Energy is a rapidly growing investment sector. A sector ripe for Small and Medium-Sized Enterprises to exploit.
Sitra’s PreSeed to provide expert advice in creating a European-wide market place for initial investments
Coxa, Respecta and Suomen Terveystutkimus are the first three investments made by the Terveysrahasto health-care fund established at Sitra’s initiative
Energy efficiency and clean energy as a business opportunity
Closed focus area (2008-2012)
From 2008 to 2012 Sitra has been an active investor in the energy field. Sitra’s Energy Programme has ended, and new investments in the energy sector are no longer in our focus.
Global mega-trends, such as the price fluctuation of fossil fuels, geopolitical issues related to energy procurement and awareness of climate change and environmental development in general, have recently led to a rapid increase in the demand for clean technologies and services. Although the growth in demand is often driven by public-sector regulations and incentives, new demand is also increasingly created wholly on market terms.
This trend has opened significant business opportunities for enterprises focusing on energy efficiency and renewable energy sources. Growth companies in particular have started to attract not just investors but also significant business expertise from many other sectors.
Translating expertise into business growth and jobs
With regard to the commercialisation of various technologies, capital investments made in growth companies are an indicator of future trends. In the past few years, the most significant areas of global investment in clean technologies have included solar energy, electric cars and energy efficiency.
In Finland, growth areas emerging in energy efficiency and renewable energy include LED lighting solutions, heat pumps, various energy saving services and solutions related to wave, solar and wind power.
Instead of establishing start-ups, an efficient model for accelerating growth and the commercialisation of new energy solutions is to help SMEs develop into technology companies with a genuinely international orientation. This development is further encouraged by the fact that the focus of the manufacturing industry is shifting to low-cost countries, and thus companies need to re-assess their future competitive edges. A key aspect of this operating model is finding appropriate ways in which new, applied research data can be combined with a revitalisation of the company. There is a clear need for competent players who bridge the gap between the research community and traditional businesses.
Early-stage mergers and other forms of corporate structuring provide interesting approaches to the acquisition of a critical competence mass for the purpose of expanding into the international market. In such arrangements, emerging companies with mutual synergies join together to form – both in Finland and across borders – competence clusters which from the point of view of customer need are clearly stronger than the individual parts. The appeal of such arrangements as development paths for entrepreneurs is to ensure that high-level expertise can be converted into growing business volumes and new jobs.
Sitra as an investor in the energy industry
In 2008-2012, the Energy Programme made venture capital investments in start-up and growth-phase companies in the energy sector, both alone and as a co-investor with private investors and other funds. New investments will no longer be made in 2012. Sitra’s investment activities focused on energy technologies and services in the following fields:
- energy efficiency – buildings, communities, industrial processes
- clean energy production
- energy transmission, distribution and storage.
Initial investments typically fell within the range of EUR 0.5–2 million. Sitra acts as an active minority shareholder in the portfolio companies.
Energy Programme investment portfolio
The company has developed and patented the WaveRoller plant concept for generating electricity from the swells near ocean shores. A 300 kW demonstration plant is currently being deployed on the Portuguese coast.
The company develops, markets and supplies innovative and energy-efficient solutions for modular new construction and renovation projects.
The company specialises in designing, manufacturing and selling hydraulic cylinders. Most of the products are customer-specific special cylinders used in mobile work machines, marine/off-shore industry solutions or solutions for heavy industry. The company is developing a new product concept based on digital hydraulics, which is in the process of being launched.
The company is a Finnish turnkey provider of renewable energy solutions. Its solutions include development, technologies and local services as well as a local energy portal designed for service operations. One1’s solutions make use of ground heat, wind, solar power and other natural energy sources and are based on developing and centralising renewable energy technologies as part of local heating concepts.
The Mikkeli-based company develops and manufactures innovative, effective solar energy collectors and absorbers for OEM partners throughout the world. The mission of Savosolar is to help resolve the climate change challenge by using solar energy and to improve living conditions by creating a clean and secure environment.
The company supplies industrial refrigerating plants as well as industrial heat pumps that it has developed itself. The products help the company’s customers in the energy sector to achieve significant energy and costs savings.
Viola Systems Oy
The company designs and supplies wireless communication systems for the energy industry in particular. The company’s systems may be used for automatically monitoring and controlling the operation of electricity distribution networks or energy-intensive facilities.
Sitra’s fund investments in the energy sector
In addition to companies, Sitra has also made investments in Finnish and international private equity funds. Sitra’s aim is to act as a link between international funds and Finnish energy-sector companies seeking investments in particular. Through these activities we want to help Finnish companies better utilise international capital and, in particular, international expertise with regard to their growth and internationalisation needs.
Sitra cooperates on themes related to energy with the following funds in which Sitra is an investor:
Capricorn Cleantech Fund NV
Chrysalix Energy Limited Parnership III
AC Cleantech Growth Fund I Ky