Intro: Unlock the high returns of the expanding venture capital world right here on the Emerging Managers Podcast.
Tracy Hazzard: Scott, we’re gonna talk about the energy business, and I know this excites you right now.
Scott Kelly: It was, it was really intriguing, you know, um, I got introduced to Neil from one of our previous guests, Chris Howard, and.
When he said E Energy, I’m like, okay, this is gonna be boring. But then almost simultaneously, all the press now is about energy. Energy is the big thing. And I remember about a year ago, some were telling me, look, we gotta get involved in these data centers and AI and all that and go, yeah, the real play is energy.
’cause they all need more power. And you’re finding all these energy companies, the public company stocks are just blowing up. And so it’s becoming, you know. The industry has been around the oil fields and, and the coal mines have been around for a decade, you know, a hundred plus years. But now energy is invoke because they’re powering these massive companies.
You know, Amazon, I think it was, I forget the name of the company, actually bought one of the towers at Three Mile Island.
Tracy Hazzard: I saw that. I saw that it was crazy. And because it was easier to renovate something than it was to build it from scratch, it was faster, and it still took like a decade. To get it up and running
Scott Kelly: and it’s, it was really interesting to talk to Neil because, you know, he obviously knows that business, Colin, he’s been in the oil field.
He is worked for Shell, he, he knows that business. But now all of a sudden his business was always important. But now it’s massively important ’cause there’s just not enough power, the power, the next generation of technology, which is, which is really pretty cool.
Tracy Hazzard: Yeah, so you have Neil Deman on Energy Transition Ventures.
I like that transition part. I think it, it sets ’em apart in a really unique way. He’s the general part partner of Early Stage Fund Energy transition ventures, and he formally helped launch Shell Ventures and Jane Capital. Yeah, those are big players, energy and clean tech focused venture capitalist involved with amazing founders and great exit at every step.
He’s a six-time founder with multiple IPOs. He started his energy in energy and then went into.com. So he is got a broad experience and he won the Libertarian nomination for US Senate in Texas. But he lost in the general election pretty badly. He admitted
Scott Kelly: it was really interesting conversation with, ’cause he’s got a really upbeat, crazy personality.
You know, people in the energy field are just kind of in my background ’cause I. My first job outta college was in Lafayette, Louisiana, in the middle of the oil in natural gas field, and they’re not the most exciting guys.
Tracy Hazzard: So I’m gonna just say this by, I know because my dad was in the oil industry,
Scott Kelly: right?
And Neil has his really bubbly personalities, funny and you know, the, and, but he knows this stuff cold and which I really, you know, the whole transition part because obviously he understands that energy. Isn’t just in the ground, it’s in the air, it’s in the ocean, it’s everywhere, it’s in the sun, it’s everywhere else.
He really gets that. And, uh, it was a really interesting conversation. He, he, he really put a, a new tech spin on an old tech industry.
Tracy Hazzard: Well, let’s go here, this interview with Neil Dykeman. Hello
Scott Kelly: everybody. My name is Scott Kelly, the founder and CEO of Black Dog Venture Partners and your host for the Emerging Manager podcast.
Excited to bring on Neil Dikeman of Energy transition, uh, ventures. Uh, Neil, welcome to the podcast. Thanks for having me
Neal Dikeman: on. As, as we were talking earlier, you happen to have a guy on the other day who was an old good friend of mine, and so I, I just had to be on your show. I’m really excited to be here.
Well, it’s great to
Scott Kelly: have you following up, uh, on Chris Howard. So Howard, so Neil, before we get into the fund itself, share a little about your background prior to launch you, the fund.
Neal Dikeman: Sure. Sounds good. Well, I’m, look, I’m a, I’m a Texas boy originally. I’m, and I’m back here in Houston now. But, you know, after a short stint in investment banking, um, I, I ended up out in the valley, kind of 1999 doing manufacturing turnarounds at the height of the top.com boom.
I was out working for a fund out there that was dumb, right? Like everybody I knew. Working in a software startup of some sort or other. And here I am working in a tube bending plant. Awesome shop. I learned a lot. We had fun. I happened, got to be the corporate secretary of Ocean Pacific, if you remember the op surf wear brand.
