TEX-E hosts inaugural energy and climate conference in Houston this month

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Energy leaders will discuss AI in energy, climate venture funding and the evolving energy workforce at the first-ever TEX-E Conference on Tuesday, April 15, at the Ion. Photo via the Ion

The Texas Exchange for Energy & Climate Entrepreneurship will host its inaugural TEX-E Conference on Tuesday, April 15, at the Ion.

The half-day event will bring together industry leaders, students, researchers, and others for panels and discussions centered around the theme of Energy & Entrepreneurship: Navigating the Future of Climate Tech. Topics will include AI in energy, climate venture funding and the evolving energy workforce. Bobby Tudor, CEO of Artemis Energy Partners, is slated to present the keynote.

A networking happy hour and an interactive trivia session are also on the lineup.

Here is the full schedule of events:

1:15 p.m. — Keynote Address: Fueling the Future: Balancing Energy Demands with Net Zero Solutions

Bobby Tudor, CEO of Artemis Energy Partners

1:50 p.m. — Emerging Technologies & AI in Energy

Rob Schapiro, Senior Director, Energy Partnerships, Microsoft
Prakash Seshadri, SBP of Engineering, Electrification Software, GE Vernova
Birlie Bourgeois, Director, Shale and Tight Asset Class, Chevron

Moderated by Timothy Butts, TEB Tech

2:30 p.m. — Break

2:40 p.m. — The Climate Capitalists: Funding the Next Generation

Neal Dikeman, Partner, Energy Transition Ventures
Eric Rubenstein, Founding Managing Partner, New Climate Ventures
Jim Gable, President, Chevron Technology Ventures
Juliana Garaizar, Venture Partner, ClimaTech Global Ventures

Moderated by Adam Ali, TEX-E Fellow

3:20 p.m. — Interactive Trivia Session

3:30 p.m. — The Talent Transition: Navigating Energy Careers in a Changing World

Gin Kinney, Executive Vice President, Chief Administrative Officer, NRG
Loretta Williams Gurnell, SUPERGirls SHINE Foundation

4:10 p.m. — Closing Remarks

4:30-6:30 p.m. – Brewing Innovation Mixer at Second Draught

TEX-E launched in 2022 in collaboration with Greentown Labs, MIT’s Martin Trust Center for Entrepreneurship, and five university partners — Rice University, Texas A&M University, Prairie View A&M University, University of Houston, and The University of Texas at Austin. It's known for its student track within the Energy Venture Day and Pitch Competition at CERAWeek, which awarded $25,000 to HEXASpec, a Rice University-led team, earlier this year.

Houston-based Oxy and Woodside Energy sponsor the TEX-E Conference. Register here.

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Energy founders — when you feel the market starting to tighten up, consider giving yourself, and your investors, some breathing space, then use that breathing space to drive value. Photo via Getty Images

Houston energy investor: How to build startup runway in a choppy venture funding market

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The venture funding market in 2023 has been very tough.

The number of rounds closing is significantly down from the 2022, and a record number of companies are raising. Overall VC fundraising is down, but great deals are getting funded well and at good valuations, while many are struggling. Fewer new investors are writing lead checks and being more cautious when they do, later stage investors are shifting earlier stage to manage risk, bad cap tables, operating plans, and reluctant insiders are killing otherwise good deals, and everyone is working on ensuring their portfolio is in good shape.

This is just another venture cycle. The sky is not falling, the playbook for this cycle was written long ago. But if you are a founder, you may need to take action. If you are less than 15 months of runway, it’s time to go to your investors with a plan. You need to either be well on your way to closing a round, starting your fundraise if the company is ready, know your investor group’s plan to bridge or do an inside round if necessary and what you need to achieve to unlock that, or bring them a realistic plan yourself to get to 18 to 30 months of runway. But whatever you need to do, you need to do it now.

The runway plan

The core of a good runway plan is building a cash wedge by taking a little from everywhere, and drop margin and cash. A little revenues, a little in pricing, a little headcount reduction, a little insider capital, a little new capital, and a little balance sheet help. How much a little is, depends on your own dynamic. The secret to a good cash wedge runway plan is starting early, and doing it now. Every day of delay increases the depth of the changes needed for the same runway – until you reach a point where the brutal burn math just doesn’t work, and the changes become costly or even untenable.

