National Grid Ventures Lisa Lambert, SVP, CTIO June 2018
Lisa Lambert Education MBA, Harvard Business School BS/MIS, Pennsylvania State University Executive Education, Stanford University UPWARD www.upwardwomen.org/ Founder, CEO & Chairman Global network of executive level women to accelerate careers Nearly 5000 members Career Owens Corning Intel Corporation Intel Capital The Westly Group National Grid Ventures Home & family Happily married 2 growing boys Scholarship Athlete (Basketball) Crew Team at HBS Favorite food: Thai 2
Mission statement: National Grid Ventures is building a new structure and team to execute on our strategic and financial goals Our Mission: Enhance National Grid s strategic objectives by making and managing financially attractive investments and leading and supporting company-wide innovation efforts 3
Corporate Development Technology & Innovation: Lisa Lambert SVP, NGV & CTIO Innovation Incubation Corporate Venture Capital Business Development Venture Rotation Program Source new ideas both internally and externally Identify new areas for growth and operational improvement Connecting innovation more tightly with our growth strategy Invest in early stage companies Enhance visibility in disruptive technologies for internal engagement Foster collaboration and facilitate learning, access, and engagement Invest in expansion and growth stage startups that are ready to partner with our core and emerging businesses Market monitoring, making and managing investments Exiting portfolios at a profit when appropriate Accelerate growth of internal and external startup organizations Technology days, pitch days Support groups through business models and monetization strategies to create strong viable businesses. Provide a program to enable National Grid employees to build skills in venture capital Promote a culture of investigating new fields and expanding perspectives 4
Startup development path: Approach aligned to typical startup development path Investable startups CORPORATE VENTURE CAPITAL Commercial success INCUBATION Customer-validated product, first sale One or more customers, scale-up BUSINESS DEVELOPMENT Most startups Prototype IDEATION Time since founding 5
Techniques for success: Investing Innovation Making and managing investments in complementary startup organizations Connecting innovation more tightly with our growth strategy Why invest? How are start-ups impacting innovation? What do we get from our efforts? Where will we invest? What does innovation mean? Why is it important? How do we do it at National Grid? What do we get from our efforts? 6
Investment in energy related companies is rising: $ Millions Funding of companies in the Energy + Electricity categories $4.500,00 $4.000,00 $3.955,53 $3.500,00 $3.097,39 $3.176,93 $3.175,86 $3.000,00 $2.695,05 $2.500,00 $2.000,00 $2.047,28 $2.107,83 $1.784,44 $1.500,00 $1.000,00 $1.167,53 $912,68 $500,00 $- 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: PitchBook (Jan/2018) Investing Venture & Growth Capital 7
Universe of new companies being born: Private companies valued over $1B CB Insights (31/01/2017) Investing 8
Forces shaping the industry 1 2 3 4 5 6 7 Generation & wholesale Transmission Distribution Metering Retail Services behind the meter Distributed Generation Revenues for a traditional utility (%) Value shift 30-40% 15-20% 40-50% 0-10% 0-5% 0-2% 0-2% Driver of shift Lower plant utilization Investment in lower regulated grids and DER Smart meters & advanced metering services IT system and selfservice applications Smart equipment and software Distributed generation equipment Opportunities Energy storage Distributed generation Supply/demand matching Predictive maintenance Demand Response Systems Advanced inverters Microgrid integration Cybersecurity solutions Predictive maintenance Tariff personalization Smart analytics Advanced controls Tariff personalization Supply/demand matching Grid integration Managed consumption Tailored services Distributed storage Smart devices Platform to support distributed generation Energy trading Investing 9
Investment strategy: Search priorities: Competitive attractiveness Flexible generation Grid modernization Process/IT optimization Renewable Generation Solar, PV, Nuclear, Wind turbines, Geothermal, Hydro Storage - Batteries Li-Ion, Flow batteries, Molten Salt, Lead-Acid Equipment Combined-cycle gas turbines, cooling technology Smart assets Smart grids, asset load management/peak shaving, plant virtualization, storage integration, industrial security, asset maintenance, microgrids Smart car, home & cities Connected car & home, Responsive charging, distributed storage, fleet management, devices management, prosumer integration Intelligent operations Smart metering, advanced analytics, supply/demand matching, asset inspection & monitoring, risk & compliance, incident response, customer interaction, blockchain Smart enterprise Big Data/Analytics, SaaS, Cloud Infrastructure, AI, Cyber-Security, Mobility, Datacenter SW Energy management Energy efficiency & management system, responsive devices, Access mgmt & fraud detection, remote energy control, virtualization, Software Defined solutions, energy trading DER evolution Autonomous Transportation Tools to allow autonomous driving Nano Technology Discovery of new materials Intelligent robotics Smart robots that help humans in the physical world Sustainable Agriculture Agriculture equipment, seed, fertilizers and others Customer-centric evolution Technology or Application Strength / Financial Return Investing 10
