The Arctic is melting, while hurricanes, blizzards and heat waves leave millions of people and animals in disarray. Lisa Lambert, the head of National Grid’s CVC National Grid Partners, told TechCrunch+ that environmental and social concerns should be top of mind right now for any smart investor.
“Not because it’s the right thing to do, but because there’s an enormous opportunity,” she said. Through her work, she invests in technology focused on climate change and mitigation. Though funding to climate startups dropped slightly in Q1, she sees that as a mere reflection of the overall venture downturn. “By no means do I see the beginning of a concerning trend.”
Instead, she points to the fact that the International Energy Agency estimates that global investment in climate technology needs to hit $4 trillion a year by the end of this decade to meet the promises that government and corporations made of becoming net-zero; that’s four times more than it is right now. She expects the federal Infrastructure Investment & Jobs Act, the Inflation Reduction Act and the EU Green Industrial Plan to infuse billions of dollars into the sector; she estimates that trillions of dollars in private investment capital will be waiting to back scalable climate-focused technology.
Through her work, she leads the charge. Lambert founded National Grid Partners in January 2018, when she and other leaders at the company realized it was best to “disrupt ourselves before we were disrupted.” National Grid is one of the largest utility companies in the world and owns various electric and natural gas networks to power the United Kingdom and the Northeastern United States. Lambert said the company is under a mandate from the British government to reach net-zero carbon emissions by 2025.
“Our CEO recognized that getting there would require new investments in technology to achieve the ‘three Ds’: digitalization, decentralization and decarbonization,” she said.
Previously, Lambert was a GP at a clean tech fund and before that spent nearly two decades at Intel Capital, one of the world’s oldest and largest CVCs. She moved from Intel to climate tech because she had a thesis that the sector was due for a “renaissance” following the clean tech bubble collapse in the early 2000s. “And because, as a mother, I can’t think of a more important sector to invest in,” she said.
She has a point: By 2050, which is the target to reach net-zero, the oldest of Generation Z will only be in their early 50s. “As a corporate VC, we’re measured not just on financial return but also on how much operational and strategic value our portfolio provides to our parent company,” Lambert said.
Under her, NGP has allocated $400 million to 40 startups and four specialty funds in which NGP is a limited partner. It’s had seven exits to date, and five unicorns; for those interested in pitching, the fund is currently stage agnostic. At the same time, the firm has focused on opening doors for founders to enter the highly regulated and tough utility market while providing ways to further use technology to innovate a sector with a critical role in climate mitigation.
I caught up with Lambert to ask her five questions about the future of NGP and the importance of her work.
As part of a power company that uses natural gas as a resource, what responsibility do you believe you and other similar CVCs have to offset and protect the climate?
Last year, National Grid introduced what we call our vision for a Fossil Free Future, which will affordably replace our natural gas network with green hydrogen, electrification, networked geothermal and other alternatives in the coming years.
Our parent company earlier this year sold off our U.K. national gas distribution network, so we’re all electric in the U.K. We also recognize, in practical terms, that you can’t just turn off natural gas overnight: We have millions of people in the Northeastern U.S. who rely on the fuel we supply to heat their homes and run their appliances. So at NGP, we’re helping National Grid get to that fossil-free future by doing things like investing in zero-emission hydrogen production.
We also developed an Innovation project to replace natural gas in restaurants with biogas generated by breaking down food waste. Grid’s business units in New York and Massachusetts are working to implement that as we speak. These are early steps, but they’re exciting and promising.
How diverse is your current portfolio, and why is it important to fund women and people of color regarding innovation in a sector as important as climate tech?
If I’m entirely honest, it’s not as diverse as I’d like. If you look at the population, 50% of the world is female, and that’s not the case with our CEOs or just about any other VC’s portfolio.
I will tell you we grade every prospective deal on how diverse the leadership team is, measured in various ways. And we’re mindful of our own diversity as a team: I’m proud that a third of my team are women and people of color. I’ve also committed to getting those numbers to 50% by 2025.
As an LP, how has the market environment affected you?
Both as an LP in the specialty funds we back and as a direct investor in startups, we know this is a tough market for innovative companies. Anytime the IPO window is tight and interest rates are high, the traditional paths to venture capital exits (IPOs and M&A) become more challenging. Like every VC I know, we’ve been counseling our CEOs to be mindful of spend and to really focus on driving results for their customers.
The flip side is tight markets often provide a great opportunity for investors who think long term; valuations tend to be less inflated, and startups are often able to recruit talent from bigger tech companies. History has shown again and again that tough times produce disruptive, market-defining new entrants.
Where can AI be useful in helping make a cleaner environment?
Let me give you just a couple of examples from our portfolio.
We’re an investor in a Silicon Valley startup called AiDash, which runs satellite imagery through a proprietary AI engine to help owners of distributed infrastructure — think utility companies or railroads — identify vegetation encroachment that could create problems, like a tree that could fall and knock down a power line. While National Grid was adopting its technology across its U.S. service territory, our counterparts in the U.K. were trying to figure out how to meet a corporate commitment to improving the environmental stewardship of the land we own. NGP’s Innovation team realized AiDash technology could be applied to this problem as well. By taking satellite maps of the land our transmission lines run through and using predictive analytics, National Grid can determine how, say, extending a line in one direction versus another will impact biodiversity in that area.
Another company we’re excited about is Urbint. Utility companies every year deal with hundreds of gas pipelines damaged by third-party digging. Those breaches not only release methane into the atmosphere but also cost the industry hundreds of millions of dollars. Urbint uses AI to comb through public and private datasets to predict which digging permits are likely to disrupt buried pipelines and alert utilities to prevent those breaches from happening.
CVCs were consistent last year in capital deployment despite overall pullback in the sector. Do you think this trend will remain steady this year? How many new deals are you looking to close, and how much of your fund are you hoping to deploy this year?
One advantage corporate VCs have over purely financial investors is their strategic mandate to help their parent companies improve. So yes, I expect CVCs to continue to deploy capital because even in a downturn — maybe especially in a downturn — big companies need to identify and adopt new technology to help them become more efficient.
As for National Grid Partners, we’ve received another $75 million from our parent company to invest this year on top of the $400 million I mentioned earlier. And we’re deep in conversation with National Grid about our next fund; I expect we will have exciting news to announce in just a few weeks.
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