NGIF CLEANTECH VENTURES – ONE YEAR LATER PIONEERING A NEW VENTURE CAPITAL MODEL
Thought leadership feature by John Adams (President & CEO NGIF Capital and Managing Partner NGIF Cleantech Ventures)
I can’t believe it has been one year since we launched NGIF Cleantech Ventures. I recall communicating to our investors, in what would be the first of regular monthly communications, that we were launching a first-of-kind strategically led venture fund that would be reshaping the way venture investments were made. NGIF Cleantech Ventures would break new ground, focusing on cleantech startup investments that would underpin Canada’s natural gas industry and its full value chain with solutions to drive the emissions performance of one of Canada’s most important energy sectors.
One year later, these regular communications continue to the NGIF team, our investors and important stakeholders outlining the important milestones we have completed as we grow our organization into a leading venture capital firm. And all the while during these two years of COVID, the NGIF team has kept focused on execution, fund performance and creating portfolio results while staying connected to each other, to our investors and to our startup founders.
During this last year, the team continues to be assembled with subject matter expertise that you would expect for a hybrid financing cleantech venture capital fund for the energy sector. They include seasoned investment professionals who bring decades of experience in cleantech, investment banking, creating companies, legal transactions, gas operations and venture capital. We have a newly formed executive team that meets weekly where we discuss the issues at hand, problem solve and make decisions on how we can best support our investors, our founder startups and the NGIF organization.
NGIF Capital offers an integrated hybrid model for financing cleantech companies with solutions for the energy sector. We are unique in our approach of bringing Canada’s energy industry leadership to every investment. We take startups and their ideas from concept to commercialization and with our strong connections to every part of the gas value chain, we can assist our startups to develop their technologies, validate in live operations, and accelerate their customer creation. We do this under our three divisions as noted below.
First, the division NGIF Industry Grants is the former Natural Gas Innovation Fund that launched in 2016 by the Canadian Gas Association (CGA) and its member utilities. It is now managed under the new NGIF Capital Corporation formed last year as a subsidiary of CGA Enterprises Inc. and is now called NGIF Industry Grants. It is often referred to as an accelerator that provides a non-dilutive industry grant to startups to help de-risk their cleantech solutions through a field trial or pilot. We now have 10 startups with completed projects and their technologies at or near gas market commercialization.
Second, the division NGIF Emissions Testing Centre, a $35MM industry-led emissions plug-and-play live industrial platform at a Tourmaline Oil and Perpetual Energy jointly-owned gas operations site with 20 startups testing at the same time to validate their emissions management and quantification solutions.
The NGIF Team: Left to Right Jonathan Bryan (Technical Director NGIF Emissions Testing Centre); Rosalby Guerrero-Mesia Coordinator (Investment Process NGIF Capital); Ali M. Ali (Lead Contracts NGIF Industry Grants); Abdul Qadir (Director Corporate Finance and Accounting NGIF Capital); Michael Hebert Associate, NGIF Cleantech Ventures); John Adams (President & CEO NGIF Capital and Managing Partner NGIF Cleantech Ventures); Akhil Abat (VP, Technology Strategy and Delivery NGIF Capital); Saad Sarfraz (Manager Technology and Evaluation Industry Grants); Daniely Molero (Executive Assistant to the President and CEO NGIF Capital); Ashutosh Pohary (Manager Contract Lifecycle Management NGIF Industry Grants); and Isaac da Silva Aboo (Director of Legal Affairs NGIF Capital and Associate NGIF Cleantech Ventures).
Finally, after a year of fundraising in 2020 – the third division - NGIF Cleantech Ventures (Cleantech Ventures) officially launched in 2021 with an initial close of $35MM in committed capital from seven industry partners. Since then, Cleantech Ventures has welcomed an eighth limited partner, and completed two subsequent closes, both of which contributed to an impressive $55MM in total assets under management. The Fund’s eight limited partners represent Canada’s natural gas value chain: ARC Resources Ltd., Birchcliff Energy Ltd., Canadian Utilities Inc.- a division of ATCO, FortisBC Energy Inc., TC Energy Corporation, Tidewater Midstream and Infrastructure Ltd., Tourmaline Oil Corp., and TriSummit Utilities.
There is a lot of hype around climate tech, cleantech, ESG, clean energy and whatever vernaculars are being used to describe emissions reduction these days. Our Cleantech Ventures stands out as a maverick fund that not only sees natural gas as a long-term energy source, but Canada as the lead supplier of this energy source. Reducing carbon emissions is one of the primary concerns for every government, corporation, and citizen around the globe. The demand for technologies to achieve these reductions is at an all-time high, and this demand is only going to increase over time. According to data collected by the Government of Canada, the global clean technology market is expected to exceed $2.5 trillion by 2022. Renewable energy will play a vital role in the cleantech revolution; however, Cleantech Ventures believes that natural gas will be the cornerstone.
