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Episode 50: Amy Francetic

This week, for our 50th episode, Jon Powers sits down with Amy Francetic, Managing Director of Energize Ventures. Energize Ventures is a $165 Million venture fund; one of the largest first-time venture funds raised in Chicago in recent years.

Amy is a business executive and entrepreneur with more than 25 years of experience in the energy and technology sectors. She is a successful entrepreneur, fundraiser, and investor who founded the technology venture fund. She holds a B.A. from Stanford University.

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Transcript:

Jon Powers:

Welcome to Experts Only podcast sponsored by CleanCapital, you can learn more at cleancapital.com. I’m your host Jon powers. Each week, we explore the intersection of energy, innovation, and finance with leaders across the industry. Thank you so much for joining us.

Jon Powers:

Welcome back to Experts Only podcast. My name’s Jon Powers, and today we’re speaking with Amy Francetic, the managing director of Energize Ventures. Amy’s a business executive and entrepreneur with over 25 years experience in the energy and technology sector. She’s had a really successful career, and last year helped with Energize Ventures efforts for $165,000,000 fund, one of the largest first time venture funds raised in Chicago in recent years, looking at some exciting thing that’s happening in clean energy. She currently serves on the board of the Clean Energy Trust. The conversation goes to a bunch of different places. I think you’ll enjoy it, and I think really hear about some of the exciting stuff that they’re working on, but also some of the exciting challenges that we have as an industry to bring diversity into the workforce. Amy, thank you so much for joining us here at experts only podcast.

Amy Francetic:

It’s my pleasure, Jon. Thanks so much for having me.

Jon Powers:

Absolutely. You’ve had an amazing career, I want to step back for a little bit for our audience and talk through some of the really interesting things you’ve worked on before ending up doing what you’re doing today. If you look back studying at Stanford and then you… To my understanding you went into… You’re the CEO of a tech company that sold to Lego and worked at Hasbro. Tell me more about that. How did you get into that space?

Amy Francetic:

Sure. So I quickly in my career became interested in working with scientists and engineers and doing my part to help realize their ideas, their inventions, and bring them to market and did a project at… Something back, oh gosh, in the 90s that was called Interval Research and Paul Allen, the co-founder of Microsoft was funding Interval Research in Palo Alto. And it was sort of like an MIT media lab of the west coast. And there were a lot of great artists and technologists and folks that were collaborating to come up with new technologies and new things that would appeal to consumers and would be on the very more creative side of technology. And so I was assigned this one group that was figuring out how to embed sensors into physical products and making new interface for the computer and was the lead scientist on that project.

Amy Francetic:

And so I helped him think of the different applications that would be enabled by his invention space. And we created a company called Zowie, which was using toys to interface with the computer. So we put all these sensors into these toys and an antenna, and we actually built a custom chip and we plugged that into the computer and used that toy to control a virtual experience on the PC, and this was for younger kids, and we ran that business. Paul Allen funded it along with another investor and we ran that business and sold it in the year 2000 to Lego. And they included it in their sort of high-tech line that they were creating at the time that eventually became Lego Mindstorms.

Jon Powers:

Oh, Interesting. And then you stayed at Hasbro for a little while?

Amy Francetic:

Yeah. So Hasbro was before that. So yeah, so I did Hasbro and worked on their first line of kids software and we were taking Hasbro properties and turning them into video games. And so I did Hasbro which led to this project at Interval Research, which turned into Zowie. And then when I sold the company, I actually exited the company and handed things over to our head of engineering to run. And that was my first experience being a CEO and was really hard work. And we were doing a really difficult thing, which was, we were designing software, we were designing and manufacturing, these toys, we were designing and manufacturing electronics because this was a new space, it was complicated. It wasn’t like you could easily OEM this, but it was before the Wii, and before some of these other very natural ways that people interact with video games and PCs today so, you were sort of making it all up as we went and that’s how you had to do it.

Jon Powers:

So, I want to come back to that jump from going from being a CEO of a company to later being on the investment side, right? And serving on boards and working with entrepreneurs. But before doing that, you’ve won awards for your corporate leadership and corporate citizenry. You’re obviously a leading woman in technology currently living in Chicago. If you had some advice for… I think about my six year old daughter who we are aggressively trying to push into doing STEM things for instance, right? At her school and get her engaged. What advice do you have for so young women coming up in this space?

