Could you tell more about the Westly Group?
Since the company was founded in 2007, The Westly Group has been investing into start-ups focusing on smart energy, transportation and buildings. The group was an early investor in eg. Tesla Motors and helped many companies grow and succeed.
The Westly Group was founded by Steve Westly, who has a very interesting background mix between energy and policy making. After being a lecturer at the Stanford Graduate School of Business, he joined online auction company eBay and helped guide it through its period of most rapid growth. He served as the Controller and Chief Fiscal Officer of the state of California, and eventually founded the Westley Group, one of the larger sustainability venture firms in the US.
What is the strategy of the Westly Group?
We have EUR 450m AUM under management, of which EUR 130m is in our currently active Fund III. We invest EUR 2-5m in start-ups focusing on energy, mobility and smart building spaces in Seed, Series A or B rounds.
We are particularly interested in the early growth stage companies that focus on creating solutions to complex issues around the grid and the rise of electric transportation, because we see true potential. We believe that building smart cities and the evolution across lead certification to healthy buildings is the future of Energy Tech industry. Westly group is mainly looking to invest in companies that have low marginal cost, are capital efficient and have a high gross margin.
When picking investments, what do you mostly look for in a targeted company?
When I first started and had a limited experience, I would mainly focus on the technology, the market for it and whether it fits my vision. Based on my past experiences and how critical my team is now, we also focus on a few other criteria.
First, we want to see an entrepreneur with a strong vision for the future and conviction. The way that the CEO leads his team and interacts is also very important. We want to know that the founder of the company has the right communication, management and negotiation skills.
With multiple new funds emerging each year, what is the USP of Westly Group among other investors? Why would entrepreneur choose Westly Group, and what value beyond capital you add to the teams after investments?
My answer may differ slightly from others within the firm, but I believe one of our strong points is the fact that we can take on multiple roles. We can be a strategic partner who maintains direct contacts with global utilities and various strategic LPs, to help on the customer side, or we can be more of an institutional investor who can sit on the board and lead the investment.
We are very active in support, helping out with fundraising, strategy, impact of external factors like COVID-19, etc. and there is no single point of contact between us and our portfolio companies. They will work with our entire team.
What 3 trends are going to be mostly important in the next 2 years in Energy Tech / Cleantech? Why?
Institutional investors are trying to measure the climate change impact because some have large parts of their portfolios that are either climate risks or affected by climate change. They are now working with companies that are mitigating climate change or are unaffected by it.
• Electrification of the mobility sector is a massive trend now. That being said, there is still a lot of innovation happening in the e-mobility sector and a lot of space to explore in the connected nature of these vehicles.
• Another big hit is the Digitization sector. As time goes on, the workforce will transform as older generations who didn’t grow up surrounded by software and easy access information retire. Their replacement will be today’s generation who will want to work with digitised systems instead of 100 page paper manuals.
• Finally, while in the early 2000’s there was a revolution called LEED certification, there is one big miss that it didn’t consider and that’s the people in the office and their health. I believe that Smart building spaces will have to tackle these health issues.
What will be the effect of C19 and the low oil price on the climate dialogue?
I’m an optimist, so I think that it’s going to be a big benefit for us all. In the near term, the COVID-19 will have some consequences, but in the long term, I believe that the virus has awakened the globe to the existential risk and the global impact to the world. A lot of the attention has been brought to the climate impact, which creates great opportunities for the Energy Tech industry to grow.
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