Focus on your customers. Nothing cures runway or fundraising ills like revenue. You’ve built these relationships for a reason. They are taking your calls because they care. If you and your team aren’t spending most of your time with customers right now, you are doing it wrong. Good customers get it. Focus their attention on how your product makes them money, and how much. Support their internal efforts to grow the account. Open book it, raise prices if it makes sense, and ask for more volume or contract extensions at good prices if you can’t. With new customers, focus on getting more phase ones that fit in the budget your champions have available quickly. Bet you and your customer can find more budget later when you’ve demonstrated value to them. Bid every grant and non-dilutive source that makes sense, which builds leverage for yourself and your investors.

Burn matters. In a tight market, no one likes to buy burn, and demonstrating efficiency of revenue and backlog relative to capitalization and burn level matters. If you’re going to cut (and you probably should), cut much deeper than you think, and do it now. You ran this company when it was four people and no money, you can do it again if you really had to. Start making quick decisions about what you can defer and cut in the near term, there is always an easy 5 to 10 percent of costs you can cut and push to next year, and often a few points that can be pulled from supply chain deals. Overplan for growth, but don’t release to spend until your capital markets plan is clear.

Rebalance your spend. Shift your cost structure and organization chart forward towards the customer. Aggressively expand customer facing lead generation, guerilla marketing, applications engineering and direct sales efforts, at the expense of internally facing ones like R&D, manufacturing, and overhead. Repurpose people, change comp structures, job descriptions, or adjust costs and headcount. Get your team on board with the focus and where your runway is. A 12-person startup has about 2,000 labor hours a month to throw at its problems, 3,000 hours on overdrive, when your runway shortens, it’s time to hurl those at customers. Keep in mind, none of this is permanent, good startup organizations are elastic and in six months you can shift back or add again. You’re only really making 180-day changes here. That’s what the nimble startup means. It’s about runway and quick product and operational shifts.

Hit the balance sheet for cash. Depending on company stage and type, sell any underutilized assets and inventory, defer some capex, put someone on collecting AR and adjust your contract terms and pricing to pull forward cash flow, term out and negotiate payment terms on AP, leases and debt. One huge caveat. Do not take venture debt. Until you are profitable, venture debt does not actually create the runway in the real world that you see on paper, and has killed more good startups on the cusp of greatness. Venture debt is Lucy, runway is the football, and you are Charlie Brown.

Adjust your capital markets strategy. The classic rule is raise all you can when you can, because capital is available most when you need it least. But that’s not the whole story. And founders need to realize it is really dangerous to take a deal to market that is not ready, and doesn’t have the right level of insider support, is priced or structured wrong. While the market sets the price and terms, once you’ve a cap table full of investors, both new and existing investor appetite, and valuation, becomes a partial function of existing and new investor appetite and support. Take out a deal that’s not ready, or with too much burn, too little insider support, too high a last valuation, too large a convert or safe overhang or prior capitalization, too little team ownership, or too much valuation or cash need relative to its team, technology, TAM and traction (and cap table), and a founder and board can turn a good opportunity into a death spiral headed straight off a cliff, fast.

The "Magical 25" percent ratio. This is an art not a science, but the Magical 25 percent ratio on a prototypical startup will give you an idea of how powerful a Runaway Plan can be to get a deal done and reset a founder’s opportunity.

Imagine a middle of the road seed funded SaaS startup, burning $350,000 gross, with $100,000 in MRR, which has raised $3 million in cash from three investors and spent half of it. On its current trajectory it has six months of cash left, and is bankrupt by March. Market turned down, and the initial investor calls don’t result in a lead VC leaning in. The logic of burn rate math is brutal. In 90 days the company is on fumes, and it has no term sheet in hand, with the odds of getting one generally falling. And in today’s market the $1 million in ARR has become the new minimum not sufficient condition for fundraising, and the company will need to get farther on it’s A to be attractive to a B round investor. If the founder does nothing and waits 90 days they’ll be begging their investors for a bridge, and begging new investors for a flat round, and will likely end up with downround or an ugly insider bridge. At $250,000-a-month burn and no term sheet, within 150 days the founder will then need an inside round of between $4.5 and $6 million to get to the prototypical 24 month runway, or a $1.5 to $2 million bridge to buy enough more months to fundraise and build value. That’s 1.5x to 2x the capital raised, or over half the existing capital in a bridge, and puts intense pressure on strength of your cap table, growth rate, broad insider support, and quality of revenues in a tight venture funding market.

