#Enviria, a successful German scale-up in the commercial and industrial #solar solution business, announced an investment of 200 M USD (185M €) by #Blackrock yesterday. While not much is known yet about the details of the transaction, we believe that it may hold an important message about how to crack energy transition funding.
Funding the #energy transition is very capital intensive and requires infrastructure investors to come on board with full force. At the same time, driving innovation in energy still has a lot of venture character, with limited track record, significant speed of change, strong market swings and shifting profit pools along the supply chain. In short - all the challenges startups in new and evolving markets face.
A seemingly obvious solution is to combine corporate and venture funding with infrastructure money in new ways! And this is what Blackrock and Enviria may be doing here. The challenge: #venture investors don’t like #infrastructure returns and infrastructure investors don’t like #startup risk or most other risk associated with ”First-of-a-kind“(#FOAK) asset portfolios.
In our perception, the perspectives and incentive structures of corporate and infrastructure investors are often far apart, even within the same organization of institutional investors, so that deals such as Enviria’s are very rare. That has to change if we want to drive the energy transition faster than today.
As senior advisors we have been working on bridging the gap between #cleantech businesses with asset roll-outs and investors for a while now. This includes solutions for how to structure funding of First-of-a-kind portfolios. how to assemble the right mix of capital sources to enable innovation and scaling of new energy infrastructure.
As the details of the Enviria investment are not public, allow us to speculate a bit about the transaction. Wouldn’t it make sense if it was a combination of corporate equity for the platform together with flexible asset funding at asset or #SPV level, likely a combination of different capital layers? Financing should be made easy from the customer perspective by reflecting the complexity and mix of risks in a smarter funding structure.
We also like this transaction because it is our strong belief that the commercial + industrial #cleantech space offers the biggest untapped opportunity out there. Making the energy transition easy for corporations is the most important value driver in this market. Well done, ENVIRIA and BlackRock. Well done Melchior Schulze Brock, Dirk Schmitz and your teams.
Watch this space ;-)
Tobias and Christian