That was us and we were the successful turnaround in that. But I need to do something different that wasn’t going to be a career stop in 1999. So I ended up jumping to the fund behind yellow pages.com and a few others. Ended up getting into tech and, and startups and venture back then. And in, uh, 2001, after the tech wreck, my boss and I at that firm pulled the team and hooked up with Macquarie Bank and launched a company called Jane Capital.
Yeah, we were their advisor to Macquarie Bank’s Tech Fund. Back then and we ended up advising Conoco Phillips and a few others in Shell and a few others along the way. And, uh, then we were doing seed investing out of the Jane Capital portfolio and did real well. We ended up, uh, kind of three IPOs outta seven deals there, and, and then shell caught me at a weak moment.
I’d moved home to Houston for, for family reasons, and they managed to convince me to come over and help launch Shell Ventures in, in 2013. And so I was kind of the, the guy brought in to, to launch that thing. And we had a great fun ride and Shell Ventures has done extremely well since then. I did, I had three deals there.
Yeah. Um, all exited, you know, one IPO. They were, that was a fun group of people. I got to work with guys with over a hundred patents to their a EI mean, just a, it was just a really fun time, but not a long-term spot, you know. So after about three years there. CDC was not going to be a long term play for me.
I ended up leaving, um, took a short break because I was kind of burned out, needed some time off, and then I, um, I filed to run. Against Be O’Rourke and Ted Cruz in the 2018, uh, um, Senate race in Texas. I was, I won the Libertarian nomination and then lost to Ted. Yeah. Um, as did Beto. We are our, our track record’s about the same.
There actually, mine’s a little bit better than his. I’m one and one. He’s a little under 500. And, uh, yeah, but no, it was a, it was a great time and, and did that. And then, um, in 2020, an old friend of mine, Craig Lawrence, who was at Excel Partners back in the Cleantech days, called me up and says, Hey, I’m working with this large lp, Korean National, uh, a international company called the GS Group.
They want to get into CC, they want to give you energy, you wanna help me And. Conversations there ended up being us helping launch GS Futures, which is a CDC in in San Mateo. Now I’m operating globally, construction, retail, uh, uh, and energy. And then we set up ETV and they were our anchor investor in that, in the first fund.
Craig and I had been trying to do business for years. He, this guy had smartest dude I’ve ever met. PhD from Stanford couldn’t get into real school. So he ended up going to Stanford and um, worked for Excel to launch their clean tech group. But he was actually an ideal product designer in the early days.
And he got to Excel. I was blogging, I’d met him, he was, both of us were a bit younger and the dude hit O Power and Sunrun, two of the category creators in our sector, like Okay. And those were the only two deals he did. Like, okay, this guy’s, I tried to hire him, he turned me down. I tried to get him to a startup with me a few years later.
He told me it was stupid and turned me down. So finally he and I get in business together and, and launch this fund and, and, and we came out in 21 in the teeth of the biggest runup and valuation boom in history, turning out to be an awful vintage for everybody but us. We’re doing great. And, but you know, we got to work together and now we’re out backing some pretty awesome founders and, and having fun.
That’s the short story.
Scott Kelly: Fantastic. I appreciate that. Great background. You already have a better sense of humor than your friend Chris. I’ll give, I’ll give you that. Well, that’s
Neal Dikeman: good, right? Okay. With the goal of this, of this show is to beat Chris’s podcast beat Chris.
Scott Kelly: That that’ll, that’ll be, tell Chris that’s the goal
Neal Dikeman: here.
Scott Kelly: Yeah. For, for, for our editors. That’s what we’re gonna tell the show better than Chris podcast. Fair enough. Awesome. Well, well deal. Thanks for that background again, and let’s talk about the fund. Talk about your thesis, how you’re investing, where you’re investing in, and why you’re good. Sure.
Neal Dikeman: Well, it’s called Energy Transition Ventures.
It’s kind of picked, we picked the term of art. The goal kind of broadly is anything that benefits from, or, you know, drives the energy transition is in thesis. We’re early stage folks, uh, but we do cheat on that a little bit. We have a, what we call a growthy sleeve, and we’ll do this in all of our funds.
The, um, uh, we’re as early as I can get. A hundred K million dollars, whatever, pre-seed, two guys in their garage. We’ve done that a couple of times now. Spun Map University. I like to be the very first checkin lead, but I will go as late and as small or as big as I have to go to get into the category killer and creator in that particular sector.
