In their annual global survey of executives, the consulting firm McKinsey highlighted an, “ongoing shift in global economic activity from developed to developing economies, accompanied by growth in the number of consumers in emerging markets.” They also saw that technology is not only unlocking the free flow of information but is also creating truly global labor markets. Beneath this apparent good news lay an undercurrent of anxiety about natural resources scarcity and stewardship. Executives remain concerned about the impact that increasing constraints on the supply or usage of natural resources will have on their companies’ profits. More significantly they see a need to develop innovations to shift need for natural resources.
Where some executives see cause for concern, others see opportunities. Rather than place bets on increasingly scarce resources, some companies choose instead to bet on technologies that transcend resource scarcity. If ever there was a marker to identify those companies best-positioned to innovate, the ability to see through the chaos of the present and invest wisely on long-term opportunities is one of the surest indicators.
What sets these companies apart is often a firm belief in their own capabilities to read changing market conditions better than their peers. While larger firms, with huge capital equipment investments, might be able to make and transform markets, sometimes it is the application of capital to a series of smaller investments that can produce extraordinary returns. One such company that is doubling down in the sustainability and clean technology arena, well beyond its apparent size, is Virgin Group through their Virgin Green Fund.
Virgin Group has created more than 300 branded companies worldwide, employing approximately 50,000 people, in 30 countries. Global branded revenues in 2009 exceeded £11.5 billion (approx. US$18 billion). The Virgin Green Fund is a much smaller play but is a direct expression of the innovation focus of the peripatetic founder, Sir Richard Branson.
The Virgin Green Fund is an independent private equity firm investing growth capital in the clean energy and green tech sectors predominately in North America and Europe. They invest in product, equipment and service companies with proven commercial success and strong underlying fundamentals operating in Virgin’s core sectors and geographies. The great thing about Virgin Green Fund’s investment approach is that seek to collaborate with management teams to increase the value of their businesses by providing ready access to, experience and global networks. This approach is designed to help companies seize opportunities and solve problems.
…we work collaboratively with our portfolio companies, bringing to bear the operational expertise and financial acumen of our Team to help management teams think critically about strategic issues such as market positioning, recruiting, acquisitions and financings.
This collaborative approach appears time and time again the way Virgin Green Fund describes its work and where it chooses to invest. So, why the heavy emphasis on this kind of supportive investment? Value generation and its maximization are at its heart, and collaboration is seen as an essential ingredient in that effort.
One such investment is a company called Wildcat Discovery Technologies. This Company is not focused on the production of clean energy but with its focus on innovating in the materials science domain it is seeking to overcome several key technical challenges, a principle one is the energy storage dilemma. To that end, Wildcat has developed a workflow that enables them to synthesize and test an eye-popping 1,500 unique materials every week. They employ a massively parallel approach that enables Wildcat to explore a much broader range of electrode materials, electrolytes, formulations and additives than is possible through conventional methods. Needless to say a breakthrough in battery technology would be transformational across multiple industries.
For Virgin Green Fund developing companies with robust pipelines and a track record of growth in revenues and profits is their path to success. This focus is so strong that their investment charter highlights that they will, “Conduct business with our partners in a way that is open, collaborative, based on trust and equitable.”
The path to innovation success for Virgin Green Fund is doubling down on collaboration. And it looks to be paying off.
