Venture capital professionals will learn nothing from the Breakthrough series. However, if you are looking for emerging technologies that may help your organization, it can be helpful to see what the CVC-Corporate Venture Capital professionals have identified as interesting startups.
This post focuses on companies that the venture capital arms of oil & gas corporates have added to their portfolios.
TIP: Google® "venture capital" AND (petroleum OR oil OR gas OR hydrocarbon)
One article resulting from the search includes a table detailing recent investments by the venture capital arms of the oil majors as of 2018. Granted, we are half way through 2020. But grant you me, they are investments in companies that are still in their formative stage. Some will not survive. Others will.
We can learn from the oil majors in two ways.
- Specific companies the majors have chosen to invest in may provide opportunities for other companies that are looking for creative solutions to their technical problems.
- The companies, even those that do not survive, can suggest the long term thinking of the oil majors that take a chance on these companies. That can offer guidance in the strategic thinking of companies with less muscle than that of the majors.
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Oil And Gas Corporates Are Investing In Clean Tech, Analytics, And The Internet Of Things
February 1, 2018
Oil & Gas
O&G industry investment in startups reached record levels in 2016 and 2017.
Corporate venture investments by oil and gas companies hit record highs in 2016 and 2017, after a slight dip following the 2014 crash in oil prices. These investments have been concentrated in clean tech companies and technologies with the potential to improve operations.
Integrated oil companies, such as Chevron and BP, have driven CVC investment by the O&G industry over the past decade.
We used CB Insights (www.cbinsights.com) data to analyze the investment activity of a selection of the largest and most active companies across the O&G value chain.
Clean Tech focuses on three areas:
Alternative Energy: wind, solar, hydro, advanced batteries, etc;
Alternative Materials: materials or products with the potential to replace petrochemicals;
Environmental Impact: technologies with the potential to mitigate the environmental impact of burning hydrocarbons— carbon capture, home energy efficiency, and vehicle efficiency.
Operational Improvement technologies offer the potential to enhance O&G company operations. Startups in this category offer IIOT, analytics, and reserve replacement and enhancement capabilities.
Conventional Energy companies provide processes or products that utilize hydrocarbon generated energy.
Track more oil & gas tech startups on our platform
Startups working to improve processes across the oil & gas sector, from exploration and production to transportation and refining. Look for Oil & Gas Tech in the Collections tab.
Clean tech investment dropped off following the 2011 collapse of Solyndra, whose highly public implosion contributed to a decline in funding and public interest in renewables. Activity has bounced back, with O&G CVC investment in clean tech increasing every year since 2014, hitting record levels in 2017.
In Q3’17, French integrated oil company Total took a $285M minority stake in renewable asset operator Eren Groupe (https://www.total-eren.com/en/?cli_action=1592753541.653) at a $1.2B valuation. In Q4, BP invested in a $200M minority stake in European solar developer Lightsource. (www.lightdource.com)
Looking forward to 2018, Anglo-Dutch oil giant Shell invested $217M in solar energy developer Silicon Ranch (www.siliconranch.com) in a secondary market round.
Investments in operational improvement technologies have increased since 2011, as connected devices, analytics, and automation have advanced. In Q4’17, Maana (https://www.maana.io/) a company that provides a platform for analyzing data generated by industrial operations, raised a $28M C round from investors including the VC arms of Chevron, Saudi Aramco, and Shell. Chevron and ConocoPhillips Technology Ventures participated in the company’s Series A in 2014.
Integrated oil companies— defined as international and state-owned companies with operations across the oil and gas value chain — are especially incentivized to invest in technologies that could enable the eventual replacement of hydrocarbon-generated energy and lower the cost of meeting remaining fossil fuel demand. These firms are highly vulnerable to the energy value chain’s environmental, political, and execution risks.
Integrated oil companies accounted for 80% of industry participants in financings since 2008. All other players, including independent exploration companies, oilfield service providers, and independent refiners, accounted for 20% of industry participants over the same period.
With an estimated 1.7 trillion barrels in the ground, untold dollars of capital investment, and investor and regulatory pressure on O&G players to recognize the environment and financial risks posed by climate change, the stakes are high.
Integrated oil company investment also makes sense in the context of the energy industry’s technology development structure. Large, integrated oil producers tend to spend less on R&D than the oilfield services companies that drive technological execution in the industry. However, integrated companies have an active interest in bringing technologies that lower operating costs to market, creating incentives for VC investment.
Below, we break down the portfolio investments of the five most active integrated oil companies that drive much of the VC activity in the O&G industry (notably absent from this list is Exxon, which has eschewed VC investment for R&D, particularly in biofuels).
source: https://www.cbinsights.com/research/oil-gas-corporate-venture-capital-investment/
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Jean Steinhardt served as Librarian, Aramco Services, Engineering Division, for 13 years. He now heads Jean Steinhardt Consulting LLC, producing the same high quality research that he performed for Aramco.
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