You might not immediately associate decarbonisation and the energy transition with a venture corporate arm of an energy major, but that’s where Shell Ventures might surprise you. At present, 90% of Shell Ventures’ investments are related to sustainability.
Beyond raising capital, one of the key draws of the fund is the help it gives its portfolio companies to find deployment opportunities within Shell’s assets and businesses.
“These are small companies and besides funding, the main thing they need is actually paying customers that are willing to trial and test things out,” says Geert van de Wouw, managing partner at Shell Ventures.
While Shell has a target to be a net carbon zero business by 2050 — and partnering with startups that can reduce the carbon footprint of the company’s assets will certainly help this goal — Shell Ventures also sees itself contributing by, providing the key capital and resources for climate techs to scale.
“[The] energy transition is not just a Shell commitment, it’s an industry commitment,” says van de Wouw. “There’s only been very few cases where we decided to acquire a company lock, stock and barrel. In most cases we are happy to seed it, to support the commercialisation.”
Why are so many startups scaling up with Shell Ventures? To find out, we asked two of its portfolio companies, Akselos and Culumus.
Deployment support
Shell Ventures, which was established in 1996, works with startups from seed to late stage, across renewable power systems, new fuels for transport, mobility solutions, emission management systems and energy innovations. Right now, it’s the most prolific energy company investing in climate tech.
They don't try to help the company on everything – that is not the proposition. They help on deployment within Shell.
The fund provides access to a broad network of technical experts, suppliers and customers through a dedicated team.
“Shell is best in class when it comes to deployment within their ecosystem,” says Thomas Leurent, cofounder and CEO of Akselos, an AI-based engineering simulation platform for the world's critical infrastructure. “They don't try to help the company on everything – that is not the proposition. They help on deployment within Shell and have people specifically helping for that, like deployment managers and PRs.”
Akselos took investment from Shell Ventures in 2018, as Leurent says within his sector it takes a long time to hit the value points – but Akselos has achieved this with Shell.
“Now what we want is to have ten other customers as big as Shell,” he says. “That’s the aim of our journey to 2028.”
Investing early
As a company’s value is not only defined in terms of financial return, but also the strategic value of getting technologies and business models implemented into businesses in Shell, the fund will invest at the very early stage.
Especially in the early days of the company, Shell’s investment provided a proof point and credibility that startups need when you're serving these large industries.
This early confidence in a young startup from a corporate can be critical for scaling.
“Especially in the early days of the company, Shell’s investment provided a proof point and credibility that startups need when you're serving these large industries,” says Matthew Kleiman, CEO and cofounder at Cumulus Digital Systems, a quality management system (QMS) that digitises manual work that is mission-critical, high volume and difficult to automate.
The startup is a Shell spinout, becoming an independent business in 2018 and now calling Shell both a customer and investor.
“To be able to show Shell not only as a customer, but that they believe [in us] enough to also be an investor, was incredibly important both with expanding to other similar companies in the industry and attracting further investment,” says Kleiman.
As an investor in Cumulus Digital Systems, Kleiman says Shell has a seat on its board and provided growth capital, as well as using its deployment team to find opportunities.
And it seems to be working - Cumulus Digital Systems became profitable this year. Kleiman says the company aims to grow to help Shell with all the new projects in both their new energies business and in their more traditional lines and hopefully, Kleiman notes, also generating good returns for them as an investor too.
“The business is growing quite fast,” he adds. “We've been able to incorporate AI into our product for cleaning up data, converting written engineering procedures into workflows that workers can use faster than we ever could in the past.”
Scaling for success
For climate techs to truly scale, funding and partnerships need to be extended into the later stage too. This is why Shell Ventures has established the capability to invest in later-stage startups with tickets in Series C+ companies - and will also make strategic follow-on investments.
Collaboration between regulators, private capital and corporate capital will be critical to bridge the funding gap.
For instance, during Series C, Shell Ventures invested in a growth equity VC round in cleantech company GridPoint in 2022. The company uses software to analyse data in tech from heating and cooling to lights - to pinpoint inefficiencies.
“We are really fortunate to have the support of Shell Ventures helping us drive this product out into the market, said Mark Danzenbaker, CEO at GridPoint late last year. "It has really helped us move our needle over the last year and I think that’s going to continue to happen as we continue to grow.”
To support growth, Shell Ventures also co-invests with other corporate investors and venture capital funds to help companies scale. Van de Wouw says one reason is that companies need a broad spectrum of customers to be successful and the other reason is that everyone in the industry needs to collaborate in order to meet ambitious industry-wide targets and thus mitigate the worst effects of climate change.
For example, van de Wouw says, “Collaboration between regulators, private capital and corporate capital will be critical to bridge the funding gap where startups have promising technology but lack the capital to move to the next level of maturity.”
If you are a climate tech looking for funding and scaling opportunities — or are an investor in the energy sector focussing on developing new technologies - find out more about Shell Ventures and how you can get involved here.
