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French energy giant TotalEnergies has made a surprising move by closing its corporate venture capital arm, TotalEnergies Ventures, and selling its climate tech startup portfolio to Paris-based VC firm Aster. The decision comes in contrast to the growing trend of oil and gas companies showing interest in backing climate tech startups. While data from Dealroom indicates that the six largest fossil fuel companies, including TotalEnergies, invested in venture deals worth a record $1.3 billion in 2022, TotalEnergies Ventures opted to discontinue its activities.
TotalEnergies Ventures, founded in 2008, had been actively investing in climate tech companies across Europe, Africa, and the US. Aster, an established VC firm with a track record of around 100 investments since its inception in 2000, will now take over TotalEnergies' entire portfolio of 18 companies. Aster's existing portfolio includes notable companies such as solar power provider Zola and US SaaS unicorn Docker.
Among the startups in TotalEnergies Ventures' portfolio are notable names like smart meter company Tado, hydrogen startup Sunfire, and electric vehicle subscription service Onto. The venture arm had also launched a $400 million fund in 2019, intended to be deployed over a span of five years.
The decision to close TotalEnergies Ventures and sell off its portfolio as secondaries raises questions about the motive behind the move. Jean-Marc Bally, managing partner at Aster, declined to comment on the reasons behind TotalEnergies' decision but noted that the lifespan of corporate venture capital is typically limited. He stated, "It's part of the evolving strategy of corporations."
This move aligns with previous instances of companies divesting their corporate venture capital portfolios. For example, General Electric sold off its startup portfolio, GE Ventures, in 2019 during a period when the company's stock was experiencing a decline. However, unlike General Electric, TotalEnergies reported record profits in 2022, suggesting that a similar dynamic may not be at play.
The decision to sell off its climate tech startup portfolio comes at a time when TotalEnergies launched "TotalEnergies On," an accelerator program for clean energy companies in March of last year. At that time, TotalEnergies announced that some members of the CVC team would transition to working on the accelerator program.
In conclusion, TotalEnergies' closure of TotalEnergies Ventures and the sale of its climate tech startup portfolio to Aster signifies a departure from the prevailing trend of oil and gas companies investing in climate tech startups. While the reasons behind this decision remain undisclosed, it reflects the evolving strategies of corporations in the rapidly changing energy landscape. As Aster takes over the portfolio, the future trajectory of these climate tech startups and the implications for TotalEnergies' long-term vision will be worth monitoring in the coming months.
