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Energy Transition Ventures is launching the first venture capital fund in Texas aimed at funding startups that can help the transition from fossil fuels to clean energy.
The Houston-based fund has closed its first capital raise in February and is targeting a total fund size of $75 million.
As rapidly falling costs in key energy sectors have made it cheaper to build renewable power technology than run fossil power plants, Energy Transition Ventures will invest in energy transition technologies. Founded in the world’s energy capital by cleantech startup executives and venture capitalists Craig Lawrence and Neal Dikeman, the fund received an anchor investment from two operating companies from the GS Group of South Korea.
The fund is investing in early-stage startups in North America. Investments will focus on companies driving or benefiting from the energy transition away from fossil fuels, across categories including distributed energy, electrification, mobility, and resource efficiency. The fund made its first investment in March.
In the past, Lawrence and Dikeman helped manage cleantech investing at Accel Partners, Jane Capital, and Shell Technology Ventures, as well as holding operating roles in solar and smart grid startups. During the first cleantech wave, Dikeman was also well known in the sector for authoring CleantechBlog.com and starting the Cleantech.org network.
Lawrence and Dikeman formed the fund in recognition of the disruption occurring across the energy industry due to the significant cost reduction in renewable energy technology (solar, wind, energy storage); decarbonization efforts by both business and governments; and the development of network, computing, and intelligence technologies applicable to the energy industry, said Lawrence in an email to VentureBeat.
“These trends are making it possible for new entrants to enter the energy sector in ways that were previously not possible,” Lawrence said.
After witnessing the challenges and opportunities in this sector, Lawrence and Dikeman decided to get “off the bench” to launch a new early-stage fund in the sector, Lawrence said.
GS Futures managing director Tae Huh said in a statement that this is the first investment from the new GS Futures fund in Silicon Valley. The firm’s parent company is the energy, construction, and retail conglomerate GS Group of Korea.
Dikeman said in a statement that the 500 multi-billion-dollar energy companies globally are going to be disrupted in the energy transition. Those companies are spread across energy and power, transport, real estate, industrial, consumer, and agriculture. As Texas is an energy capital, a focus in the state made sense.
“We view the energy transition as a broad shift in fuel sources (from fossil fuels to renewable, carbon-free sources) and fundamental changes in how energy is generated, distributed, and consumed — shifting from a centralized, highly regulated set of technologies and markets with passive consumers to much more distributed, intelligent, and networked technologies and markets, and more active consumers,” Lawrence said. “We are investing across multiple themes, including electrification, distributed energy, mobility, and resource efficiency. Some specific examples of areas we are focused on are resiliency — how we make the electrical grid more resilient to disruption, and electric vehicles — [and] what ecosystem technologies and products are needed to support the massive shift underway from gasoline-powered transportation to electric transportation.”
Energy Transition Ventures also announced that Jon Wellinghoff, former chair of the Federal Energy Regulatory Commission, and Deb Merril, former co-CEO of Just Energy, have joined as advisors. GS Energy executive Q Song has moved from Seoul, Korea to join the Energy Transition Ventures investment team in Houston.
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