Amy Francetic:

Well, I have two daughters as well, so I have a 14 year old and a 16 year old. So that is a very salient request that you made. And especially selling it as we’re thinking about my 16 year old, starting now to think about colleges and what she’s going to do and what she wants to study. And she’s a math kid, but she’s also a music kid and she loves music and she loves math. And so I see this interesting tension in her, which is the sort of math science and being drawn into, maybe a more of an engineering path, but then also her love of music and wanting to do music. And I think that it is also… Those are the years, right? Those middle years are the years when the kids, when the girls actually start to take a different path or are not encouraged to stay on their math and science path, as much as maybe boys are where there’s fewer and fewer girls in the classes. And there’s maybe fewer female teachers in the classes.

Amy Francetic:

So, I think that today, fortunately, girls have a lot more support. Like I know my daughter, it doesn’t feel that way. Doesn’t feel like she’s one of the only girls in the class, but I think that this idea of allowing your kids time and space to really pursue the things that they love. And also having them understand how much computer science or mechanical engineering, or even if it’s biomedical engineering, how much engineering underpins so much of our modern life. And I think kids today being so proficient at technology, get that, they understand how it’s an enabling thing, right? So they want to have a career in video games, that they want to have a career as an entrepreneur.

Amy Francetic:

If they want to make stuff, I think that they’re learning you really need to have this training in math and science in order to do that, because that’s really driving our modern economy and job opportunities. So my advice to my own daughter is pursue both. So we’re looking for schools where she can pursue music and she could be a math major, or she could major in engineering. I think definitely pursuing as many of your passions as you’re allowed to do, they’ll get a degree and not make yourself fully stressed out and crazy is the right approach.

Jon Powers:

Yeah. I think we could do a whole nother podcast on that and I’ll make my daughter listen, I can make her do anything. So going back to the career side for a second. So, when you talk about making the transition from being the CEO of a company, being deep in operations, and then going to the investor side and… Are there lessons that you’ve learned that you take with you and share with your portfolio companies? How has that experience been?

Amy Francetic:

Yeah, I think it’s really good for anyone that wants to be an investor to have operational experience. And you may not have to be a CEO, but to have pretty senior operational experience, to work in a startup so that you understand what it’s like to run a startup, you understand the challenges and trade-offs and decisions that a CEO has to make, so that you also understand how to do sales. Even if your contribution is on the technology or product side, you really understand and work closely with the people that are trying to grow the business, I think is really, really great experience for anyone that wants to be an investor. And not only because you can walk in the shoes of the entrepreneurs that you’re investing in, but that you really understand, how to give advice.

Amy Francetic:

How to advise the company. “What are the challenges? Okay. When we did it, this is how we did it. Here’s some of the pitfalls.” Or, “Looking around the corner, here’s the thing that I see around the corner that maybe you don’t see yet, as a CEO, that’s your first time CEO. So, here’s how we dealt with some of these challenges that we think are coming that maybe aren’t so much of a worry for you.” And I think trying to add value in the boardroom, all investors claim that they want to be helpful and value added. But I know from talking to our companies, that not too many investors actually really can do that.

Amy Francetic:

So, a lot of folks want to just open up their Rolodex to help us, which is great and super helpful. But if you could really tee up a sales call, or go on a sales call, or help really unpack what someone is telling you… A potential customer is telling you and what they need in a feature set in order to win that sale, that’s a different level of help than just maybe pontificating in the boardroom. So I think that the big thing is being able to be really helpful to these companies and having some direct experience growing businesses or running businesses. And I highly advise that for anyone that wants to be an investor.

Jon Powers:

Yeah. As we’ve thought through our CleanCapital investors, we are always thinking through strategic additions, right? And as we talked earlier about our BlackRock investment we received early this year, for us it was a clear connection to some of them we wanted on our cap table. We’re already doing deals together. And the value add for us is significant. Sometimes companies are just looking for the money, but I think you really need to think through how you can make the most of the folks that you’re bringing into your family.

