If you’ve been at any of our events over the past few months, you’ll know that we have been dropping mentions of this new chapter, but we haven’t publicly announced it…. so…drumroll please! It is with great excitement that we introduce the newest evolution of the Elemental Excelerator model, a private, follow-on fund customized for energy and clean technology companies: EEx Fund One.
First, the high-level details. It is a:
+ $3M venture capital fund
+ Intended to support Elemental Excelerator portfolio companies
Now, let’s get to the point. We are a non profit and we raised a fund. Why? To get technical, EEx Fund One and Elemental Excelerator are two separate entities. Elemental Excelerator is a program of the Hawaii-based nonprofit, Pacific International Center for High Tech Research. EEx Fund One is a for-profit LLC whose upside is shared between its investors and Elemental Excelerator. Tying them together, Elemental Excelerator receives 30% of the fund’s carry.
For us, this fund is about impact and using this new structure to support our best-in-class cohort of 50+ companies to continue doing pioneering work in energy, transportation, water, agriculture and cybersecurity.
I guess this means that you could call us impact investors, but to be honest, we really don’t know what to call ourselves (we are open to suggestions!). Our mission has always been two-fold: 1) help our companies succeed; and 2) help transition the world to 100% clean energy, starting in Hawaii.
How does EEx Fund One help us achieve our mission?
Startups need funding to grow and succeed. As we know in clean energy startups, there are two valleys of death and we are building a bridge across the second one, commercialization (the first one is at the R&D stage when you’re building your prototype). Your first steps into the commercial market often play out as follows; your first customer was either born a risk-taker or knows you well enough to believe in your success.
But now, your second customer wants you to prove it. You’ve pitched them with all of the benefits instead of the features (because that’s what we’re taught to do in sales), and they’re interested… but now they want you to prove it. That’s where our funding for demonstration projects comes in; we provide up to $1M to help you prove it. EEx Fund One follows suit with an infusion of funding for additional growth. This is us laying the next few planks as we build a bridge for our companies across clean energy’s second valley of death.
Every time an innovative solution succeeds, we move toward our second goal to transition the world to 100% clean energy. Hawaii is a microcosm for this transformation. We have a goal to go from almost total reliance on oil to 100% renewable energy less than in two generations. We’re on our way; we’ve moved from 90% oil to less than 80% oil in just seven years. So it makes sense for Elemental Excelerator and EEx Fund One to be based here.
We are moving quickly. We know our companies really well and this intimate relationship helps us accelerate the pace of innovation. As one of our investors, Marc Stuart (founding partner and CEO at Allotrope Partners) put it, “Elemental Excelerator has two distinct advantages: 1) they receive some of the best deal flow in the country; and 2) they know their portfolio companies very well, providing an additional level of due diligence. And it makes sense for them to do it in Hawaii — where else in the world can you find such a perfect storm of economic and environmental conditions for emerging energy companies?”
After officially closing the fund in April 2016, EEx Fund One has already made investments into three Elemental Excelerator companies (more information about each company can be found below):
- Ibis Networks — plug-load controls and monitoring for enterprises; originally developed for the U.S. military; recently signed distribution deal with Honeywell’s Alerton
- Plotwatt — machine-learning algorithms to help small-to-medium businesses, quick service restaurant chains, and smart grid service providers save energy and money; their existing customers include KFC and Dunkin Donuts
- TerViva — new crops that grow sustainably on underproductive agriculture land; their first crop, pongamia, has an 8x higher oil yield per acre than soybeans; planting hundreds of acres in Hawaii and Florida
Our investors are proof that innovation is common ground. This is our second favorite aspect of EEx Fund One (unlocking capital for investments in clean energy will always be first). If you look at our investors below, you’ll see organizations up and down the energy value chain — from project finance funds to a gas utility to Silicon Valley’s preeminent law firm.
Looking again at Hawaii as a microcosm for the shift that is happening in our energy system, you will see that many of these players sit on different sides of issues as we move to 100% renewable energy. But all have demonstrated, through their commitment to EEx Fund One, that innovation will be key to us getting there. Drum roll (again)…it is truly our pleasure to introduce the investors in EEx Fund One.
AIO Group: Hawaii-based family of businesses specializing in media, including Hawaii Business and five other magazines, technology, sports, and food.
Allotrope Partners LLC: San Francisco Bay Area-based merchant banking company focused on clean economy opportunities and the development and deployment of clean economy assets and businesses in developed and emerging markets.
Hawaii Strategic Development Corporation (HSDC): The Hawaii Strategic Development Corporation (HSDC) is an agency of the State of Hawaii. Through the HI Growth Initiative, HSDC supports the development of an innovation sector in Hawaii through a return driven investment program in partnership with private capital. The HI Growth Initiative provides investment and funding to support entrepreneurial development through events, venture accelerator programs and investment funds providing access to startup capital for Hawaii companies.
Hawaii Gas: Hawaii’s gas utility focused on diversifying Hawaii energy fuel resources, including renewable natural gas. Subsidiary of Macquarie Infrastructure Company.
Pacific International Center for High Technology Research (PICHTR): A Hawaii-based non-profit established as partnership between the U.S. President Ronald Reagan and Japan’s Prime Minister Yasuhiro Nakasone in 1983. It was established to accelerate technology commercialization in Hawaii and the Asia Pacific region, and incubated Elemental Excelerator until we spun out in 2017.
Syzygy West: Syzygy West is a family office investment vehicle providing early-stage capital to promising agriculture, energy, and water companies.
Wilson Sonsini Goodrich & Rosati: Wilson Sonsini Goodrich & Rosati is the premier legal advisor to technology, life sciences, and other growth enterprises worldwide. They represent companies at every stage of development, from entrepreneurial start-ups to multi billion-dollar global corporations, as well as the venture firms, private equity firms, and investment banks that finance and advise them.
And 2 more individual investors
Elemental Excelerator Corporate Foundation Partner — Hawaiian Electric Industries (HEI) (NYSE — HE): HEI supplies power to approximately 95% of Hawaii’s population through its electric utilities, Hawaiian Electric Company, Maui Electric Company, and Hawaii Electric Light Company. HEI also provides a wide array of banking and other financial services to consumers and businesses through its subsidiary, American Savings Bank, one of Hawaii’s largest financial institutions.
Our first investments:
Ibis Networks — Ibis Networks enables commercial and government enterprises to cut plug-load energy consumption by up to 40%. Originally developed for the U.S. military, Ibis Networks’ technology creates a secure, scalable, and centrally managed system for controlling and monitoring devices, dramatically reducing energy consumption with low up-front investment.
Plotwatt — PlotWatt’s platform utilizes machine learning algorithms to derive intelligible, actionable insights from existing smart meter or energy management system data. PlotWatt works with small-to-medium businesses, quick service restaurant chains, and smart grid service providers using energy analytics to provide feedback and easy-to-understand recommendations. These direct recommendations help drive operational efficiencies and saves an average of 10% on energy bills per month, while also alerting customers if equipment is not functioning properly.
TerViva — TerViva develops and commercializes new crops that grow sustainably on underproductive agriculture land. Pongamia, their ﬁrst crop, is a leguminous species of tree that produces an annual harvest of pods containing seeds that can be processed into oil for fuel and seed cake for animal feed. Pongamia’s advantage is that it can produce 8x more oil than soybeans per acre, using less water and fertilizers than most other crops.