a mismatch for investment but it had a silver lining. Developments in innovation and expertise in the sector means there now exists a broad range of technology businesses able to operate cost effectively and available to invest at reasonable valuations. Today’s new wave of CleanTech businesses focus on finding applications and solutions rather than innovation for innovation’s sake. They take existing, core technologies and combine them with software, the cloud, and sensors to build new products and services with a demonstrable need. The companies that succeed in this sector will do what smart technology businesses have always done: focus on customers and disrupt markets by working creatively with existing models. Innovation can take hold quickly in this sector, producing technologies with the potential to generate significant returns. 15 years ago Tesla Motors was a start-up, it now has a market cap larger than Ford and is trading places with General Motors. Other growth stories include: • Push Energy: a developer and engineering, procurement and construction contractor with permission to build some 140MW of solar farms, of which 92MW has already been constructed. Low Carbon Innovation Fund (LCIF) sold its original £750,000 holding for £1.87 million as part of a recent share buy-back, netting close to 2.5x its original investment and a 60 percent internal rate of return. Push Energy was pre-revenue when LCIF invested. • E-Car Club: the UK’s first all-electric car club bought out by Europcar, Europe’s leading car rental company in 2015. Prior to this, in 2013, 63 people jointly raised £100,000 to support E-Car Club’s development in exchange for 20% equity in the company. E-Car Club went on to raise a further £500,000 from Centricabacked social impact fund Ignite before being acquired by the European brand for an undisclosed sum. • Ceres Power: a developer of low cost, next generation fuel cell technology used in decentralised energy products. In 2016, after 10 years developing their technology, Ceres Power raised £20.0 million in an AIM IPO. New money is flowing into this sector. In the USA, Andrew Chung, a former partner at Khosla Ventures, launched his 1955 Capital Fund in 2016, raising some $200 million to be invested in technology which helps solve energy, food, and agriculture challenges in the developing world. Another new fund, Energy Ventures, will take minority stakes in start-ups developing technologies including wind power, energy storage, and smart grids. Statoil ASA, the Norwegian oil giant, plans to invest $200 million in renewable energy and IKEA Ventures over $500 million. A challenge for many UK innovators in CleanTech, however, is finding and accessing the necessary funds and capital support often so critical to successfully scale-up to meet increasing demand. Paradoxically, capital appears to be thinnest precisely where it is needed the most: to prime the pump of company growth. The Greenbackers Cleantech Fund will function to address and exploit this gap.
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