Face-to-Face with our Portfolio: eSmart Systems
eSmart Systems, a provider of AI-driven software for the inspection of powerlines, grid maintenance planning, and energy flexibility optimisation, began its journey with us in June 2019 when innogy Ventures participated in a $34 million USD growth investment round. eSmart’s innovative approach to grid asset management and maintenance prolongs asset life, increases operational and capital efficiency, making them an obvious and mutually-beneficial partner for us. Today, we are proud to continue our partnership with eSmart Systems as we advance the technologies that will bring our vision of a decentralised, democratised, and digitised energy system to life.
We sat down with eSmart Systems CEO Knut H. H. Johansen and innogy Ventures Venture Capital Investment Partner Thomas Labryga to learn more about their latest projects, their collaborative partnership, and how AI and data will impact our future energy systems.
Can you start by talking a bit about what your company does and what it is you are focusing on in particular at the moment?
Knut H. H. Johansen: We build and deliver the next generation Artificial Intelligence-based analytics software solutions for inspections and optimization of the world’s critical energy infrastructure such as electricity grids. Our core product, Connected Drone, leverages Artificial Intelligence (AI) applied to aerial and ground-based images to identify assets and detect defects in electric utility Transmission & Distribution infrastructure.
At the moment, we are particularly focused on building on the momentum we have in the market, especially with tier one utilities in North America and Europe.
What are the key challenges you foresee for utilities going into a digitised and decentralised energy system? What role do you see data usage and AI playing in this future and what impact will it have for the grid business?
Thomas Labryga: There are the obvious investments required into renewable generation, transmission lines and other infrastructure improvements to accommodate decentralised renewable generation. However, there are also the less obvious, but just as essential, “asset-light” new requirements: the new system needs smart and efficient steering, customer expect digital solutions and the transformation need to be affordable to be accepted. In my opinion, AI and digital technologies are the key enabler to establish and efficiently operate the new “smart” energy landscape.
Does eSmart Systems have the potential to transform the energy industry?
Knut: Yes, without a doubt. As a company we have always been at the forefront of technology and our products have unlocked completely new ways of utilising data, making decisions, conserving resources and reducing costs. We are changing the way energy companies operate.
Why did innogy Ventures invest in eSmart Systems? What opportunity did you see in the company and how does it fit with your strategy?
Thomas: eSmart’s AI and digital capabilities are paired with a profound knowledge of the energy industry. This is a perfect match to our investment hypothesis to invest in startups which support the digital transformation of the energy system. eSmart’s main product, which automates grid asset inspections, is the perfect example of how Machine Learning and Artificial Intelligence can reduce maintenance costs at the same time as increasing the quality. In addition, we have been impressed by the experienced management team and the traction they have already established with their international customers. In our view, eSmart Systems’ expertise and capabilities can be utilised to “digitalise” core processes – their current offering is just the beginning.
Why did you choose innogy Ventures as an investor?
Knut: innogy Ventures is the perfect investor for a company like eSmart Systems. What initially impressed us most was the team’s unique combination of deep industry knowledge, their global network and their demonstrated success in scaling technology companies. They are more than just a financial investor, they are a trusted partner and advisor. For a company like us, in the phase we are in, this is what made them stand out.
Can you tell us about your approach to giving growth support to eSmart Systems?
Thomas: eSmart Systems’ product offering speaks for itself but as with all of our start-ups we try to support growth by opening doors at innogy as well as at other corporates from our global network. For example, we introduced eSmart Systems to some of our DSOs which led to some very successful PoCs. At the moment, we are investigating further and larger scale collaboration options. Furthermore, we support the growth of eSmart Systems via an active advisory board engagement, strategic support and if requested on operational level where feasible.
What makes innogy Ventures different to other investors (VCs or other corporates)?
Knut: I would say their hands-on attitude. Our cooperation with the innogy Ventures team is not limited to board meetings or other formal forums, they are always available for discussions and to give guidance, advice and support. It is not only their willingness to engage actively with us which are unique, but also the quality of the support they provide.
You have already built strong global partnerships and have acquired some big names in the energy industry as your customers and successfully completed a significant funding round in 2019. When do you expect exponential growth for your business?
Knut: We strongly believe that we are approaching an inflection point within the next 24 months. The adoption of image capturing technologies for grid inspections is rapidly growing in both Europe and North America, especially driven by great success stories from some of the early movers in the market, like our customer Xcel Energy. This creates an urgent need for solutions like Connected Drone.
While many utilities are implementing such technologies at smaller scale currently, the volume of inspection data is expected to grow rapidly over the next few years as both image capturing technologies and related regulations evolve.
Can you provide some concrete examples of how innogy Ventures has provided growth support/cooperation?
Knut: One example is the support they provided during our entry into the DACH region. Venturing into a new market is always challenging and full of potential pitfalls. The innogy Ventures team assisted us in everything from introductions to prospective customers right through to advice on how to handle legal matters. They even supported us in the recruitment process for a Regional Manager.
Where do you both want to be in two years from now on this joint journey?
Knut: Two years from now, building on our current position as the leading AI inspections software provider in Europe and North America, we will have expanded into two new geographies and merged our Connected Drone and Connected Grid products, providing an offering which combines the world class image analysis capabilities in Connected Drone with the extensive asset analytic capabilities in Connected Grid.
Thomas: It would be fantastic to see eSmart maintaining its leading position for AI analytics for automated asset inspection in electricity grids in a huge international market, where this automated and smart approach has become the new normal, replacing current manual solutions. Furthermore, we would like to see eSmart combine its products into a holistic, next generation asset management system for utilities. On a personal note, I would love to see at least semi-autonomous drones inspecting transmission lines enabled by eSmart on my way to work.