So we’ve done that several times. So yeah, that works. ’cause we’re, we’re a specialist in energy, right? So if we can’t find a company that we’re excited about in that. Subcategory or genre of, of energy transition, we’ll just skip it. We wanna play what the, the guys that we think are going to win. And um, so that’s got us in some super interesting companies.
Yeah. Um, and I’ll talk a little bit about some of those, the themes we like. Look in 2010, 2008, 2006, whenever. The story that we invested in, and both Craig and I did this was essentially it’s the policy stupid. We called it alternative energy ’cause it’s more expensive than conventional. Therefore you invest in things that have good policy support.
There’s no disruptive technology, it’s disruptive policies, and even things like Tesla benefited from that thesis. Um, today’s different. Today what’s changed is it doesn’t matter what the policy does. Yeah. There’s tariffs and other stuff that causes kerfuffles, but in reality, it’s now cheap. It’s an, and energy tends to be about commodity prices.
So solar is now so cheap. We’re, we are, I was talking to a friend of mine at r at RPE the other day. He happened to be at BP Solar back in the day. Yeah. And, um, I’m like, Hey man. Yeah, because he, he worked for an old friend of mine in like 2000 in that timeframe, and I said, what was y’all’s best target?
Solar costs of the, the module cost. Gimme some metric anywhere in the future, like a massive scale in success case, right? Wildest dreams. And he laughed and he said probably about a dollar a lot for the module. Well, today the industry makes them at less than 10 cents, right? An order of magnitude better than the wildest dreams.
Batteries are close. We’ve changed everything, right? So rule number one is don’t bet against crystalline or lithium. Let, um, meaning lithium ion batteries and crystal and solar modules, we’re riding waves of success. We’re in second and third and fourth order opportunity sets. And so that really has set the underlying theme of what we like is things that are changing the world, even if you got policy support that have a, a native path to rewrite based on these huge mega trends.
Scott Kelly: Interesting. So obviously you shared some success prior to the fund. Let’s talk about some of those stories. Talk about some of these great energy transition investments. Well, to
Neal Dikeman: quote one of the, uh, co-investors in, in, in one of my, uh, biggest positions, well, all of my children are. I love the, which is of course not true.
So for the largest position, we got one of our big, you know, favorites, you know, ’cause they’re all favorites is oum. It’s one of the green hydrogen companies. It’s actually the ex bloom energy technical team. Mm-hmm. And we followed a gentleman by the name of Amilla, who’s the, was the, uh, chairman of Sun Edison now runs an investment arm.
Yeah. And um, the two of them had cooked up and grown this business. We got a couple of gigawatt plant per year in India. Guys are doing great. That was one of those where. We were coming a little later stage, bigger rounds. We take a smaller piece and are just helping support the business. Then we’ve got a company out of Austin that we love called Resilient Power.
This is a solid state transformer, you know, play. It’s a really tough technology. It’s a how do you fix the grid and bring something that’s not just a hundred year old copper iron transformer, you and gobbly go of electrical equipment to what? What’s supposed to be a modern digital grid. Well, it turns out EV chargers need that sort of thing.
Solar plus storage, not just, not just grid utilities and data centers. Right. So you can imagine where that story is going. It kind of blew up as soon as the data center market got there. So we’re, we’re making big power equipment there in our Austin facility. That’s the, and one of the things I like to tell people about that one, it is the first intrinsically EMP hardened transformer ever developed.
Just the nature of that particular design. And it’s also one of the few transformer, you know, factories being built in, in the us. Uh, our first deal was a really fun one. It was a, yeah, it’s called Zeit View. Now was, was then named Drone Base. It’s a USV backed portfolio Company USV and, and Upfront did this thing about 10 years ago, came outta Y Combinator hot little drone company.
Well, it’s in the story we tell the founder’s, ex-military, he was gonna be basically the Uber of drones. It didn’t really work. Platform work, software work. Not a lot of business. So he and the board, you know the guy’s name is Dan Burton, is the CEO. They pivoted, say, well what does a customer need? Well, customer just needs services so we’ll do it.
And now they are one of the leading, you know, arrow inspection companies out there. They’re serving solar, wind buildings, telco, utilities. Just do an amazing, just brought in a very large round. With, um, uh, climate investments, which is all the little oil company cool kids investing together in climate deals.