As noted by famed entrepreneur and climate advocate Bill Gates, "Half the technology needed to get to net-zero emissions either doesn't exist yet or is too expensive for much of the world to afford." This is where NGIF Cleantech Ventures comes in. The team is hunting for in-demand technologies such as carbon capture and storage, low-cost hydrogen, renewable natural gas, and fugitive emission detection and quantification to contribute to Canada and its most responsibly sourced and competitive molecule. Cleantech Ventures knows how to de-risk cleantech start-ups, help them get to market, and achieve commercial scale. This is the core competency of Cleantech Ventures, and the hand-picked team at the center of this innovative fund are happy to invest in future multi-billion-dollar companies in sectors that others have overlooked.
For such an early fund, I will note that Cleantech Ventures has already constructed an impressive portfolio of high growth startups representing a cross section of key technology verticals. Right from the onset, Cleantech Ventures targeted the HVAC space through a co-investment with Euclidean Capital in New York-based ThermoLift Inc. – a developer of a fuel-flexible natural gas and hydrogen-enabled heat pump that can provide water heating, space heating, and air conditioning – all from a single unit. Another investment targeted a different area of emissions reductions – carbon capture utilization and storage (CCUS). Cleantech Ventures partnered with Haliburton Labs to seed CCUS developer Ionada Carbon Solutions Limited to advance their cutting-edge polymer and membrane technologies. To address the need for cost competitive, high performance, and environmentally friendly hydrogen fuel cells, Cleantech Ventures co-invested with Shell Ventures and Chevron Technology Ventures in Vancouver-based Ionomr Innovations Inc to develop their revolutionary ion-exchange membrane technology.
For direct exposure to hydrogen production, Cleantech Ventures invested in Vancouver-based Ekona Power Inc as part of a high-profile syndicate including Baker Hughes, Conoco Phillips, BDC Capital, and Continental Resources. Ekona is developing a novel methane pyrolysis platform that delivers a clean, low-cost and scalable solution for industrial hydrogen production. The Fund continued to invest alongside a prominent syndicate of world-class investors with its next investment in Validere Technologies Inc. Validere is a leading data and analytics SaaS provider that is digitally transforming the world's largest supply chain to be more sustainable and efficient. Cleantech Ventures’ investment in Validere featured a who’s who of investors including Blackrock, Mercuria Energy, Wing VC, and Greylock Partners – not bad for the new kids on the block.
In addition to an impressive track record of syndicated investing, Cleantech Ventures was the lead investor in Vancouver-based Kinitics Automation Ltd. Kinitics is a leading company in the development of motion control products using shape memory alloy materials. Finally, to address the critical need for efficient wastewater disposal, Cleantech Ventures led the seed round for Calgary-based Galatea Technologies. Galatea is developing a platform to efficiently aggregate, analyze and optimize a multitude of ever-changing logistics focused, capacity centric decision-making processes for wastewater disposal.
In its inaugural year, NGIF Cleantech Ventures was the breakout fund to watch as it made an unprecedented entry into the venture capital ecosystem. The Fund closed seven investments in seven months, which places NGIF Cleantech Ventures among the most active independent venture capital firms in the country. In addition to leading two rounds of investment in high growth cleantech startups, the unique and disruptive approach pioneered by NGIF Cleantech Ventures caught the eye of some of silicon valley’s top VC funds, and the CVC arms of the world’s most prolific energy companies, both of which were eager to co-invest alongside NGIF’s first-of-kind Cleantech Fund.
What is next for Cleantech Ventures?
One year into the NGIF Cleantech Ventures journey and there are no signs of this ground-breaking fund slowing down. I anticipate a final close of their inaugural Fund I in June of this year. With a healthy amount of dry powder remaining, Cleantech Ventures will continue to deploy capital into several more early-stage, high-growth startups that support emissions reductions along the natural gas value chain.
With so much early success in Fund I, and a pent-up demand from industry heavyweights to decarbonize operations, the NGIF Cleantech Ventures team is already looking to the horizon to contemplate what a Fund II could look like. A geographic expansion is likely with new partners in the United States and possibly Europe, while an expanded scope for Fund II is also likely but the specific thesis is still under development. No matter what shape Fund II takes on, NGIF Capital will bring the same dedicated focus and drive to the organization’s projects as it has for the past six years, ensuring innovation continues to advance the natural gas industry well into the future.
John Adams can be reached at email@example.com
For more information about NGIF Capital Corporation, please visit ngif.ca
This article appeared in World Biz Magazine's Q2, 2022 Issue
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