Amy Francetic:

Yeah, for sure. Yeah. You definitely want to sell for more than just the money when you’re choosing an investor.

Jon Powers:

Right. So how did you go from children’s toys really? And the tech side, into sustainability?

Amy Francetic:

So this theme of working with scientists and engineers and inventors I… After we sold Lego, a couple of years later, I ended up at Stanford Research Institute, and I was working in the ventures and licensing department at SRI. And they had a lot of government funding and private funding to do research that they were also trying to commercialize. And that meant either licensing it to other companies or turning into startups and looking for investment. And I worked on a fuel cell technology, and I knew that I wanted to move… I had actually done some time between Zowie and there working in the wireless space. And I helped a friend of mine start a wireless company and helped him get that off the ground, and then served on his board of directors when he left the company, I had his feet. And that eventually became Glu Mobile.

Amy Francetic:

And his name was Scott Orr I met him when I worked at Electronic Arts. He was one of the most successful producers at Electronic Arts at the time and worked on the whole Madden franchise and sports franchise there. But anyways, so I had done this time period in wireless and I was working… I brought to Stanford research Institute, consumer electronics wireless. And then I met one of the inventors there who was working on a fuel cell technology. And I thought a lot about the energy space then, and, and became really passionate about the need to do something that would enable the growth of clean energy as a solution to climate change. And some of the worst impacts of climate change and how do we address this in our lifetime? So it became… I really felt like… And then I became a mom, so at the same time, I became a mom when I was there.

Amy Francetic:

And I, and I really thought hard about “Okay, if I’m not at home raising my kids and I’m working, what am I doing that’s going to make a benefit to society. That’s going to make something better for my kids, for their kids, my grandkids?” And decided that I should devote the rest of my career to trying to solve that. And that’s what I did since then. I worked on Clean Energy Trust and then Energize Ventures and just feel really strongly that we have the technology and the ingenuity to absolutely solve climate change, as well as create good jobs for people and stimulate the economy with these new forms of renewable energy that are slowly taking over.

Jon Powers:

Yeah. So, let’s talk about Energize. For folks that aren’t aware, Energize, it had previously been in Invenergy, right? Basically because that was sort of the LP behind it. But in… If I get this right in 2018, you had GE and Snyder and a couple of other LPs come and you guys rebranded into Energize Ventures. Can you talk a little bit about the history of the firm and what you’re looking for?

Amy Francetic:

Sure. So, before Energize, I had started and run Clean Energy Trust with the purpose of funding, new companies throughout the Midwest, which was severely underfunded with seed capital, funding new companies that were starting up, many of which were spinning out of labs in universities that were trying to create new clean energy companies. And we were writing first checks into a lot of these companies. And I started that organization with Nick Pritzker, from the Pritzker family and Michael Polsky, who is still the CEO of Invenergy, and Invenergy is north America’s largest, renewable energy developer. And so I got to know Michael and Nick for the seven years that I ran Clean Energy Trust. They were the co-chairs of the board. So they were kind of my bosses. And I got Clean Energy Trust to the point where we had funded a number of companies, had raised a bunch of capital and built a really solid team.

Amy Francetic:

And I was really ready for the next challenges. So I handed the reigns over to my very capable COO named Eric Birkerts, who still runs it today and set off to go look for the next thing, and felt really strongly that I wanted to address the capital gap that was beyond seed capital. So Clean Energy Trust was funding all these really early stage businesses, but there was still this gulf then, once you were able to get a little bit of capital at seed round, even in A round, there weren’t very many institutional investors at that B stage, and that C stage, because there was a big contraction, post 2007 to 2010, a lot of the big funds in the valley that had moved into clean energy, moved out because the returns were not good. And they went back to social media and some of the other digital solutions.

Amy Francetic:

And so these companies were really struggling. And I talked to Michael after I left and he said “Hey, I think we should consider doing a venture fund.” And I agreed. And so Michael Polski and Jim Murphy, who is his president and COO of Invenergy, and I cooked up the idea for what became Energize Ventures. And we started life as the Invenergy future fund. That was what we fund raised under. But once we had pulled in so many additional investors… So Invenergy wrote us our first check, and they helped to bring in GE and Wisconsin energy, and we have a very special relationship with Invenergy. We were in the same building, but on a different floor. And we have very good access to not only Jim and Michael, but other executives and scientists and engineers at Invenergy who help us diligence technologies, who are willing to pilot test technologies for us and give us some insights that we don’t have on the team.

