The Most Active Early Stage Venture Capital Fund in Mexico Sets Up E3 to Capture The Opportunities in the Newly Opened Electricity Market
ALLVP announces its investment in Estrategia Energia Electrica’s Seed Series (“E3”) through its second fund Venture Innovation Fund II. The company is a pioneer of electricity trading in Mexico aiming to become the leading platform as a power broker-dealer and intermediary between private energy producers and mid-size consumers in Mexico.
“Currently, underused capacity is a strong ache for electricity generators while costs are a growing concern for medium and large SMEs. With power demand expected to increase, E3’s technology will benefit from a first mover advantage in a newly created market” mentioned Francisco Fuentes, CEO of E3. While some tariffs are subsided by the government (households), industrial consumers face high electricity costs compared to the USA; companies in Mexico face 41% higher prices. Yet, power demand is expected to increase at a constant rate, particularly in the services and medium industries. Electricity consumption of the segment targeted by E3 – large commercial, services & industrial SMEs – is estimated at US$20bn in 2014, and is expected to grow up to US$27bn in 2020. On the other side, the Federal Ministry of Energy determined that 100% of the increase of the capacity will be sold on the free market where electricity generation is expected to double by 2018.
Since the release of the Energy Reform in August 2014, the management team has developed a strong pipeline of both electricity generators and end-consumers and worked at the definition of the operational and legal model in collaboration with the main stakeholders. Days after the publication of the new rules and together with ALLVP’s investment, the founders are prepared for initial operations and technology development. Through an innovative trading business, E3 will bring economic added value to both electricity generators and SMEs end-consumers, proposing an efficient alternative to the existing monopoly of CFE. The broker-dealer platform arises in markets being open to competition by the regulations.
“E3 participated actively in helping understand and craft the new regulation. The founding partners make the most knowledgeable and experienced team with solid technical and financial credentials and ample experience within the public and private sectors which makes them perfectly positioned to offer the service” said Fernando Lelo de Larrea, Managing Partner at ALL Venture Partners.