VC firm focused on the energy transition targets €250m for second fund

Future Energy Ventures, a venture capital firm funding start-ups working to support the global energy transition, is back in the market with its second fund, nearly a year after launching.

FEV, an investment division of energy company E.ON, is seeking €250m from investors, Citywire can reveal.

The group already raised €40m, with E.ON becoming the anchor investor, and expects to have a first close in the first quarter of next year.

FEV was set up in October 2020 when E.ON merged the portfolio companies of its two investment vehicles under a new venture division. It employs 15 people in the US, Germany and Israel.

The group, led by founding and managing partner Jan Lozek, invests in businesses around the themes of ‘future energy, future cities and future technology’ and has €250m in capital invested across 50 companies.

The performance of that first programme is currently in the high teens, Lozek said, with eight of the investments already exited. FEV’s portfolio includes electric vehicle charging business ev.energy, mobility solutions provider HopOn and software platform Lumenaza.

While it is an innovative area of the market and one to have received increased interest from investors, investing in new technologies and businesses that look to solve the problems of the energy transition can result in a lot of projects failing, Lozek said. 

‘Sometimes the technology is too early and the energy industry is not ready. Also, the awareness of society and government has not been very high in the past,’ he said.

One of the biggest challenges in climate technology, for example, is scaling up businesses. Typically a start-up can reach €10m in revenues but then gets stuck.

This has been mostly driven by two things: a limitation of existing technologies and regulation, Lozek said.

A lot of the problems with technology has been solved, with businesses tackling similar problems to those a few years ago able to succeed in the current environment.

But Lozek said there is still more to do with regards to regulation. In order to allow more innovation in the sector, regulation needs to be relaxed, he added.

‘Another difficulty is we have different regulations in different jurisdictions. That limits scaling,’ he said. ‘[There should be] a willingness from regulators to lower the barriers so new entrants can emerge.’