Posted: October 01, 2011
GE Financial exec Kevin Skillen to keynote CCIA event
Energy venture capital unit already having record deal year
The goal that guides the investment decisions of Kevin Skillern, managing director of the venture capital unit within General Electric Energy Financial Services, is deceptively simple.
"We want to work with the best of the best, because the scale of the opportunities and the scale of the challenge is very significant," he says.
Skillern, who will deliver the keynote address at the Colorado Cleantech Industry Association Industry Awards Celebration on Nov. 7, has had a busy year. Through early August, his venture capital unit had done 16 deals. That beats the previous high for any one year of 11.
Over the longer term, his unit has backed 35 companies, including four that have conducted IPOs.
Also this year, in January, General Electric went together with two other major players, ConocoPhillips and NRG Energy Inc., to create what they call the "premier investor and commercial collaboration partner for emerging and innovative energy technology companies."
Through their joint venture, Energy Technology Ventures, the three companies together committed $300 million in capital with which they intend to fund approximately 30 venture- and growth-stage companies during the next four years.
The new venture is reviewing everything from renewable power generation to smart grid, energy efficiency and emission controls, but also oil, natural gas, coal and nuclear energy. They will be looking primarily in North America, Europe and Israel.
Among their first investments was a Colorado-based company, Ciris Energy. Ciris, which is based in Centennial, aims for technology innovation that more effectively extracts fossil fuels. Most prominently, the company has developed technology to biochemically convert coal into pipeline-quality methane, the key constituent of natural gas. Natural gas, when burned, produces half the carbon dioxide of coal, and emits almost none of the other pollutants, such as mercury.
"The world needs new energy technologies," Skillern said, after mentioning the triumvirate of heavy-hitter investors. "Oil prices are high. There are increasing regulations in the transportation and power-generation industries. People are concerned about the environment all around the world. And it has unleashed a wave of innovation all around the world."
He added: "We want something that matters."
An extra dimension for GE in making investment decisions is whether the emerging technology could benefit from GE's hefty technological expertise.
GE is heavily invested in wind and also solar, biofuels and other sectors, but takes a broad view, as is evident by its interest in technology that can deliver less polluting coal.
"We believe in taking a portfolio approach," says Christa Bowers, spokeswoman for GE Capital. "We see a good future for renewable energy, and we stand by it. But for a long time there will be a need for fossil fuels, so why not try to make those clean as well?"
The venture capital unit of GE Energy Financial Services has also invested in Glori Energy, which is delivering breakthrough technology that improves recovery of oil from existing reservoirs.
Skillern grew up in Houston and worked for more than a decade in the oil industry. He has a bachelor's degree in electrical engineering and a master's in business administration from Stanford University. In a 2009 interview with the Wall Street Journal, Skillern said there are three main drivers of valuation: Is the market large and compelling? Is the technology transformational? And are there an adequate number of A-players in the management team who will build an enduring business?
GE's energy investments have not always paid off. "What we have learned from prior VC investing is that we should be prepared to hold energy technology investments through multiple stages of the business cycle and to focus on companies with sustainable business models generating revenue and profits, and in many cases with strategic value to GE," Alex Urquhart, president and chief executive of GE Energy Financial Services, told Fox Business.
Morningstar analyst Daniel Holland said technology needs to increase as conventional energy sources are depleted. But again, he sees GE being broad in its interest, and sure to stick around. After all, it's been in the energy business for 130 years.
"No matter which way the world shifts in terms of energy policy and no matter how the world thinks about consuming energy, GE will have a position in that market," he told Fox Business. ∴