Member Spotlight: Meghan Sharp, BP Ventures

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Meghan Sharp is the Managing Director, Americas, for BP Ventures. Meghan and her team deploy $200 million annually to startups in the US and abroad across a wide range of industries and stages of growth. Recently, we sat down with Meghan to hear about her path from post-doctoral work in plant genetics to venture capital.

Let’s start with your background: How did you end up at BP Ventures?

I am a technologist by background. I have a Ph.D. in cell and molecular biology and post-doctoral work in plant genetics, all here in the Bay Area. I was on the academic track, applying for faculty positions and transition grants for my life in academia. Then, I just suddenly came to the realization that I didn’t want to do that anymore; I actually wanted to be a VC. I went to the director of the Carnegie [Institution for Science] at the time, Chris Somerville — who had founded several successful companies — and eventually he picked up the phone and got me an internship. Then, I really focused on getting the commercial grounding I needed to complement my science and tech knowledge and got my MBA at Columbia while I was working at a VC firm in Manhattan. Then — and this shows you how certain people can play pivotal roles in your life — Chris called me one day about an opening at BP. BP was looking for a biologist with university networks in the Bay Area and venture capital experience. They were having trouble finding one, and here I am, eight years later.

How has the team evolved since you started eight years ago? How do you think differently about making investments and your overall strategy?

It has been a big evolution, as it typically works in corporates. We started in the Alternative Energy Group, and our focus had been on generating insights, learnings, and experimentation for BP. Once we moved to Group Technology, which cuts across business units, it became much more about deployment and strategic value. In the last three years there’s been another evolution: we used to have a budget of $30–40 million in any given year, and recently our activity has really grown — as has the size of our team. We are now about 20 people, give or take, more than double what it was. We will deploy $200 million this year, and that’s what we really expect to deploy year-on-year moving forward. By the end of 2018, we expect to have invested $500 million into 50 companies with more than 200 co-investors.

How does the BP Ventures team work to do deals and support portfolio companies?

It’s incredibly collaborative. Multiple people work on every deal. We really try to utilize people’s talents and time in a way that makes sense so we really deliver and manage our portfolio as a team.

Even though the team has doubled in size over the last eight years, we’ve tried to really keep that spirit. It’s so important that you enjoy who you’re working with and the work environment — it increases performance. I think that particular culture and activity spills over how we engage in portfolio management. The portfolio companies know the broader team, not just one person. And we try to bring more to the portfolio of companies than just one person’s skill sets and talent. It’s not just the broader Ventures team, but BP as a whole.

What stage of startup does BP Ventures invest in?

We’re pretty stage agnostic. For context: there are two deals I’m working on right now: one is $250k and one is $40 million. We don’t normally focus on seed and pre-equity deals because there’s so much work, and we’re a small team, but we can’t help ourselves when an exciting opportunity presents itself. The Series A and B rounds are often what’s appealing to our team. You can get in early and really influence the company, its direction, and help them create their tech fit-for-purpose for the industry. A later-stage company often just needs BP as a customer.

Which sectors are you focused on?

Our focus is on those three core areas: upstream, downstream, and alternative energy, along with five strategic focus areas:
1. Mobility and electrification, in particular around a differentiated EV charging offer at our gas retail sites and forecourts, along with servicing fleets.
2. All-encompassing digital—the kinds of disruptive technologies that are cross-cutting across verticals, not just oil and gas—like blockchain and AI.
3. Bio and low-carbon products — biofuels, biolubricants. One really cool example is Fulcrum, which takes domestic waste and makes jet fuel. It’s really exciting. I was just walking by a bunch of trash cans thinking, “One day we’re going to be able to take all of that trash, every single bit of it, and turn it into something useful.” Companies like Fulcrum are definitely getting us started.
4. Low carbon power and storage (batteries, wind and solar).
5. Carbon management, the decarbonization of our current assets. BP was one of the first oil and gas majors — if not the first — to really start talking about climate change and wanting to take action, and they’ve stayed consistent in that message in their activities.

What new technology or trend are you personally most excited about — either within or outside BP’s focus areas?

A sector that I find interesting on a very personal level is autonomous mobility. I was talking to a friend at lunch on Monday — we both have very young children — and we were saying our children probably won’t get driver’s licenses. They probably won’t think about it, and maybe every generation feels this way. For instance, if I look back at my father and what happened in his 93 years of life — he was born in a house that didn’t have electricity. His family’s first car was a Model T Ford. They even had a horse and buggy! So maybe there’s always this much disruption in every generation, but this trend toward autonomous driving feels really big to think about.

How actively do you work with your portfolio companies?

We are very active investors; we often request a board director and observer seat. Our premise is that we help these companies from both a viability and an influence perspective and that our participation is not just about dollars — we’re bringing a heck of a lot more to the table, for example, commercial support, HSSE, contracting and licencing. We are both an investor and an end-user of the technologies in which we invest. This creates a longer term commitment because we look beyond a quick financial return. We want to see these new technologies deployed into our businesses. In order to do that, we have to be pretty close to the company at both the board and business levels.

Where have you been seeing the most activity?

We always were pretty U.S.-centric without even trying. 80% of our portfolio ended up in the U.S., and 80% of the U.S. companies ended up in California. But over the last couple of years we’ve increased our presence in China and Israel. We see those emerging markets as very exciting, especially in mobility and electrification. China is just way ahead in their electrification strategy. Earlier this year we announced our first investments in China and Israel; clean tech fund and ultra-fast battery technology respectively.

How do you and your portfolio companies interact with the BP business units?

In the early days, it was much more about insights and learning, so we had less of a relationship with the business. Now, there’s a strong relationship. Often when we invest, there is at least an letter of intent or commercial agreement with the business unit. Sometimes people complain about how slowly corporate business units move, but for most startups we engage with, they want the information, influence, teachings and learnings, help creating their tech fit-for-purpose, global footprint, channels, government relationships, and all those other things that the broader BP team can bring. So, may be the partnership with BP is the trade-off they want.

Having said that, we try very much for that relationship with the business to make sense. If the business unit wants exclusivity or to own the IP, venture is not the right model. We put in equity to align interests, not destroy value.

We’ve been really clear that our fiduciary duty is to the startup, not BP. Our goal is to create financial success for that startup and all shareholders, including — but not limited to — BP.

How do you think about evaluating outcomes for your team and the portfolio?

We have two very concrete metrics. Our financial hurdle is a 20% IRR. When we invest, if we can’t see a line of sight to that 20% IRR then it probably doesn’t make sense to do the deal. We also have our strategic value hurdle and metric: we want to see a 5–10x multiple around strategic value, and we’re pretty conservative about that. Will the venture land on a business’s P&L at some point? And over what period of time? Certainly within 5–10 years, you’re hopefully looking at hundreds of millions to a billion of value, but not every deal is that way. They’re not all billion dollar deals, but that’s the dream.

We’ll wrap this up, but one final question: If we were startup founders sitting here, what’s the one piece of advice you’d give about working with BP ventures?

It sounds obvious, but startups should really want corporate investors and the corporate relationship. If they’re looking just for dollars, that’s not the right relationship. They need to want the commercial agreement as much as BP wants the commercial agreement. It’s all about understanding your own business model and growth strategy, along with where you’d like our help. It’s not enough that our brand has name recognition, it’s understanding the nuts and bolts of how the relationship will work — and what each side can offer.

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Silicon Foundry is an innovation advisory platform that builds bridges between leading multi-national corporations and global startup ecosystems.

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