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Interview:

William Feng of Vertech Capital

· interview,capital

William Feng is a board director of Vertech Capital and an angel investor. He is heavily involved in the EV, Fintech, New Energy and Smart City sectors and previously worked at BMW China and Shanghai Pudong Hi-Tech Investment Co.

We spoke to William ahead of the Future Energy & Tech Investment Forum to hear his thoughts on a few different topics relating to energy and startups.

Q: Hi William, thanks for chatting with us. So, tell us a bit about Vertech Capital!

A: Sure. Vertech Capital is headquartered in Singapore and is an advisory firm focused on disruptive innovation. We help startups to scale and commercialize deep tech solutions in Asia Pacific through product commercialization and go-to market strategies.

We curate a global portfolio of selective startups with cutting-edge technology and the potential to disrupt billion-dollar industries.

Driven by agile methodologies, we provide product commercialization advisory and go-to-market consulting services. Our niche is in identifying unprecedented growth opportunities for industry-wide scale across sectors such as energy, retail, supply chain, industrials, smart city, and urban mobility solutions.

Vertech also works with technology pioneers by providing seamless access to venture capitalists in our network. Our key services in this vertical include valuation and strategic portfolio diversification.

Vertech is committed to building a global innovation ecosystem for the 4th Industrial Revolution. We are always open to collaborative partnerships with knowledge institutions through joint corporate innovation series workshops and strategic C-suite sprints.

Q: Energy, retail, supply chain, industrial, smart city, AND urban mobility! That's quite a broad net Vertech has cast. What are some of the key elements that Vertech Capital looks for in an energy startup?

A: We look for startups with these key elements:

  • An innovative deep-tech solution with scalability potential.
  • Access to a portfolio of generation, storage and flexible demand - focus on tech which can deliver flexibility.
  • Circumstance highly differs in energy, having access to an appropriate blend of resources will allow for value to be realised
  • The ability to manage risk, to optimize quickly and to trade effectively.
  • Control over big data is a substantial advantage for future competitive adv. Data analytics capabilities and data sharing efficiency are also substantially important.
The Team needs to truly understand where the market gap is and have a disruptive yet reasonable solution (oftentimes initiatives to decentralize the energy market are supported by Vertech). Also, the team needs to be experienced, proactive, and effective.

Q: What are the challenges facing the energy tech companies in getting their solutions to be adopted?

A:

  • Capital costs: For the solution to be adopted, the infrastructure needs to be in a late stage, and a substantial amount of capital is required to reach this level.
  • Sitting and transmission: Oftentimes, energy tech startups innovative solution comprises a decentralization initiative, which brings sitting and transmission challenges.
  • Market entry: Energy is a highly monopolized industry by major local players. New energy technologies startups face even larger barriers. They must demonstrate scale to attract investors and business partners, which is difficult to accomplish.
  • Unequal playing field: Energy market has always a degree of political influence. Most countries' governments still support utility R&D through direct subsidies, tax breaks, and other incentives and loopholes.

Q: Are established markets (Australia, US, Europe) willing to innovate, or does most of the potential exist in the emerging markets (Philippines, Malaysia, Vietnam etc.)?

A: According to the Global Innovation Index (2018), most innovation occurs in established markets, such as Switzerland, Netherlands, Sweden, UK, Singapore, USA, and Australia.

Established markets have a higher number of future-looking policy mechanisms to facilitate innovation. With regards to energy, the European FiT (feed-in tariffs) has been, to date, by far the most cost-effective initiative that has both encouraged and accelerated the adoption of renewable energy generation.

However, emerging APAC countries have a high potential for near future innovation intensity. For instance, countries like the Philippines, Indonesia, and India are liberalizing at a frantic pace, with supportive policy reforms, and incentivized privatization mechanisms. In renewable energy specifically, auctions are driving innovation and disruptive solution scalability.

In conclusion, both established and emerging markets have innovation-orientation mindsets. Although established markets seem to be home to incremental innovation, in contrast to the radical nature of innovation initiatives in emerging markets.

Q: It seems that these startups are only accessible to those with massive amounts of capital. Are there opportunities in the energy tech space for regular investors at this stage?

A: Yes, the energy tech space is no longer dominated by impact and institutional investors. There is a real economic profit. Even though energy tech companies have shown low ROI over the past few years, investment intensity is now accelerating again in the space. According to Deloitte (2019), renewable energy tech solution are specifically gaining momentum, and investors interest is and should be expanding in the sector since emerging policies are supporting renewable growth, and advancing technologies that boost wind and solar energy’s value to the grid, asset owners, and customers. On the demand side, increasing customer demand for renewable energy across almost all market segments continues to expand opportunities.

The supply side is buoyed by multiple factors beyond technological advances. Renewable energy costs continue to fall, and grid operators have an increasing array of tools and the experience to integrate greater volumes of renewables on the grid.

In conclusion, digital solutions developed for the renewable industry spread across the electricity value chain, renewables are at the vanguard of technology innovation that can open new revenue and business models in the electricity sector. Thus, there is a real economic benefit in investing in this space. Most represented regular investors usually are VC funds, corporate investments, and angel investors.

Q: What does the next 5-10 years look like in the energy tech space?

A:

  • Tech like IoT and Blockchain will most likely revolutionize and decentralize the energy markets.
  • Waste management and circular economy will gain more importance through tech.
  • Wind or Solar power production will intensify through automation, cutting time and costs.
  • Advanced materials and manufacturing: Perovskite and 3D printing are poised to revolutionize the solar and wind industries.
  • Smart renewable cities will start to emerge with tech like AIs. 

Want to hear more from William? He will be part of one of the panel discussions at the Future Energy & Tech Investment Forum at PwC Innovation Centre in Shanghai on March 27th, 2019.

To register at YooPay (China): https://yoopay.cn/event/fetiforum

To register at EventBrite (Outside of China): click here

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