The Story Behind Our New $100M Seed Fund

I’m so excited to share that The Westly Group has successfully raised an oversubscribed $100 million seed fund to invest in entrepreneurs transforming the world's largest industries. We’ve received some great press coverage from outlets like Axios, VentureBeat, and on Bloomberg TV, but I wanted to provide more insight into the “why” behind this fund and the impact we hope to achieve.

I joined The Westly Group as a Partner last year to begin building our seed franchise and to lead the investment strategy and deployment of this new fund.? That strategy is to invest in what we believe are technologies attacking some of the last untapped B2B enterprise market opportunities.? These enterprise markets are primarily established outside Silicon Valley and historically have been underserved, despite combining to make up over 50% of the world's GDP: Industrials, mobility, energy, and the built environment.?

With this new $100 million seed fund, we will engage with entrepreneurs at the earliest stages of company building. We’ll lead pre-seed investments starting at $500k and seed investments of up to $4 million. This seed vehicle will be deployed alongside our $312 million core fund that invests in Series A through Series C stage companies.

We’ve intentionally established a multi-stage family of funds to position our firm as a long-term capital partner to our portfolio companies. Why? Because we understand that the entrepreneurial journey can be a long one, requiring committed partners grounded in the realities of what it takes to build a durable business. We know this journey well, having supported nine of our portfolio companies on their path to IPO, including three multi-billion dollar exits: Tesla, Luminar, and SentinelOne.

"Let me know how I can be helpful." ~ Every VC Ever

Prior to joining The Westly Group, I spent several years building Parsable, an enterprise industrial software business where I held a variety of leadership roles, including as the company’s CFO, COO, and Interim CEO. We scaled Parsable’s Connected Worker platform to 1,000 manufacturing facilities in over 130 countries during my tenure.?

In March 2020, we kicked off a fundraise and despite having a successful, rapidly growing business, the challenging market conditions during the early days of the pandemic led us to pitch nearly 70 VC firms over the course of our process. If you’re a Founder who has raised capital before, you may have dealt with a bout of fundraise fatigue:? Same pitch-different day, just wanna get back to running your business, and every VC starts to sound the same.?

I’ve been in your shoes.

As we began to finalize our syndicate ahead of closing the round, the tables turned and investors began to pitch us on how they would be helpful beyond wiring a check.? Most commonly, firms attempted to differentiate by flexing their portfolio services, offering resources for talent, providing GTM advisory, or augmenting back-office functions. These are high-leverage and important capabilities. The Westly Group offers them too.? With that said, selling into a market known for its long, difficult, sales cycles (assuming you get through pilot purgatory first!), my focus was on driving the top line metrics those same firms scrutinized most closely as part of their diligence, yet, failed to mention as an area they could add tangible value post-investment.

So when I concluded my journey at Parsable and was planning my return to investing, it was important for me to join a firm where I felt like I could actually move the needle in the areas I cared about most when raising capital for my own company.??

Specifically, I wanted to help create an unfair GTM advantage for Founders audacious enough to build in the largest, toughest to crack enterprise markets.? This is where The Westly Group sets itself apart.?

We create a real GTM advantage for our portfolio companies

The Westly Group’s core differentiator is providing our portfolio companies with unparalleled access to our global network of energy, mobility, and industrial companies, including some of the world’s biggest and most influential organizations. As Limited Partners (LPs) in our family of funds, they have a deep commitment to the success of our portfolio companies.

LPs in the new seed fund include existing investors like Alaska Airlines, Duke Energy, Origin Energy, American Electric Power (AEP), and Trane Technologies. New investors include PPL, Pinnacle West Corporation, ONEOK, Oklahoma Gas & Electric, Vontier, Avista Corporation, and Evergy. They join a group of existing LPs in our flagship fund that includes ABB, Audi, Bridgestone, China Light & Power, CNH Industrial, Dominion Energy, ENEOS, Geotab, Hitachi Energy, NorthWestern Energy, Oshkosh Corporation, Puget Sound Energy, State Farm Ventures, Vistra Corp, Xylem, and several financial investors.

Having this blue-chip group of partners helps our portfolio companies in three distinct ways:

1. Global Network of Technical Experts: Our corporate LPs are experts in the opportunities and challenges in their respective markets. We help focus and accelerate product and customer discovery work for our portfolio companies by leveraging this network, generating rapid technical and commercial feedback in these hard to navigate markets.

2. Understanding & Influencing Budget Priorities: Our LPs are some of the largest buyers of IT and OT solutions in the world.? They have chosen to partner with The Westly Group not just to generate a return as investors, but to gain access and insight into the most promising startups in their sectors.? Not only does this give us a front row seat into their most pressing technology needs and innovation priorities, but it comes with the responsibility to help inform and influence what those priorities should be based on the companies we engage with across the startup ecosystem.?

