Venture Capital Investor National Grid Partners Speaks About Cleantech Investing
Silicon Valley has been the main high tech and venture capital hub in the US for decades. The Valley is typically viewed as San Jose, Santa Clara, Cupertino, Sunnyvale, Mountain View, Menlo Park, and Palo Alto. Typically, venture capital firms have invested in software, Internet and computer hardware startups: Google, Sun MicroSystems, Facebook, Twitter, Cisco, Nvidia, Yahoo! and so on. Sandhill Road in Palo Alto and Menlo Park is where dozens of venture capital firms are located. Venture capital in the Bay Area is not limited to investing in high tech.
Increasingly, clean energy and climate tech startups are where venture capital is flowing as well. Venture capital typically is not a business activity that many people have access to on a personal or financial level. Fortunately, Lisa Lambert, Founder and President of National Grid Partners, a venture capital organization located in Los Gatos, CA, answered some questions about the organization and their investing for CleanTechnica.
What does National Grid Partners do and what makes it unique?
National Grid Partners (NGP) is the corporate venture capital and innovation arm of one of the world’s largest utilities, National Grid, with nearly 30M customers across the US and UK. NGP’s $400M investment allocation is focused on startups working to transform the grid and accelerate clean energy in the utility industry.
Unlike traditional venture capital firms, NGP goes beyond investing in private companies to also serve as a strategic partner, helping deploy startup technology across National Grid’s business units. Thanks to our Business Development team, more than 80% of NGP’s portfolio companies are actively engaged with National Grid to test, develop and deploy their technologies in the US and UK. Those collaborations not only help National Grid modernize and transform its operations but also help startups scale their technologies around the globe in months, not years.
Another unique attribute of NGP is our Innovation arm, which ideates and tests new technologies critical to transforming utilities and fixing expensive, complex energy problems. For instance, the maritime industry is facing the challenges of removing emissions (accounting for 3% of global pollution) from idling vessels and providing a reliable and flexible charging network for vessels. Our innovation team’s vessel charger solution, called NOVA, provides an electricity supply solution for vessels via nearshore and offshore buoy chargers, enabling a flexible design solution to provide electrification. We estimate this project has the potential to generate significant new revenues for National Grid while reducing CO2 emissions by 27 megatons over the next decade—and we have many more projects underway.
What do you do and how did you arrive at your current role?
I’m Chief Technology and Innovation Officer at National Grid and Founder & President of National Grid Partners, responsible for leading investments and innovation across the organization. By straddling these roles, I have the unique position of understanding the challenges utilities face along with the breakthrough solutions that can help us win the battle against climate change.
Before National Grid, I was a Managing Partner at the Westly Group, a cleantech private VC firm in Silicon Valley, where I spearheaded energy tech investments. Before that, I was Vice President and Managing Director at Intel Capital, where I oversaw the Software and Services sector and then founded the $125M Intel Capital Diversity Fund. During my 17-year tenure at Intel Capital, I made over 100 deals, leading equity investments, incubations, business development projects, and innovation projects. It was a high-profile, high-pressure environment, and I learned many investing best practices there.
Founding and leading National Grid’s VC arm was a natural progression. We’ve built an organization that’s bridging the gap between innovation and utilities to achieve critical net-zero goals and defeat climate change.
For the utilities that have net-zero goals for 2050, why are some of them falling behind on achieving them?
Utilities are at a crossroads in terms of climate innovation. As regulated monopolies, most have historically avoided risk to prioritize reliability and compliance. Many are now in the midst of a cultural and business sea-change, where for the first time they’re incentivized to innovate and adopt clean energy. And despite the broader innovations of the past two decades, utilities still don’t have much experience working with fast-moving startups that may seem risky; most lack the expertise to bring pilots to scale. NGP’s experts help bring startup innovations to utilities in ways they can understand and implement effectively.
For example, traditional processes to expand grid capacity, such as reconductoring, can be costly and time-consuming. NGP helped National Grid deploy LineVision’s LineRate technology to monitor and forecast line capacity, driving a 13% increase in the lines’ current capacity across 9,000 miles of transmission lines. That’s going to let our company incorporate more clean energy sources without a massive amount of costly infrastructure.
Another common pain point for utilities is customer service. Using a conversational AI and automation platform from Uniphore, one of our portfolio companies, National Grid’s Employee Service Center shaved 30-40 seconds off of every post-call process. That quickly adds up to tremendous savings across the enterprise.