Yeah. But just, you know, growing the hell out of the business. They’re 10, 15 x bigger by revenue than when we invested and we were, yeah, just an amazing story. So we’ve had a really cool opportunity to back some awesome founders. Uh, I tell people you’re, um, you know, venture capital is kind of like you cow.
You judge a cow by its calf. You judge venture capitalists by their CEOs and founders. Right. It’s, that’s, you know, and
Scott Kelly: I’m glad you said that because that was the question I was gonna ask. So obviously you’re, you’re in some leading technology in energy. Talk about the founders. I mean, what’s the characteristics you look for?
Obviously they gotta have great tech, but someone’s gotta build a business and sell something. Wow. Scott, we actually
Neal Dikeman: talk about that a lot. What is. Archetypical profile. What do we like in a founder? Is there some weird biases in who we’re picking? You know, it’s just like you kind of just gotta have enough little EQ to think through your picks because yeah, to quote one of my old colleagues years ago, he knew who he was going to fund in the first 30 seconds, and which is a little not true, but in some respects it is.
He has a pattern. What he’s basically saying is, I have a pattern. I know what I’m looking for, and I can feel it. And then of course, let’s see if the thing is, you know, hold the deal holds water. But like you, you do know and you can feel it. So we have in our portfolio, we don’t have an archetype that we target, but there probably is one that we have picked on.
Um, we tend to resonate very well with technical founders. Not all of our founders are super technical, but a lot of them are. We have up until the last deal we did, which was Dandelion Energy, which a Google X spin out run by a guy by the name of Dan Yates. Well, Dan, this is his third time running a company and he came off the board to run this thing.
That’s part why we got excited to join. It’s cool tech and all, but we have crush on Dan. Dan also happened to be the O Power CEO that my partner cranked back many years ago. Right. So, yeah. But until Dan, I think. Every company we had done the first six companies were all first time founders, first time CEOs.
Wow. That’s interesting. Um, half of them or, or, uh, had a, had founders over 40 half founders Under 40, yeah. Um, several had immigrant CTOs. Two of our favorites. ’cause they’re all favorites, right. Are ex-military founders. I mean, two outta seven. Right. And they happen to be two of our biggest companies. It’s just interesting who you go for.
We have, um, yeah, I’ve got a female founder and I think three quarters of them. Yeah. It’s just kind of a, yeah. We don’t plan for any of this. Just kind of looking at who you back. And so the ones that have clicked with us, they tend to be very, very technical and really know their stuff. They know everybody in their sector.
You, you’re, you’re banking on them, on their technical and engineering competency, you will build the rest around them. Uh, or they happen to be executives like Dan was moving from a software business to a hardware business. But he’s an amazing executive who knows energy. Uh, and he doesn’t put up with anything.
He’s guy’s, guy’s super smart. Our, our guys in, in Austin, our resilient power one. They have father son team. One of my strongest startups do an amazing age spread. Obviously quite generational, and people don’t necessarily like father son teams. It works out well. These are some of the best engineers in their sector.
They literally wrote the book on solid state transformers for DOE. Yeah, so those are the, that guys that have kind of clicked with us and now maybe it’s just the others don’t like us. That’s possible.
Scott Kelly: So I, I’m gonna go back to something you mentioned about data centers, because, you know, about a year ago I was talking to a fellow investor.
He was saying, yeah, I wanna invest in data centers. And I said, look, energy, they all need energy. So talk to me about how the revolution in terms of data center foundries and all that, how that’s impacting the need for energy and the need for cost efficient energy.
Neal Dikeman: So that’s, that’s a good segue, right when we set up our first fund.
The thing we talked about most was this solar and batteries and the big wave. And, and so let’s look at, we’re 36 odd months later, 40 months later. What’s changed? What’s new? New, right. Um, data centers, ai. Now I look at my old pitch deck from 20 20, 21. Yes, we talked about ai. We might have mentioned the word data centers, and it said AI slash ml and it was really a thing.
More of a, and you saw this in, in kind of. 2015 to 2020 timeframe. The concept of AI generative and what it does for data centers and power, that’s obviously new, so how impactful is it? We have three, maybe four of ’em that are heavily, heavily levered to AI and data centers. One of ’em, the grid software company that’s building an AI model for power grid.
