VC remains driver and financier of innovations
With the ushering in of the energy transition, the energy market has changed and will continue to change as the energy transition progresses. The changes affect practically all areas of the energy sector in its present form. In addition, new technologies from other areas — such as blockchain or e‑mobility — are presenting the energy industry with completely new challenges that require solutions. Here, it is important to develop new solutions quickly and effectively and to constantly adapt them to further developments in the other areas. This interaction is likely to be both an opportunity and a challenge.
The high political importance of the topic of energy certainly offers a special opportunity and a favorable environment for innovative solutions because of the broad public impact and the politically specified goals. On the other hand, it should not be forgotten that the energy market is a highly regulated market, strongly influenced by legislation. This is often unpredictable, and new business models could quickly be threatened again by changes in legislation.
Most financial investors have a very clear idea of the terms of their investment and their (also contractual) implementation. As a result, the process has often been very investor-driven in the past. Today, start-ups and founders are presenting themselves as increasingly experienced and professional. Not least spurred on by the market situation, the founders and the start-up are now able to control the process significantly. In this respect, all parties involved — including us as legal advisors in view of the contractual basis of the investment — are called upon to find solutions that take appropriate account of the various interests. A particular challenge often arises when, in addition to monetary interests, strategic interests of investors, mostly corporate VCs, are also involved. This regularly requires a very clear understanding of the investment purpose and a corresponding implementation in the relationship with the start-up. Here, too, all those involved are called upon to work actively on a joint solution.
As in many other areas, corporate venturing is playing an increasingly important role in the energy sector. Whereas a few years ago specialized funds were usually the main providers of capital in the energy sector, today both companies from the energy sector and companies from other sectors are getting involved in energy issues. Many existing players in the energy sector are looking for new business models — in their core business as well as in complementary areas; they are also interested in innovations that support their existing business operations. In addition, other companies are also becoming active that do not primarily have an energy connection but see new business opportunities in this area. First and foremost, digital business models in the energy sector should be mentioned here.
In the context of corporate venturing, the special challenge regularly arises of reconciling the strategic interests with the monetary interests of participating financial investors and the founders. Corporate VCs therefore often take different approaches to their investments — those with predominantly strategic interests and those with predominantly monetary interests. — Moreover, they regularly appreciate the special market overview in the field of innovations that they obtain through their venturing activities.
On the other hand, start-ups and founders also benefit from corporate VCs as investors, as they can often gain completely different market access through them.
About Maria Weiers
Maria Weiers is a member of the Corporate Practice Area.
She specializes in structuring and assisting corporate transactions, with a particular focus on the private equity and venture capital environment. In addition, she advises both investors and companies on corporate law issues from formation to exit. It has extensive expertise in the design of investment models and forms of financing. It also advises funds within the scope of their self-governance.