3. Match-Making Portfolio Companies with LPs: This is where the magic happens.? Over the past 17 years, we have made thousands of connections between our portfolio companies and LP base, acting as a trusted partner to both parties, and thoughtfully matching our LP’s needs to the services and offerings of our portfolio companies.? We have established a dedicated effort at the firm designed to foster new customer relationships, distribution and partner channels, design partnerships, advisory roles, investment opportunities, or even M&A.

After seeing the impact this has had on our venture and growth stage portfolio across our first four funds, we are incredibly optimistic about the opportunity to now leverage this network to create an asymmetric advantage in the early days of market formation and company building for our seed stage companies.?

We’re investing in big themes across these critical industries (yes, including AI)

We're currently focusing on several horizontal themes in the context of the industrial, energy, mobility and built environment landscape. This isn’t an exhaustive list, but they primarily can be grouped into these three categories:

1. Artificial Intelligence and Deep Learning

AI and deep learning are revolutionizing industries by enabling unprecedented levels of automation, efficiency, and insight. We’re particularly interested in the application layer of AI, including AI models that can predict maintenance needs, optimize logistics, and improve operational efficiencies in industrial settings. Solutions that enhance quality control, safety, and operational monitoring in manufacturing and construction, and tools that enable intelligent workflow processes and facilitate better communication between machines and humans are key areas of interest.

2. Decarbonization and Climate Tech

The urgent need to address climate change is driving innovation across the global economy. We are focusing on technologies and solutions that facilitate the decarbonization of heavy-emitting sectors, Virtual Power Plant (VPP) technologies that can aggregate or manage distributed energy resources to create a reliable and flexible power source, enhance grid stability, and optimize energy distribution, and data center optimization technology as this asset class’ growing energy consumption and carbon footprint are rising concerns.

3. Digitization, Robotics, and Automation

We are particularly excited about the development of autonomous robots for use cases across industrials and mobility, and automation tools that streamline workflows, enhance supply chain management, and optimize manufacturing processes.

Our first seed fund investments?

You’ll already begin to see some of these themes emerge in the first three investments we’ve led from the seed fund, all of which were oversubscribed rounds.?

1. Condoit: An all-in-one electrical data platform designed for electrical engineers and commercial electricians.? There is a lot of investment being made in the global energy transition. According to Sightline, since the start of 2020, ~2,600 climate tech companies have raised $142bn+ of venture funding across 4,156 deals, with most of the funding going to low-carbon energy and low-carbon transport companies. And while the investment in these companies is deservedly taking center stage, we cannot forget the people involved who will have to do a lot of the physical work if we’re going to meet this moment.? Specifically, the electricians and engineers who are going to be designing, retrofitting and installing the infrastructure to support this transition need modern digital tools.? No one understands this better than Founder & CEO Ian Hoppe , a third generation commercial electrician, who is building the product he always wished he had.?
2. Diagon:? Investing in Founders who are solving their own pain will likely be a recurring theme in our seed fund portfolio, and is the case in our second investment in Diagon, a supply chain software company focused on CAPEX procurement for manufacturers.? When Diagon’s Co-Founder & CEO Will Drewery worked at Tesla, his team actively managed nearly three quarters of a billion dollars per year in CAPEX spend across all product lines.? This is no job for spreadsheets or homegrown tools.? At Diagon, Will has assembled a team with nearly 40 years of CAPEX procurement experience that has sourced over $4b in equipment to solve this problem.?
3. [Soon to be announced!]:? Lastly, we led the seed round for an AI-powered market intelligence company focused on organizing the new climate economy. Led by an expert team from data platforms such as BloombergNEF, Gartner and Pitchbook, the company is building a source of truth platform for enterprises, governments, and investors as regulation, corporate commitments, and consumer demands are quickly closing the gap between decisions that have climate impact and those that have business impact for these organizations.?

Let’s connect!?

There is so much I’m excited about regarding the future of our firm, and the newly raised fund is just one sign of our growth and future prospects. Our investment team has grown, with Noemi Walzebuck recently joining as a Senior Associate to help me lead the seed fund. Noemi brings venture experience from her time at Bessemer Venture Partners and Powerhouse Ventures, combined with a deep operating background at high-growth startups in our core sectors.

We’ve also expanded our physical footprint with a new office in San Francisco. I’m really proud to plant our flag in The City, and if you’re a fellow investor excited about some of the same areas we are, please swing by the new digs and plug in with us for the day. If you’re a Founder building in any of these areas, please get in touch with me (either here on LinkedIn or [email protected]) to be included in the many events we’ll host on our new outdoor terrace.

As we kick off this new fund, I’m fortunate to have the support of my fellow Partners Steve Westly , Timothy Wang , Danny Cotter and Emily Fritze , along with all of our teammates at The Westly Group. We’ll all continue to collaborate closely on investments across both funds.?

Our new seed fund will enable us to support visionary entrepreneurs at the earliest stages of their journey, providing them with the capital and strategic leverage they need to revolutionize major industries. I’m a huge believer in the transformative potential of these early-stage companies, am grateful for the bold entrepreneurs who are tackling some of the world's toughest problems, and can’t wait to partner with them to create a more sustainable and prosperous future.

Cheers!?