It’s a terrific piece of tech. Could not be done until generative AI was was real. Um, and probably not until compute was, was cheap. Yeah. Our, obviously our solid state transformer company, they huge chunks of customer demand from data centers. We brought Amazon in as an investor into that, not just for that side, but also for the ED side.
They happen to be one of the biggest purchasers there. And uh, then, um, um, the Zeit view guys are building huge amounts of AI tool that gets on top and, yeah, well why are they doing that? Because they’re basically doing image capture and then you gotta turn that into information. And which tends to be in ai, you know, type problem set.
Yeah. But what’s really changed across our sector, when you go ask folks what does data centers mean to energy, it’s driving power demand in OECD, in Europe and us, et cetera, in ways that has not ever happened in my lifetime, when I was growing up in energy, you could count what’s GDP growth. That will be energy growth.
Full stop. In emerging, and so all the demand came from emerging markets, China, India, et cetera. Today we have overloaded grids and new demand growth in Texas, in Louisiana, in California, in Virginia, in the uk, right? So we’ve never seen this before, so we were always betting that costs down on technology are gonna win today.
We’re even seeing power prices rise while the cost to serve power is falling. This is amazing and it’s all data center driven. So AI has created this double impact. One is the toolkits that you see and everything else as well as some amazing high, high growth products. And the other is, yeah, insatiable power demand that may even be dealing from cost.
That’s a weird new and awesome.
Scott Kelly: It’s, it’s amazing you guys. You have like a companies like Amazon buying energy companies. You got three Mile Island reopening. It’s, it’s amazing. Okay. That’s nice. We won’t, we, we probably shouldn’t go talk down other
Neal Dikeman: people’s
Scott Kelly: stuff, but
Neal Dikeman: that is
Scott Kelly: absolutely cray cray. Yeah, it, it’s, it’s absolutely insane.
So let’s pivot a second. So obviously we talked about the industry and the opportunity of investor side. Let’s, so this podcast, we we’re talking to a lot of folks that are interested in invent investing in ventures. So it’s either hiding with individuals, LPs, yeah. Uh, RIAs that, uh, recommend alternatives.
So let’s talk a little bit to those folks from, uh, now. Tell me what’s the profile of your current
Neal Dikeman: LPs today? So where we are, most first funds are pretty high net worth and all that. We ended up being lucky or, you know, uh, or gut for punishment. One of the two we have, we have some amazing LPs. Uh, the GS group outta Korea was, was our anchor.
We have several of their entities or investors. They, um, that’s half of the old LG they had split apart many years ago. The Gold GS is the Gold Star. Im lucky Gold Star, if you remember that brand. Yep. Yeah. And so they have invested in dozens of funds and Yeah. And, and, and then their whole CDC as well, we were with their first position, um, got a couple institutions involved in the, in the fund.
Which is probably fairly rare for a, for a first fund, but has worked, worked well for us. And then we have a pool that we call our founders Pool, which is smaller checks from some family offices and, uh, more importantly individuals who really know their stuff in our world. Instead of having this big fat advisory board and all that, we’ve just got some amazing executives inside.
So like when I need to do power electronics. Yeah. I got one of the best power electronics people in the world. Happens to be an LP in West Fund and the uh, uh, the couple of old friends that have been in venture for a long time and are kind of out now or retire, invest in for themselves therein. But like look, I know I can call folks that have been doing it for a lot longer than me and know their stuff and are lights out.
Good. And yeah, get a little bit of, little bit of brain power when, when I need it. So that’s been kind of the mix. Our, our next fund will probably look a little bit more classic, a little more, a few more institutions, and then we’ll try and broaden it to kind of hit the, some of the family office and high net worth.
Yeah. Um, markets that are, you know, frankly carrying a lot of the, what we think is the future of, of, of venture.
Scott Kelly: Okay. So let’s, let’s talk to those potential investors in either fund one, if it’s still open or fund two. Um, why your fund and why now?
Neal Dikeman: Oh. ’cause number one, if you like energy and you should, they’re like two things worth investing in AI and energy transition.
There’s not much else that’s worth your time right now. Yeah. Hopefully that’ll change in a couple years, but that’s the dynamic. Yeah. We’re specialists if you need to be in energy and energy transition. Yeah. We’re one of the few people that have been doing it for a long time, that been through multiple cycles.