If the founder instead cuts costs 25 percent immediately, and then throws all hands on deck to find 25 percent more revenue — at this level of burn the startup probably has a team of at least 12 to 15 people, meaning the founder can throw at least 2,000-3,000 man hours in an all hands customer push in just the next 30 days if they had to. At the same time, the founder goes to his largest investors, walks through the cash and cost plan, and asks them to give him a term sheet for a seed extension with existing investors all kicking in 25 percent of their contribution to date, with the extension equal to 25 percent of the total capital at close. It can be papered fast and cheap. That adds $750,000, leaving the founder to find one new investor to join the insiders at the last price for 25 percent of the extension – a much easier ask of a new investor in a tough market, and probably one the founder has a couple of interested parties that have been watching, or certainly one of the founder’s investors can make a quick call to a friend to close. Brutal burn rate math has now become magical burn rate math and the company has 18 months of runway, has halved its net burn, and can additionally get away with half the A round equal to 1x the capital it has raised to date at the end of it if need be.

The "magical" part is the founder has now changed the odds for everyone – his team only has to find 25 percent revenues and costs. His insiders are only asked for 25 cents on the dollar support at a price they should love, leaving the typical fund with plenty of follow-on reserves after that, a new investor does not have to carry the lion share of the burn, set price, do as much dd, or worry about investor fatigue, and the insiders don’t have to go it alone and have external validation, and the founder has minimized their dilution, and their fundraising time. If the founder then is able to keep costs flat for just 6 months in a sprint and pick up another 25 percent in revenues, the runway at the current cashout date is still 16 months, and the company is set up well for its next round, with on $4 million in capitalization on nearly $2 million in ARR, a new investor with dry powder in the deal, and plenty of reserves left on the cap table to support the A, with a lot more traction – leaving the size of A round the company has to have at less than half the level of before, the effective revenue multiple insiders and new investors are facing halved, the burn the new investor had to buy halved and lots of time and options for the founder to drive value, dilution, and scale.

Founders, it’s your company. Your decision. Just be aware, how and how fast you play the tough decisions when the market shifts, changes the calculus for your investors, and their level of confidence and ammunition to back your future decisions. When you feel the market starting to tighten up, consider giving yourself, and your investors, some breathing space, then use that breathing space to drive value.

———

Neal Dikeman is a venture capitalist and seven-time startup co-founder investing out of Energy Transition Ventures. This article originally ran on InnovationMap.

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Texas Gov. Abbott broadens crackdown on data centers by halting all permits

data center crackdown

Responding to public outcry, Gov. Greg Abbott has stepped up his campaign against data centers by temporarily halting approval of environmental permits for data center projects.

This and previous moves by Abbott essentially amount to a temporary freeze on the development of new data centers in Texas. His actions come at a time when Texas’ stature as a data center hub has been soaring.

On Monday, Abbott directed the Texas Commission on Environmental Quality to stop issuing permits for data center developments until the Electric Reliability Council of Texas (ERCOT) and Public Utility Commission of Texas complete their review of projects seeking power grid connections.

With regulatory reviews underway and environmental permitting now frozen, state regulators currently cannot approve or deny requests from data center developers, Abbott said.

In a letter to the environmental quality commission’s executive director, Kelly Keel, Abbott said this directive is “consistent with my whole-of-government approach to ensure Texans’ natural resources and way of life are protected.”

Abbott previously ordered the Texas Water Development Board to require data centers to meet reporting requirements for water use. He also told the board to impose penalties for failure to comply with those requirements and to collaborate with ERCOT on its review.

Abbott launched his crackdown on data centers in August by ordering the Public Utility Commission and ERCOT to review data center projects in Texas. The audits will examine all data centers in the queue for interconnections before any more projects can move forward. Interconnections enable data centers to share power, data and computing resources.

In calling for those audits, Abbott cited concerns over data centers’ use of water and electricity, and the centers’ effect on infrastructure expenses and consumers’ utility rates.

“Simply put, Texans must come first,” the governor said.

During next year’s legislation session, Abbott will push for the elimination of state financial incentives for data center projects.

