Q: How do you select startups for investment?
A: We look at the entire energy-value chain. That includes coal, oil and natural gas, as well as renewables such as wind and solar. Our portfolio is 75 percent traditional and 25 percent renewables.
We invest in transformational technologies. Our philosophy is to meet the energy challenges today, and know how to get to the solutions of tomorrow. A lot of times, when people talk about the future of energy, they talk about renewables dominating (the scenario). The reality is, we are a long way from switching completely to renewables.
When we began investing in energy startups in 1997, our competitors were saying, “We don’t get it.” Now, everyone understands.
Our model is to grow a company and sell it for a profit for our investors, either through an initial public offering or an acquisition. For the venture-capital industry, the average return is 30 to 50 percent return to investors, and we are meeting the target.
Q: What’s your strategy for start ups?
A: Today, we invest $5 million to $15 million in a company. We target companies that have a good management team, a disruptive product or technology, and either initial sales or acceptance by their customer base. We can invest up to $30 million in specific areas. A typical exit, IPO, merger or acquisition averages three to seven years.
Q: What are some examples of your investment?
A: Energy is a hugely capital-intensive business, and it takes a lot of money.
We invested in SunEdison, which built an 8.2-megawatt solar photovoltaic plant for Xcel in the San Luis Valley — Colorado’s biggest such plant.
Southwest Windpower Inc. of Flagstaff, Ariz., which assembles and installs micro wind turbines, has sold more than 100,000 wind turbines since 2004.
Micro Seismic of Houston is another example. The company owns a technology that monitors (fractures) deep inside the earth when a company drills for oil and gas buried in layers of rock.
Edited for length and clarity by Gargi Chakrabarty
