Recently, BlackRock CEO Larry Fink and State Street CEO Cyrus Taraporevla made bold pronouncements to Chief Executive Officers and Board Members to focus on ESG, innovation, sustainability and diversity.  This includes a company’s relationship with its employees, customers / communities and suppliers.  Both letters underscore the burden has now shifted for companies to demonstrate they are future-proofing their businesses for the oncoming disruptive challenges and leveraging resources to innovate and stay ahead of new market entrants.  Moreover, both postings identify the importance of natural gas in reaching net-zero emissions and providing fair, reliable, cost-effective and comparatively clean energy to all communities.  Importantly, each CEO cites the requisite for all companies (which includes natural gas utilities) to take action, lead and evolve for a sustainable, net-zero future or face disintermediation.  Staying competitive is becoming increasingly harder for companies that are traditionally risk averse, conservative, highly regulated and reluctant to change.

These pressures on innovation and sustainability are especially acute in the natural gas sector.  Billions of dollars in venture capital are being allocated to electrification as the sole solution for net-zero emissions at the detriment of natural gas networks’ ESG imperatives, decarbonization and transformation.  Many investors have overlooked the importance of the natural gas industry to the energy evolution. Both electrification and natural gas networks are required to achieve a net zero carbon state.  Further, the utility company’s relationship with the communities they serve has never been more crucial.

This is why Energy Capital Ventures (“ECV”) was founded.  

ECV is the only early-stage venture capital fund focused on the ESG imperatives and digital transformation of the natural gas utility industry.  In addition to our unique focus, we differentiate with a customized engagement model and robust integration with our strategic limited partners (investors) all of whom are publicly traded utility companies with significant natural gas distribution businesses.  Energy Capital Ventures’ focus and approach provides our limited partners visibility, understanding and actionable insight to thousands of companies innovating in decarbonization, clean hydrogen, renewable natural gas, methane leak detection/ prevention/ remediation, climate technologies, ESG advancements and sustainability.  Furthermore, ECV’s model and approach enables equal insights to digital innovations in process automation, IoT, cybersecurity, workforce safety, machine learning/ artificial intelligence and customer service.  As the platform for innovation for the natural gas utility industry, Energy Capital Ventures takes it as our responsibility to help our partners “future-proof” their business, in the words of BlackRock and State Street.   

Further, as part of that responsibility and as a natural extension of our early-stageESG/ digital transformation investment thesis, Energy Capital Ventures has recently committed to make investments in seed-stage, minority-owned portfolio companies with management teams led by underrepresented founders.  With only approximately 2% of the $330B invested in venture capital going to diverse founders, ECV endeavors to improve D&I technology entrepreneurs' access to institutional capital at the earliest stages.  In our view, the venture capital fundraising model is broken for underrepresented funders.  In general, technology startups are funded initially from founder personal wealth or the founder’s “friends and family”.  This initial funding is a gateway to starting technology companies and then accessing institutional venture capital.  Many underrepresented founders do not have access to this initial capital, thereby disenfranchising them from the phenomenal potential value and wealth creation of technology start-ups.  Moreover, this funding disadvantage further disenfranchises minority communities by preventing the enablement of a virtuous flywheel whereby successful diverse entrepreneurs reinvest their personal wealth generated from their own technology start-up into new entrepreneurs from their community. Energy Capital Ventures aims to break this cycle by providing this critical initial capital along with the support network, mentoring and business building experience that early-stage technology companies require. ECV will also encourage its strategic limited partners to leverage their internal D&I programs, enable their current and prospective suppliers and better serve their communities.

Both the BlackRock and State Street Letter highlight the importance of capitalism in advancing ESG, sustainability, diversity and impact.  As investors with top-performing track records, the Energy Capital Ventures team has proven to be a good steward of capital.  The team has over 75 years of combined experience working with utility companies and large corporations on critical transactions.  This gives us a unique understanding of how to work with corporate executives and boards of directors on these crucial initiatives.  

Two of the largest allocators of capital have explicitly called upon corporate leaders and boards of directors to focus on innovation, ESG and diversity.  BlackRock and State Street note that capital will continue to flow to those companies who continue to evolve.  Energy Capital Ventures is here to help the CEOs and board members in the natural gas industry to navigate these immense challenges and help utility companies evolve and future-proof their businesses.