Ed Hirs, an energy fellow ⁠at the University of Houston, told Reuters that Abbott was backtracking on “his earlier pronouncements about data centers leading to lower electricity prices.”

Abbott’s actions come amid growing public backlash over data centers. A recent University of Houston survey found that nearly 63 percent of Houston-area residents opposed construction of a data center within a mile of their home.

Only 8 of 160 utility companies in Texas have filed wildfire response plans

Utility News

Only eight of 160 utility companies that operate in fire-prone areas of Texas have complied with a law that helps mitigate wildfires, lawmakers recently learned. The revelation comes on the heels of a chaotic wildfire season that has continued through the summer.

Lawmakers learned about the slow progress last week during a House State Affairs committee hearing, led by Rep. Ken King, who led the charge on the new law last year. The law under House Bill 145 requires utility companies to file wildfire mitigation plans to the Public Utility Commission.

The plans must include emergency protocols in the case of a wildfire, utility operating plans during high-risk weather conditions, management of grass, shrubs and other vegetation in areas that are at risk of wildfires, inspection of poles and other electric equipment and identified areas of wildfire risks within a utility’s service territory.

King, a Republican from Canadian where much of the wildfire damage occurred during the Panhandle wildfires, pressed utility companies on the lack of compliance.

“I’m very, very disappointed with the industry,” King said. “I think it’s imperative for anybody that has not filed that report to realize January is coming. You will file that wildfire mitigation plan, and if you’re dragging your feet, there’s no excuse good enough for me.”

Last year, King filed a slew of bills in response to the devastating Smokehouse Creek wildfires in the Texas Panhandle and parts of Oklahoma in 2024. It was the largest wildfire in Texas history, started when a decayed power pole owned by Xcel Energy snapped and landed in dry grass.

It was one of a spate of fires, the majority of which were linked to electrical ignitions.

This year alone has been a very active wildfire season. Nim Kidd, chief for the Texas Division of Emergency Management, said the state has helped local governments respond to more than 1,200 fires since the start of the year. The Ross Fire, which burned for more than three weeks in North Texas, was finally contained by firefighters last week. It’s now the second largest wildfire in the region’s history.

Two wildfires have broken out on Craig Cowden’s Panhandle ranch this year, both ignited by electrical equipment used by oil and gas companies. Cowden extinguished them, before they could spread beyond 5 acres — a fraction of the 20,000 acres he lost to wildfires in 2024.

Cowden was one of many ranchers who worked with lawmakers last year to address the problem. Over the years, several fires have started on Cowden’s land, most of which were the result of faulty or damaged electrical equipment.

“It’s kind of discouraging that there hasn’t been more proactively submitting their wildfire plan,” Cowden said.

Slow progress

There has been progress since the bill was filed. According to King, six fires have been linked to electrical issues this year, a significant decrease from 80 in 2024.

Connie Corona, director at the PUC, explained the lag in filings to lawmakers, stating that on top of the eight who have submitted, four more have given the PUC a date for when they intend to file their plans. Corona said another 135 have indicated to the PUC they are in the process of preparing their plan. This leaves 13 who have not communicated their plans to the PUC.

“We’ve asked for a heads-up notice of when the utility plans to file, and try to ensure that meets with the resources we have available,” Corona told lawmakers.

Corona said PUC staff had created a model wildfire mitigation plan that utility companies can use as a template. The model is intended to support smaller utility companies that lack sufficient resources to make their own plan. King asked Corona for a list of entities who complied with the requirement.

“When eight out of 160 have complied, and we’re sitting here in September, that doesn’t sound like a very good response to me,” King said.

A looming deadline

Brad Baldridge, interim president of Southwestern Public Service Company, which operates as Xcel Energy, told lawmakers what his company is doing to mitigate wildfires. The company was heavily criticized in the wake of the fires and has since deployed 97 wildfire detection cameras across its service territory. The cameras use AI to detect smoke and provide that information in real-time to utility personnel, local fire responders and emergency managers. It also uses Public Safety Power Shutoffs to turn off power in certain areas during critical wildfire conditions to prevent an electrical start. Baldridge said since 2024, the company has had to shut off power five times.

When King asked if the company had submitted its wildfire mitigation plans, Baldridge said it was submitted last month. It would have been submitted earlier, he said, but there was “tremendous” vegetation that grew from rain earlier in the year.

