BP Ventures Investment Strategy
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In 2015, the multinational oil and gas company BP (formerly known as Anglo-Iranian Oil, then British Petroleum), was ranked Europe’s second largest company, with revenues of around $400 billion. With all that cash lying around, it’s unsurprising that the company has established BP Ventures, a transatlantic presence in the venture capital scene.
The firm’s stated aim is to tackle the dual challenge of meeting the world’s need for more energy, while at the same time reducing carbon emission. In theory, the investors are looking for partner businesses that could help BP transition to a low carbon company. We take a look at how that strategy is holding up in the UK.
Transport Disruptors
In terms of British investments, a significant share of BP Ventures capital has actually gone to companies looking to disrupt the transport sector. Last month, BP co-led a £5.5m equity injection into Drover, alongside Partech and Cherry Ventures.
This company offers a car via subscription service, with all the usual hassle-inducing tasks like buying insurance and paying road tax included in the subscription fee. Users can cancel as and when they like (depending on payment plan), and don’t have to worry about selling their car on when its no longer needed. They can simply return it upon cancellation. The scope here is considerable for disrupting the car ownership model, particularly in cities.
Victor and RocketRoute, two British aviation tech companies, have also recently picked up capital from BP Ventures. Victor operates an online marketplace that is similar in character to Skyscanner, except that it caters to private jet hire. Their web and app platform is out to make chartering jets much easier and more transparent, and with their “empty legs” booking function, more efficient to boot. RocketRoute, meanwhile, develops cloud-based flight management software for helicopter and aeroplane pilots.
BP Ventures moved £2.18m into RocketRoute in February 2016, taking a 26.3% stake. Earlier this year, the company was acquired by Alyssum Group, Victor’s holding company, which was formed with BP cash. So, both of BP’s aviation investments are now part of the same corporate structure, with a significant BP stake throughout.
It’s not entirely clear how these transport investments match up with BP’s stated aim of becoming a low-carbon enterprise. It could just be that the VC team sees them as a potential profit booster in the future. More likely however, is that these startups, by disrupting and streamlining the transport sector, could directly impact how much petroleum (BP’s main product) is consumed. If BP is to lose out in this regard, they will want to have a share in the companies profiting from the market changes.
This is supported by BP’s investment into Fulcrum back in 2016, which produces low-carbon biofuel for jets. If biofuel starts replacing BP’s kerosene, they will have a hand in it.
Cleantech
BP has taken part in three equity rounds with Heliex Power, a Scottish company which develops technology that can recover energy from steam in industrial processes. Altogether, Heliex has raised around £17 million through 7 equity rounds, the latest of which gave the company a pre-money valuation of £20.6 million.
This is more clearly in-line with the VC’s strategy of increasing energy efficiency – Heliex’s tech could directly increase the amount of energy produced from each unit of BP fuel, leading to reductions in carbon emissions.
Perhaps un-intuitively, this is BP Ventures only investment into a British startup touting a cleantech product since 2011. Clearly, this is not the main focus of their strategy in Britain, though the picture is slightly different in the United States.
Market Consolidation
The rest of British-destined BP capital has gone to BiSN and Fotech Solutions. Both of these operate directly in the oil and gas space.
In BiSN’s case, they have developed a new “thermite heater” that improves how metal structures are sealed together. Their main market is the construction of wells by oil and gas companies.
Fotech, on the other hand, develops acoustic sensing technology that can detect disturbances and strain amongst industrial structures. Again, their technology is used primarily by entities operating in the oil ands gas sector, to monitor the integrity of wells and pipelines.
These investments should come as little surprise. With their direct relevance to BP’s operations, this can be seen as the multinational consolidating its hold on key aspects of their supply chain.
All in all, BP Ventures’ investment strategy in the UK is taking a much more nuanced line than, say, simply investing in solar energy technology. By investing in disruptive transport startups such as Drover, they will maintain a degree of control over how the markets for their products either increase or decrease. They’ve also taken a keen interest in the energy reduction technologies of Heliex Power, which could well help them reduce their carbon footprint. Moreover, they have followed through with their move away from “alternative energy investing” towards more mainstream energy projects, by taking stakes in the oil and gas tech of BiSN and Fotech Solutions.
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