Robart Brothers Seek “Unconventional” Funds for Energy Tech Startups
Houston—In a post-Surge Ventures environment, what’s the most viable way to invest in and support the growth of local, young energy technology companies?
That’s the question in front of Chris Robart, and his brother Alex, as they develop their investment firm Unconventional Capital. The brothers got their firm up and running just as Kirk Coburn, founder of Surge Ventures—which hosted a cleantech startup accelerator for four years—said he was closing up shop due to a dearth of industry support.
“I’m not going to say it’s impossible, but it’s hard,” Chris Robart says. “(Surge) made a good shot at it.”
Young energy tech companies need a lot of hands-on support, both in mentoring and capital. But sales cycles in energy are longer than for other technology sectors. A way to make those economics work is to increase the number of investments, but that reduces an investor’s bandwidth to work with their companies, Robart says. Also, while the “oil and gas market” is a big market, most startups’ products are applicable to much smaller market segments.
“It’s a scaling problem,” he adds. “You can only grow so fast and only so big.”
That tension has led the Robarts to try to find a different investment model, instead of a traditional venture capital fund that targets early stage companies. A private equity model tends to focus on companies a bit beyond the startup phase.
While they explore their options, Robart says the firm has made seed investments in a couple of energy technology firms, such as Corva, which provides predictive modeling and analytics in drilling operations; and Water Lens, which does real-time chemical analysis of water used at well sites.
Even as the energy industry continues to grapple with the impact of low oil prices, young companies that are able to use technologies to promote efficiency and cost savings are attractive to the large oil companies, energy investors say.
Some have taken different approaches to finding investment opportunities. This summer, Alex Rozenfeld, who formerly led Shell Ventures, started his own firm, Climate Impact Capital, to focus on cleantech investments in water, food, and environmentally friendly energy products and services. His idea is to tap into investors such as large foundations and family offices that take a longer term view on returns, and buy into his belief that tackling climate change is good for business.
Houston Ventures founder Chip Davis says his $35 million fund has been successful in digital oilfield investments, and those include support services such as NuPhysicia, which creates healthcare networks for geographically dispersed populations such as on offshore oil rigs.
Robart and his brother got into the energy industry at their firm PacWest Consulting Partners, a research and consulting firm. They stayed on at PacWest after the company was bought by global consulting firm IHS in November 2014, and they later helped to found a water technology company, Digital H2O.
Now, as they invest in energy startups more broadly, Robart says one of the main challenges he’s working with is that many of the experts driving innovation in analytics and software come from industries outside of oil and gas.
The management team at Corva, for example, has deep expertise in analytics and gleaning important information from such data collection, he says. But they were new to the oil and gas world when they formed the startup.
“The founder has been heads down for three, three and a half years getting familiar with the technology challenges in drilling,” Robart says. “While the outsider perspective allowed him to take a different approach in using software to solve oilfield problems, there is still a big credibility gap he’s got to climb from people within the industry.”