Schneider Electric-Backed Venture Firm to Launch $520 Million Fund

With its second fund, the firm, based in Menlo Park, Calif., seeks to double down on a goal of fostering cutting-edge tech startups, some of which may eventually help Schneider Electric fill gaps in its own technology stack, products or services—either as a business partner or an acquisition, said Amit Chaturvedy, SE Ventures global head and managing partner.

He said that startups building industrial-scale tools for energy management and other areas often need a longer runway in order to grow their revenue than those creating consumer software apps. “These are areas that take longer to evolve,” he said.

But by leveraging insight from Schneider Electric’s customers and industry partners, SE Ventures can identify pockets of demand for specific services and match those with promising startups, Mr. Chaturvedy said. “Much of that tech exists today, but we have to move faster to commercialization,” he said.

SE Ventures currently has 30 active investments. This includes climate and industrial tech ventures. The fund expects to increase that pace with the new fund. According to Schneider Electric, 70% of the companies have entered into a commercial partnership.

Schneider Electric announced in May that it had acquired AutoGrid, a smart grid technology startup backed SE Ventures. AutoGrid builds software to harness the untapped potential of batteries such as those found in electric cars or backup power. SE Ventures first invested in AutoGrid in the company’s Series D fundraising round in 2019. Terms of the acquisition weren’t disclosed.

The AutoGrid deal “brings the tech in-house and will allow Schneider Electric to incorporate it in its own offerings, like EV chargers and charging software, into AutoGrid’s products, said Thomas Hodson, an energy-sector analyst at analytics firm CB Insights.

According to Mr. Hodson, Schneider Electric’s SE Ventures has a track record of directing investments in areas it is looking to expand. For instance, predictive-maintenance startup Augury, another standout investment, last year hit a private-market valuation of $1 billion, following a $180 million funding round in October. Predictive maintenance, an AI-powered technology that predicts equipment malfunctions in advance, is called AI-powered predictive maintenance.

Augury also has many large corporate clients, including

PepsiCo Inc.,

which has deployed Augury’s AI-powered systems in its Frito-Lay manufacturing plants.  

SE Ventures, as an investor, is not afraid of pivoting, Mr. Hodson stated. According to Mr. Hodson, SE Ventures was part of the first funding rounds for hydroelectric startup Natel Energy Inc. but later moved away from emerging power-generation technology markets.

Saar Yoskovitz,

Augury’s co-founder and chief executive, said an advantage of having SE Ventures as an investor is access to industry domain experts “that startups can leverage as they build their strategy or explore new technologies.”

However, the decision to double its investment funds comes at a moment when many venture-capital investors are withdrawing from this market as they wait for volatility in the public sector, rising interest rate and a dimming economy.

“There’s definitely a market reality where there is a large degree of uncertainty,” Mr. Chaturvedy said.

CB Insights reported that the number of corporate deals in venture capital fell 14% over the past quarter to 1,098, a decrease of 14%. The firm also reported that total funding dollars fell 34% to $18.6 Billion during the same time period.

These large corporate venture capital investors are not the only ones.

Alphabet Inc.’s

GV,

Salesforce Inc.’s

Salesforce Ventures

Microsoft Corp.’s

M12.  

Chaturvedy will continue to focus on earlier-stage startups for now as they are less affected by the economy. CB Insights reported that seed- and early-stage startups are taking over some of the losses from more mature startups’ sharp declines in investment. They took in 61% of total deal shares this year, as opposed to 55% in 2021. 

Chaturvedy stated that startups solving real-world problems will always be in demand. His challenge was to bring their technology to market quickly, he stated.

Write to Angus Loten @[email protected]