By Dillon McDonald, Vice President, Incubation at National Grid Partners.
An open letter to all entrepreneurs building the next big thing in OT & IT for the Energy sector:
With the launch of National Grid Partners (NGP) two years ago, National Grid set out to be a role model in how corporations innovate and adapt to the energy transition. And while there’s been progress, the utility industry still needs a considerable amount of innovation to achieve a low-carbon economy in a way that’s easy and affordable for the people we serve. The best source of innovation I’ve found throughout my career is early stage startups, so we set up a compelling way for startups to work with NGP – Incubations.
For early stage companies (pre-seed to Series A), lack of capital requires creativity. It’s a challenge getting customers to take chances on a new company versus going with the old guard. Incubations at National Grid Partners offer a compelling mix of capital and resources to make it easier to build the next big thing.
Here’s a bit more about the ingredients that make up an Incubation and about our focus areas of access, sweat equity and capital.
Access – To be open for innovation means literally opening the doors – so we did just that at NGP by opening an office in San Francisco at 1700 Montgomery Street, just across from Pier 31. It’s where we host out-of-town travelers and convene meetings, happy hours and fireside chats to provide a focal point to galvanize the ecosystem. Companies we invest in have the opportunity to spend time with us in this space in order to take advantage of the ecosystem and engage with National Grid and NGP staff.
“Sharing space with Dillon and the NGP team was a great experience,” says Thomas Folker, CEO of our portfolio company Leap. “Being able to have impromptu discussions with our investors about the markets and other interesting developments exposed us to perspectives that would otherwise be hard to come by.”
Sweat Equity – Building relationships is helpful, but insights into the market and products that make customers rave are far more important. That’s why we align the business opportunity (National Grid’s strategic need) with your startup’s roadmap (your strategic priority). Whether it’s understanding which market to enter next, refining version two of a product, or delivering a case study from a key customer, our team sits shoulder to shoulder with yours to make sure we hit the milestone. Our team includes subject matter experts throughout National Grid, as well as the seasoned investors and operators at NGP. I would have killed for this access when I was building startups on the other side of the table, and it’s fun to see what a difference it makes for our portfolio companies.
Capital – the final ingredient in the Incubation cake. During my first two decades of building startups, I saw first-hand the challenges of taking corporate venture capital. Corporate investors can be unpredictable and even dangerous at times, largely because corporates tend to care more about the strategic value of an investment than the financial outcome that aligns interests with the startup. For Incubations, NGP looks for early stage venture returns, so we behave like rational financial venture partners throughout a portfolio company’s life cycle. We believe staying with a company and investing across follow-on rounds gives us superior returns and makes us a better financial partner to our startups. I believe our Incubation portfolio companies (i.e., Omnidian, Carbon Lighthouse, and Leap) would heartily agree.
And for entrepreneurs who haven’t yet started a company and want resources beyond the ones I’ve discussed, we also work with The Hive, a venture studio that helps visionaries build the next big thing in enterprise AI. I’ll have more to say soon about the value of venture studios and why we chose The Hive as our partner.
Incubations may be an ambiguous term, but every startup needs something a little different, so a bit of ambiguity lets us provide exactly what’s needed to accelerate the growth of early stage companies from the standpoint of a large corporate incumbent. I also have faith that every early stage CEO will intuitively grasp the value of a reliable capital partner, expertise, and access to relationships to help accelerate their company.
So please consider this my love letter and unabashed notice to entrepreneurs that National Grid is here to support the energy transition and your vision for it. And Incubations at NGP are vivid proof.
Dillon McDonald is Vice President, Incubation at National Grid Partners. He joined National Grid Partners from A3Ventures where he was managing partner responsible for investments in a broad range of mobility, IoT, and AI companies. Before A3Ventures, Dillon co-founded Greenstart which provided seed investments in energy & IT companies. He invested and advised companies across DG, IoT, and EV’s. As co-founder of Jumpstart, he led the company through acquisition and became CEO of the combined entity including Car and Driver, Road & Track. Dillon holds a B.S. in Business and Managerial Economics from University of California, Davis.