Houston Energy Startups Take A Shot at Shell GameChanger Funding

7/16/14Follow @angelashah

Henk Mooiweer and his colleagues at Shell GameChanger usually gather behind closed doors when evaluating new investments in energy startups.

But recently they opted to participate in a sort of public casting call for energy entrepreneurs that, if the pitches looked interesting, Shell would immediately pledge $25,000 of in-kind advice and assistance to help bring the idea to the proof-of-concept stage.

“Usually, we have a screening panel where we listen to a pitch for 10 minutes and then send them out when we take 10 minutes to discuss the idea,” Mooiweer told the assembled group of entrepreneurs Thursday. “This time it’s an open discussion. You can follow how, perhaps unsophisticated, the discussion actually is.”

Hosting the meet-up was Simrit Parmar, co-founder of co-working space Platform Houston near Rice University. “A lot of the times these early-stage entrepreneurs are so disconnected from the funding process,” she said. “We wanted to try to make things happen quickly.”

Two months ago, Shell GameChanger executives spoke at an introductory event there explaining the organization’s goals. Essentially, the investment group is looking for early-stage innovations related to what it calls “extreme recovery” energy, or where it’s hard-to-reach, and future energy technology to aid in processes like storage and transportation of energy.

“We are interested in meeting unusual people because we feel that a lot of the solutions to challenges we have in our industry might come from different areas,” Mooiweer told me in an interview following the event. “And we want to be active and support the local entrepreneurial community.”

Shell started GameChanger 15 years ago to act as an angel investment arm for the multinational oil company. “We look at deals too risky for normal Shell business,” Mooiweer said. “We are to be investing in what people might say are crazy ideas.”

At bat Thursday evening were four entrepreneurs with energy projects such as an electric “muscle,” a turbine for villagers in the autonomous region north of Somalia called Somaliland, cyber-security software, and an idea to use electromagnetic fields to decrease oil viscosity to increase production. GameChanger had four criteria it used to evaluate the 10-minute pitches: novelty, potential value, relevance to Shell’s business—i.e., it has to do with energy—and that the idea must be something that can be taken to the proof-of-concept stage.

The GameChanger team decided to accept two proposals for further support: the electric muscle developed by Houston entrepreneur Charles Whitehead and the use of electromagnetic fields in oil viscosity as pitched by Kelvin Selva, also a Houston entrepreneur. (The other two projects were deemed not to fit within GameChanger’s purview, but the turbine project was referred to Shell’s social venture arm, while the cyber-security software—which as part of a standalone company was well beyond the proof-of-concept stage—was referred to a Shell IT investment arm.)

What I found interesting was that the two projects accepted by GameChanger were on opposite ends of the innovation spectrum. Whitehead has already built a prototype of the electric “muscle,” which he said in his pitch “can bench press 100,000 pounds.”

The muscle’s technology has origins at NASA and DARPA, he added, and has the potential for extensive uses in energy exploration, including infrastructure for subsea drilling and in stripper wells, wells that are at the end of their useful life.

Selva, however, came to the committee with only basic research about how electromagnetic fields might be able to reduce viscosity in oil, thereby making it easier to extract. His plan would be to further explore the possibilities working with Rice University scientists and executives at Shell to test out theories.

“GameChanger is a sweet deal because it not only accepts ready-made processes,” he said. “They also accept ideas at inception from a start-up guys like myself, [people] who can’t do anything with their idea without any appropriate funding and guidance.”

Both men will now pitch GameChanger’s full screening panel, after which Shell executives will work with the entrepreneurs to flesh out the ideas and bring them to the proof-of-concept stage. Ultimately, the projects could get fully developed, receiving as much as $500,000 in investment and an entry into the business pipeline at Shell.

The odds are long, however. Mooiweer says only 10 percent of projects at the first stage make it to full funding. “Ninety percent fail; that is a good number,” he says. “We’re trying to do stuff that is difficult.”

Angela Shah is the editor of Xconomy Texas. She can be reached at ashah@xconomy.com or (214) 793-5763. Follow @angelashah

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