Amy Francetic:

So, we pulled in money from 50 different LPs. We closed the fund, we raised 165,000,000. We pulled… In addition to Invenergy, GE and Wisconsin energy. We have Madison gas and electric. We have Schneider electric, Caterpillar Ventures, and then a number of family foundations and other institutional investors that make up that 165 million. And our focus of the fund is to invest in digital solutions, primarily that optimize energy and industry. So we’re looking really at that hardware and software layer that drives better performance from the equipment and the infrastructure. And we pay special attention to clean energy. We’re looking for benefits to the clean energy industry in particular.

Jon Powers:

So it sort of spans cyber security, mobility, data, operational efficiency, sort of distributed energy to some of the different companies that you guys are tackling. How are you finding these portfolio companies? What’s the process you guys are undertaking?

Amy Francetic:

Well, Yeah. And, we’re in Chicago. So we are a little bit, I think, gratefully outside the echo chamber of Silicon valley. However, we have five companies that are headquartered in Silicon valley because there’s a lot of great innovation there, of course. And, I built this amazing team. So I have this great team. So John Tough is on the team. He’s a partner here. He did a period of time at Kleiner Perkins. He actually, like myself, lived in San Francisco, moved back here for family reasons. So, I came back here to Chicago to raise my kids, to raise my girls 14 years ago, and John did the same thing. So we understood each other. And Juan Muldoon is on my team. He was the first person I hired actually to help put together the financial approach and the pitch for Energize.

Amy Francetic:

And then we have Katie McClain and Tyler Lancaster, and we have a great female CFO named Lori DeLuca and a great head of our office, Steven Kirnbauer. We have this awesome, awesome team here. And we just are out hunting constantly, looking for these companies. And, once we were done fundraising, we were able to do a little bit of press around what we were doing to raise our brand and to get some visibility into the entrepreneurial community. We’re really good Co-investors, so we like to lead rounds, we’re happy to price rounds, we’re happy to lead, also happy to follow. And I think we’ve been very deliberate about getting to know the other funders in the space because all of these companies need syndicated rounds of capital.

Amy Francetic:

And we’re starting now to get deals referred to us by our LPs as well as by our existing CEOs, which I think is really… Those are really two of the best ways to look for deals. So it’s starting to work, but it takes time. It takes time to build up that persona, that brand, but we’re finding companies and we’re very focused. I think that the other thing that’s helped us is we’ve got a really clear focus on these digital, this optimization layer of energy and industry. So I think the right kinds of things are finding us as well as us being out hunting very, very deliberately looking for these companies.

Jon Powers:

Yeah. So let’s add some color to what these companies are. So you’ve got a for instance, a charging station company, you’ve got a sort of a network, which I don’t fully understand what Nozomi is, but you’ve got a drone company. Add A little color to what these companies look like for our listeners.

Amy Francetic:

Sure. So many of the companies are SAS businesses. So software services, businesses. Volta, who you mentioned has a really unique design for charging stations that include the big digital screen on which they serve ads, and those ads pay for the electricity. So the car charging is free. Yeah, it’s free for the car owners, and it provides a little bit of revenue to the real estate partner. And they place these stations at grocery stores, shopping malls, sports venues, movie theaters, and they get the best parking spaces right in front. And so they’re monetizing the idles, the foot traffic of everybody walking in and out of that venue and it’s free. So it’s the largest free charging network in the country, it’s also the most highly utilized charging network in the country. Their numbers blow away all the other charging stations.

Amy Francetic:

And it’s because people will park and sort of charge their car while they’re at the movie or shopping or whatever. And they get very, very highly utilized. So, even though their product is a physical station, what’s unique about them is their business model. They kind of turned that charging business model on its head, and we really liked that. We really liked how the CEO, Scott Mercer was thinking about this, and what his vision was for how to build out the infrastructure and in a very cost effective way. So that’s Volta, there in San Francisco, they’re doing awesome. They’re rolling out city by city. They’re in Chicago. They’ve got a very big presence actually in Chicago, and they’ve got five or six people here, which is so cool. And I think one other company mention that I think will be relevant to you guys and to your listeners is Aurora Solar.

