What drove you to invest in EnerG2?
It’s been several years since EnerG2 first presented to Element 8 and looking back on the deal we felt very strongly about the company’s product offering and thought it fell squarely in our wheel house. EnerG2’s tech was spun out from the University of Washington which meant that we’d have access throughout the DD process and the ability to support home grown technology. As the process continued and we learned about EnerG2’s technology, we really believed it had the potential to disrupt multiple market verticals – specifically electric vehicles and renewable energy.
What excited you about this opportunity and provided you the confidence to invest in the company multiple times?
There is a mantra in angel investing, ‘invest in the entrepreneur, not the idea’. The experience and leadership of EnerG2’s team provided us the confidence that they’d do whatever was necessary to make this company a success. Throughout our initial due diligence process they invested the time to listen to our members’ concerns and thoroughly answer our questions. Since that first round of funding, those same leaders have been receptive to the advice of investors during the hard times. At the time of our first investment, there were also a couple of venture capital firms willing to invest and it speaks volumes for the company, leadership and product that those same VC’s have continued to make successively larger investments on multiple occasions in the years since.
In what ways does EnerG2’s business align with Element 8’s mission and investment goals?
As I’m assessing companies for my own personal investment, I like to know that the company aligns with my values and the values of Element 8. EnerG2 checked that box for me. Perhaps more importantly is the fact that EnerG2 provided investors an opportunity to make a significant impact for the environment without any tradeoff of returns. The capital invested in EnerG2 has been a multiplier for the company – it has created dozens of high paying jobs in the Northwest and the environmental impact potential increases every day.
What has allowed EnerG2 to succeed throughout the years and now, establish this partnership with BASF?
One word – innovation. Despite the challenges that they’ve faced, the EnerG2 leadership has continued to innovate and move the company forward. While the market for their initial market didn’t develop the way we expected, the company was able to pivot and begin development of a carbon anode technology that increases performance of lead acid batteries.
How do you see the market for clean tech investment evolving in the next 3 years?
I’m very optimistic about where clean tech investment will be three years from now. Cleantech and renewable energy are going mainstream and I believe there are three strong indicators of this.
First, capital is becoming more readily available to clean tech ventures – specifically from corporate and institutional sources. The financing mechanisms available to cleantech just four years ago often required creative thinking, but now the same vehicles that finance traditional energy are available to cleantech and renewable energy. Companies like Solar City are raising funds through the issuance of “clean” bonds and, most importantly, there is significant demand from investors.
The second driving force is interdependent on the first one. In the last couple years, we’ve seen grid scale renewable energy generation reach price parity with fossil fuel alternatives. Across the southwest United States solar energy costs have decreased significantly and have remained cost competitive even in the face of falling natural gas prices. Similar trends are happening across the country as wind energy costs drop. This is a huge milestone, but unfortunately it’s not true everywhere – yet.
Finally, we are seeing a paradigm shift among investor sentiment towards impact investing – which cleantech is a subset of. More and more individuals and institutional investors care about capital having a double bottom line return, and realizing impact and profit aren’t mutually exclusive. This means that individuals and institutions are investing their time in organizations like Element 8 and we, in turn, are investing in companies like EnerG2.
Are you reading any good books right now?
Read our Q&A with EnerG2 CEO, Rick Luebbe, HERE.