“All of our experts were focusing on wildfire mitigation,” Baldridge said. “Which delayed us a little bit in our filing.”

Mark Bell, CEO for the Association of Electric Companies of Texas, said they are using remote cameras and sensors to detect wildfires and are taking a more aggressive approach to manage vegetation. They also use power shutoffs in extreme conditions to minimize the risk. Bell testified that their utility companies were on track to file their wildfire mitigation plans.

“I think all the plans are going to be filed by the end of the year,” Bell said.

King reminded Bell that it’s September, and many haven’t filed yet.

“That’d be 148 (plans) approved before January,” King said.

Bell assured King that five of them have filed their plans and one is scheduled to file in October.

Corona, with the PUC, said there are also pole and maintenance plans due in January that will detail a complete inventory of those assets owned by utilities. King said the plan is to have the companies list everything they own in Texas, where it is and how old it is. However, he said they aren’t being compliant and lawmakers will see what happens in January.

Cowden, the rancher in the Panhandle, told the Tribune that while it’s not technically fire season anymore, there are still small fires that ignite around the area.

Cowden sees the amount of work being done by Xcel Energy to upgrade their electrical poles and infrastructure in the area. He said it’s different than before the wildfires in 2024. He thinks the fires got their attention.

“You can tell they’re making a conscious effort to try to upgrade their infrastructure,” Cowden said.

This story was originally published by The Texas Tribune and distributed through a partnership with The Associated Press.

Houston-based ‘grid in a box’ provider Branch Energy raises $33M

fresh funding

Houston-based startup Branch Energy, which offers a self-contained “grid in a box,” has collected $33 million in a Series B round.

Piva Capital and Clean Energy Ventures led the round, according to a news release. Active Impact Investments, Whitecap Venture Partners, Prelude Ventures, Zero Infinity Partners and Inovia Capital also contributed to the round.

In 2024, Branch raised $10.8 million in an oversubscribed Series A round.

Branch’s business model

Branch, which launched in 2021, says its proprietary Arc “grid in a box” contains everything needed to store and supply electricity. A container about the size of a parking space holds an industrial-grade battery, grid connection equipment, cooling capabilities, autonomous controls and cloud-based management software.

The startup installs Arc systems at warehouses, hotels, factories, stores and other commercial properties. Each system arrives on a flatbed truck and can be online within two days, Branch says.

Under Branch’s business model, a property owner avoids upfront payment for an Arc system.

Aside from equipping a host business with an Arc system, Branch serves as the business’ power provider. The startup says it guarantees savings on the host’s energy bills and delivers backup power during outages.

Branch generates revenue by sending the battery’s stored power to the grid or to customers like hyperscale data centers. It also benefits by shifting energy from low-cost periods at night to high-cost periods during daily power peaks.

The startup handles permitting, installation, insurance and operations for each Arc system. The host provides a parking-lot-sized plot of land for the system.

Alex Ince-Cushman, co-founder and CEO of Branch, says the startup’s “grid in a box” can quickly meet the substantial power requirements of hyperscale data centers.

“We can do it on the timeline of a delivery, not a construction project. Our customers don’t lift a finger, don’t pay a dime and get guaranteed savings,” Ince-Cushman said in the release.

Entering the Illinois market

Branch already operates in Texas and is entering the Illinois market.

PJM, which operates Illinois’ power grid, recently paved the way for major energy users like data centers to connect to the grid sooner when they rely on their own electricity generation. PJM’s territory covers roughly 1.2 million commercial buildings and represents 20 percent of U.S. power demand, according to Branch.

“Grids around the country need the distributed capacity that [the Arc] system can supply, especially in states with fast-growing power demand like Texas and Illinois,” Lee Larson, principal at Piva Capital added in the release.

To keep up with that demand, Branch plans to build tens of thousands of Arc systems in the U.S.

A multibillion-dollar company in the making?

Daniel Goldman, co-founder and managing partner of Clean Energy Ventures, said Branch holds the potential to become a multibillion-dollar competitor in the emerging market for distributed power.

“With utility-scale generation and storage challenged by interconnect and siting constraints, behind-the-meter commercial, and industrial storage sites have become the ultimate market opportunity with ease of interconnect, ability to combine distributed AI data centers, and identifiable savings in rapidly growing markets,” Goldman said.

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