Amy Francetic:

And so they are very cool. We funded them in January and they’re in San Francisco, started by two friends from Stanford business school who wanted to create a more efficient way for solar installers to design rooftop solar. So they built this, best in class, design tool that allows a solar installer to use LIDAR data and satellite data to very accurately design a solar installation for a home or a business from their desks. And it basically replaces the need for someone to run out to that site and measure and climb on the roof before knowing how much energy can be generated from that site and what the cost of it will be and what the feedback will be. And so it, it really helped address that soft cost of rooftop solar, and reducing that very dramatically so that the solar installers can target very accurately, the best sites for rooftop solar.

Amy Francetic:

So they’ve got very accurate shading analysis and radiant analysis in the tool. And they’re also working with folks to help finance, to offer financing for the customer. And it’s a very clean, very smooth experience for the installer as well as the potential customer. And they’re just doing great. So, that’s a software services model. They’re, right now, mostly in north America, they’re starting to roll out overseas and we’re just very pleased with their product. The tool sells itself. So they’ve grown mostly through word of mouth. And so with our investment they’re going to be… We’re heavily investing in their customer success and sales teams, and they’re hiring very, very aggressively. So any of your listeners that are looking for jobs, please look at the Aurora Solar website because they have a lot of openings and we would love to see them bring solar to as many customers as they possibly can.

Jon Powers:

And you can get to that website through Energize’s website, which is energize.vc. Yeah, aurora is really interesting. And I think they’ve got a cool technology. You guys focus on investing in leaders, right? And sort of identifying not just good technologies, but people who can run from those firms. One of the things I’d love your opinion on, we just had the head of the solar foundation on talking about their recent workforce analysis and the challenges of diversity in our workforce. So it’s something we at CleanCapital focus on, we were pretty good, we’re considered a pretty good mix. It’s challenging, it’s something you’ve got to think about at the C-suite level. How do you challenge your leaders to try to incorporate diversity into their companies? I

Amy Francetic:

Think it’s super important. And we have a motto here that is diversity drive alpha. So alpha being outsized returns for our investors, and we consider ourselves to be diverse here at Energize, but also looking for diverse leaders, not only in ethnicity and gender, but backgrounds, so that we’re not over-indexing on the same kinds of people, which is… Everyone is very inclined to do, is to find and hire people and invest in people that seem like you, that look like you, that are familiar. And so-

Jon Powers:

Solar power international, and it’s like one… It’s a very clear demographic when you walk around there.

Amy Francetic:

Yeah. No, for sure. So, I think right now at our companies, as they’re thinking about adding executives or adding board members. So I think first of all, in the boardroom is a really good place to start, right? And I think it is… Even if the investment world does not have a lot of women or folks of diverse ethnic backgrounds, you can add that onto the board in different roles, right? So independent board directors and looking for diversity in the boardroom is a really good place to start because then, the CEOs will be reminded by those board members to hire diverse candidates, and that will be something that is like a good way for them to really keep that at the forefront of their mind. We would love to have a female CEO in our portfolio, it’s actually one of the things that we’re looking for.

Amy Francetic:

And as you can imagine, there are not so many of them. And I think we’ve talked to most of them, and we’d have to also fit our investment thesis. So we’re really trying to… That’s an even smaller sub sector, but we’re actively looking and we have wonderful CEOs in the portfolio now and are encouraging them to hire more diverse candidates on their team, mostly just to drive for that same alpha return in the startup, that if they could get folks with more diverse backgrounds… And I think the business is also new enough that we don’t have to rely just upon the folks that have grown up in the industry. Just like you guys in your business, it’s a new enough space that folks are coming into the business from all different walks of life and backgrounds.

