Posted: 7 August 2013

A capital idea?

venture, capital, energy, innovation
BrightSource Energy

By directing solar heat to steam generators using computer-controlled mirrors, VantagePoint company BrightSource Energy is near completion in the Southern California desert on the world’s largest solar power plant, and has plans to build similar plants worldwide.

Collaboration between investors, start-ups and large corporations is essential if we’re going to solve the world’s energy challenges, says Lee Burrows. The applied physicist and managing director at Vantage Point Capital Partners, a venture capital firm in Silicon Valley, USA, explains why his firm’s partnership with National Grid is ‘a very cool thing to do’.

When VantagePoint was established in the mid-90s, we were a venture fund specialising in IT, software, telecomms and healthcare. It wasn’t until the early 2000s that we moved into the energy innovation and efficiency space and started working with utilities like National Grid. Many other firms shied away from the sector, mistakenly seeing utilities as slow-moving, not willing to change and simply there to be manoeuvered around for short-term financial return.

Lee Burrows

VantagePoint’s Lee Burrows

But for us, the opportunity was clear. The energy sector is one of the world’s largest markets: a massive industry with massive opportunities and one that can have a hugely positive impact on the welfare of the planet. Since then we have worked with our energy partners to build effective business ecosystems: balanced and mutually-rewarding relationships of strategic expertise, knowledge-sharing and problem-solving that hone technology and help solve the big challenges the industry is facing.

Incubation time

Each utility is different, so with National Grid, we spent a lot of time talking to them about their specific problems, then using our portfolio of businesses to create the right solutions. This is what we call ‘incubation time’ and the successes of Next Step LivingTM and Premium Power are good examples of how listening to your partners and assembling the right kind of expertise over time can be so worthwhile. This takes patience. Firstly to understand the specifics of the technology, and secondly to break into an established, heavy-regulated industry like utilities. I cut my teeth on the entrepreneurial world back in the ‘datacomm’ boom of the 90s and I learned then how difficult it was to work within an industry that was so constrained by regulations. So we like to first ask partners what problem they are facing, what we can work on together and then go from there: it’s all about playing the long-game. The right attitude is so important. You need to have the desire to understand your partners’ specific problems: trying cookie-cutter solutions in an industry as complex as utilities is a non-starter. At VantagePoint, our philosophy is to see our partners as experts who can educate and enlighten us into new opportunities: that’s the kind of mindset that makes a difference.

Starting the conversation

Our partnership with National Grid is testament to this. We have a special relationship with this business and it would be very difficult to reproduce the dynamics of what we do. Every utility is at a different stage. Some are ahead of the curve in certain areas but not in others, so the value VantagePoint can bring is by starting the conversation between different organisations that will benefit everybody in the long-run. The advantages are huge. If you pick the right partners, develop the right solutions you can get a good financial return, plus the knowledge you’re doing a good thing by bringing energy efficiency and stabilisation to huge populations. That’s a very cool thing to do. In the future, I believe there will be more and more collaboration between investors, start-ups and large corporations. As a venture capital firm, our responsibility is to keep bringing these people together and ask: ‘What are the broad global energy problems we are facing, and how can we solve them?’ In my experience, such relationships are tremendously productive and exciting. The industry will inevitably roll this way and I think everyone who has a stake in its future should pay attention to what National Grid is doing.

Gas innovation in full flow
“You need to have the desire to understand your partners’ specific problems: trying cookie-cutter solutions in an industry as complex as utilities is a non-starter.”

Lee Burrows, VantagePoint Capital Partners