Leading global wind turbine manufacturer Vestas has launched a venture capital unit as it looks to stoke the energy transition.
Vestas Ventures will focus on four areas: long-duration storage and other grid flexibility technology; "power-to-X" technologies to use renewable electricity to produce carbon-neutral fuels; wind energy technologies; and sustainability and advanced materials.
The company intends to focus on seed capital for early-stage startups across these themes.
Vestas invested €10 million into Swedish battery manufacturing startup Northvolt in December 2017, when the company was barely one year old. Now it's set to open a 4 gigawatt-hour Northvolt Ett gigafactory next year, the first phase of a facility with the potential to be scaled to 40 GWh.
Bo Svoldgaard, senior VP and head of innovation and concepts at Vestas, said the positive experience of working with Northvolt was the trigger to increase the company’s activity with startups in other sectors. The focus is on lending Vestas’ 40 years of experience to businesses in sectors that society cannot wait 40 years to scale, he said.
“We learned from the experience with Northvolt, and piggybacking on that we want to exploit these new ideas and find ways to help the green transition and pursue new technologies. We need to look at the surrounding ecosystem,” said Svoldgaard in an interview with GTM.
While Northvolt is primarily planning to serve electric vehicle demand, it has already gone to market with a modular stationary storage product.
The European Green Recovery and a plethora of national plans have begun to sketch out the roadmap to net-zero carbon status. All involve green hydrogen and large volumes of electrification, which overlap with Vestas' chosen areas of focus.
Vestas not scouting for acquisitions
Vestas chose to focus on these four segments to concentrate the impact of its venture investments. But it hasn't set any limitations on how it might spread investments across those sectors, and it intends to conduct a global search for the right targets.
“We just want to see the best companies and the best ideas come to the surface and then take it from there,” Svoldgaard said. The goal is to learn from startups in its own sector and across the clean energy ecosystem.
Acquisitions are not the endgame for Vestas Ventures, he added.
“The fund will not take a majority stake in any of these startups. Companies like Northvolt have shown that they should be able to drive their own business,” he said. “[The aim] is to ensure that bright new ideas in the energy transition can be matured and that we can help them to mature.”
Svoldgaard said investments would be in the order of €1 million to €6 million, “depending on the position we want to take and the valuation of the company.”
Vestas isn’t ready to name where its first investment might land, but it is already looking at several potential targets. Getting a seat on the board may or may not be part of the strategy.
Vestas plans to offer up its substantial testing and development facilities where startups can experiment with, optimize and ultimately mature their technologies.
“Vestas is in this for the long term," he said. "We’re not in this to make quick money for the investors."