Investment summary: Develop early stage disruptive startups to future proof our business and invest in expansion and growth stage startups to accelerate growth and produce financial returns Summary Invest in all stages of start ups seed to growth Market monitoring and scouting Making and managing investments Facilitating access, learning, and partnerships Exiting portfolio companies at a profit, when appropriate Use fund of funds strategy to access geographic territories and increase co-investment opportunities Investing 11
Techniques for success: Investing Innovation Making and managing investments in complementary startup organizations Connecting innovation more tightly with our growth strategy Why invest? How are start-ups impacting innovation? What do we get from our efforts? Where will we invest? What does innovation mean? Why is it important? How do we do it at National Grid? What do we get from our efforts? 12
What does innovation mean? Innovation is changing something established through introduction of new methods, ideas, or products. i Small I - Local scale incremental innovation Examples: Enhance the customer experience, cost reduction, process refinement, productivity and efficiency improvements, etc I Big I - Global scale disruptive innovation Examples: New technology and product development, monetization strategies, business models, Spin in, M&A, etc Everyone is an innovator and should own innovation. Source: George Day Closing the Growth Gap: Balancing Big I and small i InnovaMon Innovation 13
Why is innovation important? Access to the innovation ecosystem Partnerships to expand product offerings The Telecom industry Incumbents missed the innovation and failed to capture additional value $ Billions Host events to facilitate meetings 1000 900 Global mobile revenue 800 Promote idea exchange between invested companies, incubator, innovation lab and core business 700 600 500 650 New value pools largely captured by new entrants Use opportunities to increase revenues with new business models and cut costs with operational improvements Understand new markets trends and technologies to support strategical goals 400 300 200 100 0 280 200 Late 1990s 2010 Traditional value pools largely captured by incumbents Innovation 14
Strong innovators gather ideas from multiple sources: Where do companies source ideas Examples of Strong Innovators 78% 72% 68% 65% 64% 62% 62% 70% 65% 33% 32% 15% 21% 22% 13% 21% 26% 14% R&D COMPETITIVE INTELLIGENCE EMPLOYEE IDEATION FORUMS SUPPLIERS & VENDORS STRATEGIC PARTNERSHIP (ACADEMIA) INCUBATORS EXTERNAL FIRMS HIRED TO GENERATE IDEAS CUSTOMER SUGGESTIONS SOCIAL NETWORK Source: BCG report Strong innovators Weak innovators Innovation 15
Successful crowdsourcing innovation initiatives of Global 2000 companies: Reward with implementation: P&G connect + develop: Dell launched a website to generate ideas; Over 27,808 ideas submitted, 550+ implemented. P&G posts current needs and People submit ideas; In 2016, 35% of products in market had elements originated outside P&G. My Starbucks idea: Unilever foundry ideas: Starbucks created an initiative to generate ideas; 200k ideas in the first 5 years, ~300 were implemented. Crowdsourcing initiative to increase idea generation; Unilever posts areas for collaboration and people contribute with ideas. Innovation 16
Reaping benefits from innovation portfolio: Pursue strategic goals Strengthen operations Design new products and services Stay ahead of disruption keep updated with innovation Discover new partnerships Serve new geographies or customers Increase productivity of internal operations Enhance customer engagement Increase quality of services Reduce time to market Invest in talent Leverage finance Improve employee spirit and retention Build tomorrow s workforce attracting tech professionals Increase meaningfulness of work by pursuing innovative ideas Innovation Increase market-share Increase revenues with new products Reduce costs with optimizations Improve profitability Generate financial returns with investments Increase market cap with new businesses 17
Innovation summary: Connecting innovation more tightly with our growth strategy Summary Source new ideas both internally and externally Enhance visibility into emerging and potentially disruptive technologies Cultural shift toward innovation and away from the status quo Education in design thinking and lean start up methodology Foster collaboration and support startup activities Facilitate new areas for growth and operational improvements Increase reputation and thought leadership around energy innovation Innovation 18
Example Engagements Company Stage Engagement Description Grid Management Pilot Won competitive RFP to develop a Distributed System Platform for NY REV Microgrids & Backup Pilot Awarded RFP for New York REV NWA project at multiple sites Smart Home Pilot 400 residential units were deployed in Rhode Island Security Deployment UK team uses intelligence product IS team in pilot for intrusion detection 19
Thank You. Any questions? Forward Looking Statements Disclaimer This presentation may contain forward-looking statements. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as anticipate, believes, can, could, may, predicts, potential, should, will, estimate, plans, projects, continuing, ongoing, expects, intends and similar words or phrases. Accordingly, these statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed in them. Actual results could differ materially from those anticipated in any such forward-looking statements. Any or all of our forward-looking statements in this presentation may turn out to be inaccurate. The inclusion of this forward-looking information should not be regarded as a representation by National Grid or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Any forward-looking statements have been based largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.