Our numbers, you know, which we obviously can’t just jump into on a. Call like this, but they speak for ourselves. One of the top performing funds of any vintage, let alone the the 21 vintage. We know our stuff, you know, um, we’re specialists and if you know you’re looking for that type of exposure, we’re a good fit.
Uh, um, uh, and, um, we happen to be kind of one of the few funds that fits between both Texas and California. Right. This is the energy capital, but there’s not a lot of startup adventure here. There’s some we’re all trying, and then the Valley, both Craig and I spent our time there. Our networks are there, then office there.
So we’re one of the few funds kind of, you know, split across both, both places. Yeah. Um, so yeah, we’re, we’re, we’re a good option for people interested in getting into the sector and Yeah. And always looking for good partners to talk to. Fantastic. Anything else you wanna share with our listeners today? I think we’re in a really weird time for venture, but that’s when you wanna be investing.
Yeah. This is an asset category. It’s not going away. Yeah. Um, things like AI are generational. I mean, this is, I had a big long argument with a friend of mine last night, you know, at a dinner party, and he and his wife do not like ai, you know, um, they, it feels value destructive to them on a. On a kind of a, a societal level.
Not sure if they’re right or wrong. Not without getting into that. Here it is. Yeah. Amazingly cool what’s happening, and we have a quote in, in ET v that energy is life. The rest is just details. And combining those two together, it’s like, you know, this is a pretty special time to be investing. I don’t think we’ve ever been more bullish.
Our end of the world. Even when we stepped in 21, it was a long discussion of, well, what should we be investing? Which lane should we look for here? Mm-hmm. Today, I think it’s just daylight to run. You know, it’s a running back downhill type thing. Yeah. It’s a, um, it’s a pretty exciting time, whether you we’re doing business with us or, you know, our kind of strategy or any of like a dozen pretty cool strategies.
You know, this feels like a time to play. So Neil, where can people find out about your, your fund and yourself? Remember Scott Term picked a fund name picked as a term of art energy transition ventures.com.
Scott Kelly: Yeah, that’s us. Fantastic. Well, Neil, thanks for being on the show today and for all that you listening in, uh, I encourage you to learn more about Neil and what he’s doing and, uh, Neil, again, thanks for being on the show.
Well, lemme add one more
Neal Dikeman: thing, Scott, I gotta say it. We need more founders, like we are open for business. I need more founders. Nothing runs in the world if you don’t have great founders, so send ’em to us. All right. You heard that
Scott Kelly: first? Yeah. Everybody. Thanks again, Neil. Appreciate it. Thanks man.
Tracy Hazzard: Scott, one of the most interesting things, I think that Neil talked about and, and it’s one, it’s something we really haven’t covered before.
Is this later stage investment model called category Killers. He mentions it and you know, I think that’s something worth uncovering a little bit more here because does that mean like oil’s gonna be gone? Like, you know, category killer? Like what does that mean? I,
Scott Kelly: I think, you know, in category killers it’s basically people that are gonna be the significant part of an industry.
You know, the reality is Amazon is a category killer, you know, in retail, online retail, or everything. Walmart category killer, you know, Facebook category killer. And now there are category killers in the energy space and there’s all this new technology that’s coming out that, um, is really gonna define who are the people that are in charge.
As energy companies realize we’ve gotta find more ways to get more power to more people, and you gotta be a category leader to fill that need.
Tracy Hazzard: Yeah. And I think the interesting part is that you’re talking about though, that there’s a real opportunity for someone to become the player there. Not necessarily the tried and true, you know, who’s been there forever, you know, shell or you know, uh, whatever oil company
Scott Kelly: you, you’re right.
’cause you’re getting, the people are coming in for different reasons now. You know, traditionally energy guys were in the energy business. Now you have technology companies in the energy business. You know, data centers in the energy business, chip companies in the energy business because outta necessity, and it’s really interesting that, um, you know, transition is, is, is an understatement of what’s happening right now in the industry.
And I think, uh, I, I think Neil’s had a great career, but I think, uh, the next act is gonna be more interesting.
Tracy Hazzard: Well, I think he aptly named his fund then Energy transition. Right. It, I mean, that’s what it is. But I also thought was really interesting about what he was talking about is that they have this unique position operating between Texas and California, which, you know, I mean energy centers all, all the time.