Amy Francetic:

And yes, probably most of them have to have some kind of technology background or engineering background, but I think about Invenergy. They’ve just grown, like in the years that I… Since I started trying to do the fund with Jim and Michael in three years. They now have over 30% of their employee base are women. And because they made a very, very deliberate effort to do that. But also because they’re hiring folks into the company, that they’re willing to train, they’re willing to teach them how to do that.

Amy Francetic:

How do you do development in this business? It’s not like there’s such a giant pool of folks that already have expertise, and you’re Aurora Solar, you’re looking for folks that have 3D modeling capabilities, but you’re also looking to build out a sales team and it’s not like there’s so many folks that you can draw upon. So you really have to be willing to train folks from other industries and look for folks that are just really, really entrepreneurial, that are creative, and kind of goes back to like where we started this with my daughter, right?That math, science meets creativity. I think that, that combo is a really, really deadly potent combo for an entrepreneurial company.

Jon Powers:

That’s great feedback. So just two final quick questions. The first one is, what are you guys looking for next? What do you see as the next exciting space in the market that you’re looking for companies in?

Amy Francetic:

Well, we’re very… We’ve got Volta in the mobility category. We’d like to have more companies in the mobility category. So we’re really thinking a lot about what that means, is it how electric vehicles interact with the grid? Is it more sort of that grid to vehicle space? Is it autonomy and electric vehicles and thinking about the future of driving and how to address all the congestion and pollution that has come about from not only more people moving into the cities, but also all the ride sharing companies serving folks. And unfortunately replacing public transportation, right? It’s like they’re kind of seeing a little bit of a backlash happening for the Uber’s and the Lyft’s, where they’re really taking people off of public transportation and adding to this congestion and pollution problems.

Amy Francetic:

So how could EVs serve that need in the market? And we can kind of ride that wave a little further. We’re very bullish on electric vehicles on being not only a better driving experience and certainly having environmental benefits but, total cost of ownership being lower, but thinking about, outside of the personal vehicle space, what does that mean? When you’re thinking about buses, you’re thinking about other forms of transit. I think that there’s a lot of really exciting new opportunities there. And then we would love to have an investment in the broader efficiency space as well. We’ve looked at a bunch and we haven’t made any particular choices yet, but thinking about building efficiency or building technologies and ways that reduce consumption at more of a macro level, how can you do that? So that’s a really great opportunity and it seems like, there’s some companies, there’s more and more really interesting companies that are coming about. We just haven’t picked one yet.

Jon Powers:

That’s great. And so final question, I sort of ask all our guests, if you could go back to yourself coming out of high school or even college, what advice would you give yourself?

Amy Francetic:

I think that, looking back and seeing my career, all the different twists and turns that I took and maybe sort of accepting that, that’s okay. And that, enjoy all of those steep learning curves that come along the way with changing and sort of following your passions and maybe your own creativity and sort of looking for something unique that you can do. Just trust that if you’re going to do that, it’s not going to be a linear path. It’s not going to be something that is very prescriptive, that you can build this plan and then stick to the plan, allowing for that flexibility and not only just allowing for it, but honestly, just to really enjoy it because for me… Enjoy the ride, definitely enjoy the ride, but also to be endlessly curious, and to indulge that on some regular basis. I just feel like intellectually that’s so important in whatever your field is just to constantly be learning, constantly be curious, constantly talking to folks who stimulate your own intellectual capabilities I think is… You’ll never go wrong if you really embrace that.

Jon Powers:

That’s amazing advice. Thank you. And thank you so much for joining us on Experts Only Podcast

Amy Francetic:

My pleasure and congratulations on all your success, Jon. We’re all very, very impressed and excited for you guys. So thanks so much for your leadership.

Jon Powers:

Amy, I appreciate that. And for our listeners, you can get more episodes at cleancapital.com and as always, you can submit advice on folks we should be interviewing, and please share our episodes. I’d like to specifically thank our producers, Carly Batman, and our intern, Courtney Flinn for helping to put together the research. And I look forward to continuing the conversation.

Jon Powers:

Thanks for listening in today’s conversation. Find more episodes on cleancapital.com, iTunes or wherever you get your podcasts. You like what you hear, be sure to subscribe and leave us a five star review. We look forward to continuing our conversation on energy, innovation and finance with you.