What got you interested in climate and energy tech and what is NGP aiming to achieve in the next 3-5 years?
I got interested in climate and energy tech because of the vital challenge we’re solving: Climate change. Helping large, successful organizations like utilities transform is a fascinating challenge. And I also believe energy startups are in a strong position to grow and deliver compelling returns. Consider our tailwinds: A global emphasis on decarbonization, rising pressure to meet looming net-zero goals, and now heavy investment in the sector through the US Infrastructure Investment & Jobs Act and Inflation Reduction Act. We’re seeing a cleantech boom once again – and this time it should be sustainable. I’m excited to be at the forefront of the movement.
What sets NGP apart is our unique understanding of the challenges and opportunities facing both startups and utilities. Our goal is to bridge that gap to help startups reach utility scale and help utilities adopt critical technologies for the “three Ds” (decarbonization, decentralization and digitization). By doing so, we can make a dent in climate change that no other firm can.
NGP is also building a first-of-its-kind network of utility partners called the NextGrid Alliance (NGA), which is bringing together voices from some of the world’s most forward-looking energy companies to help accelerate the decarbonization transition. Now at nearly 100 members, we regularly convene to collaborate on shared challenges and identify opportunities to help turn utilities into climate innovation powerhouses. Our motto is “faster together.” In the next 3-5 years, we expect to be well on our way to helping utilities around the world achieve net-zero goals to fight climate change.
Silicon Valley and San Francisco are known for high tech, but do you see more people there interested in working on clean energy, energy efficiency, and climate change?
Silicon Valley has always looked to the future and helped lead the way in clean energy, and we’re starting to see workers in the region hit a new gear. Especially in light of the Great Resignation and more recent layoffs, Silicon Valley workers are asking big questions around purpose and their life’s work. I’m seeing more and more people pivoting to a career tackling climate change. The interest — and entrepreneurial energy — are on the rise.
For your fund, do you actively search for startups to invest in or do they come to you?
Like most firms, it’s a mix. We have a strong network and learn about companies in a variety of ways, with our investment team actively seeking out startups and even working to incubate them directly. Of course, we always welcome a terrific introduction!
What do you look for when evaluating a company you might invest in?
Rather than simply looking for innovative technologies to invest in, NGP is focused first and foremost on finding solutions to problems.
We look for areas with the potential to deliver real results and advance the mission of delivering change at utility scale. For instance, one area commonly overlooked is transporting electricity. It seems basic, but our global infrastructure is mostly decades old. Identifying technology to upgrade transmissions systems without requiring trillions of dollars in infrastructure is a key initiative for us, especially as it enables more solar and wind power to join the grid. A couple examples from our portfolio are LineVision and TS Conductor, which has developed a next-generation cable that can double or even triple a power line’s capacity without the need to retrofit towers.
By focusing on the three Ds, we’ve invested in companies some people might not consider to be cleantech but are solving huge problems in the energy ecosystem. We’ve invested in companies that offer everything from “x-ray vision” for safer construction projects; to ChatGPT-powered customer service technology; to AI analysis of satellite imagery in order to head off potential power outages and forest fires.
Do you ideate and create your own startups as well as invest in others?
Absolutely. Part of the reason National Grid Partners was created was to disrupt ourselves before we’re disrupted by others. This means that, along with investing in revolutionary companies, we have our Innovation team dedicated to identifying problems in the field and seeking out the perfect technologies to fix them.
One of the many solutions this team has created makes right-of-way access to our transmission towers more sustainable and affordable. When building or repairing that infrastructure, utilities deploy wooden matting so heavy trucks and machinery can safely go back and forth. Laying out the matting for these short-term projects is an expensive process and a big contributor to carbon emissions, when you consider how much energy it takes to produce and transport lumber. Our Innovation team found a novel solution — a next-generation, fungi-based material we estimate will cut operational costs by 53% compared to timber-based matting.
We also help our existing portfolio companies develop entirely new use cases for their technology. For example, that satellite technology I mentioned comes from a company called AiDash, which National Grid already uses to protect our US electric network from falling trees (the #1 cause of power outages). When National Grid needed a way to measure and track the biodiversity of land we own in the UK, our Innovation team realized the AiDash artificial intelligence solution could be a powerful solution. We announced the new product at the UN’s COP26 climate conference; the CEO of AiDash calls it a multi-billion dollar market opportunity. It’s a great example of how we’re not just helping our startups thrive and our parent company meet its goals, but also helping the planet — and making money along the way for National Grid shareholders.