My, my father in the oil industry still worked in both states, so, um, as well as in Canada. So there’s another very large in Vancouver area. There’s a very large energy sector right there as well. And you know, it’s just thinking about that, bridging that gap. There’s a lot of funds that steer away from California.
So when you ha you know, that you wanna be doing business there, that’s an advantage I think they have in their fund.
Scott Kelly: Well, I think the OB obviously there are vast natural resources in both states and, and around the country, quite frankly. You know, the, um, you know, the liquid national gas industry, the LNG industry, you know, no one knew about until probably a year or two ago.
The US is one of the biggest providers of that, and so it’s, it’s obviously Texas. It’s obviously California, Canada, but the reality is, you know, there’s great pockets around the world, you know, that provide great opportunities.
Tracy Hazzard: Yeah. But I, I think just being open to being able to take investors in those areas makes a huge difference in, in terms of what their fund can do.
Being, being open to the fact that we’re gonna be doing business in those states. You can do it business with the investors in those states too.
Scott Kelly: Right, right. Well, and the thing is too is that, you know, it’s always, you know, and you, you, your father knows this. It’s always been about how to maximize the yield, you know?
And now he has this drone technology that they’re investing in other technologies to really find the best spot with the best opportunity. So, you know, not only is, you know, energy, you driving technology, you know, technology is driving energy.
Tracy Hazzard: Well, you know, I’m curious about technical founders. Like, I mean, this is a very, very specialty area, if you wanna think of it like that, right?
I mean, it’s specialized knowledge that you need. And I think a lot of times the funds and the people we talk to, they wanna, they want this dynamic amazing founder who’s like gonna sell the business and everything. But sometimes you don’t want that, you need that technical capability. I mean, what, what do you think about their capabilities of, of really understanding whether or not they, the businesses are gonna do business?
Well, the good
Scott Kelly: thing is, you know, basically he spent a lot of time, you know, in the industry. So he understands, you know, the components and the, the characteristics of people in the industry. You know, you know, being in the field takes a different type of type of character, you know, uh, being in the industry sector, you know, I remember, you know, way back when I was in Louisiana, you know, I, I went to Louisiana when oil was $10 a barrel and in Lafayette they had a, had 25% unemployment because oil was so low.
And they had a, um, they had a campaign called I’d Be Loving Lafayette. And everyone be what was on the silent, they say, no, I’d be leaving Lafayette. And so having that technical background allows you to overcome, you know, the lulls and now the, the boom in the industry. And I think that’s obviously, they, they have that experience from what they’ve done and now they know how to identify that experience.
Tracy Hazzard: Really. Great. Well, I’m looking forward to seeing what the energy transition, because this, I mean, we’ve been talking about the AI. Centers for a while in my, in my business. I mean like this is because we’re looking at putting more data into it, which is just, you know, that just makes this energy crisis go even higher if you wanna think about it that way.
So you do have to think about these efficiencies and other things. And the reality is, on the AI side of it, the creating a much more efficient AI can actually be a detriment. Two, the results that you get. Right, because it think of it like it cut cuts corners.
Neal Dikeman: Yeah.
Tracy Hazzard: Right? And so you have a less effective result.
So using less energy is not necessarily the best model, but we all agree you need to use less energy. So how are we gonna achieve that? I mean, it’s got amazing innovations need to happen all around it.
Scott Kelly: Right? Exactly. Yeah. Obviously we need, uh, more energy and we need more efficient ways to produce it now.
Tracy Hazzard: Well, I look forward to seeing what energy Transition partners or Energy Transition Ventures does next, and who they bring into their portfolio, because there’s some interesting companies there.
Scott Kelly: Absolutely.
Tracy Hazzard: All right, we’re gonna have more, and I think you’re gonna have more in the EV sector and other things coming up, because I mean, you’ve got a great interest there.
So we’re gonna have more of those episodes here on emerging managers.
Scott Kelly: We’ve got some great people coming up. It’s, uh, you know, it is been great that we’ve, since we launched the podcast, we’re getting all kinds of great unique, uh, fund managers, uh, reaching out to us. So there’s, uh, plenty more good stuff to do.
Tracy Hazzard: Well make sure you go to emerging managers podcast.com. Check it out, and if you are the right guest for us, make sure you apply.
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