Investor Circle

Why Building Trust Matters More Than Money in Energy Investing

• Stewart Noakes • Season 2 • Episode 3

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Renato shares his journey as an investor in the clean energy space, bringing his unique perspective from corporate venture capital, pan-European investment, and angel investing experiences.

• Background in engineering with over 10 years in clean energy investment
• Energy sector facing multiple challenges: decarbonization, affordability, reliability, and availability
• Team importance varies by stage - critical in early stages, less dominant as companies mature
• Different investment vehicles require different approaches but always treated with the same ownership mentality
• Energy investments more challenging due to physical nature - "electrons and molecules are not bytes"
• Building trust requires putting yourself in others' shoes and understanding their position
• Successful exits require careful investor selection and managing expectations about potential failures
• Best advice for first-time founders: balance incorporating feedback while staying true to your vision


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Stewart Noakes:

fantastic. All right, thank you so much, renato, for joining me today. It's wonderful to have you here on the investor circle stuff and welcome to the marina hotel. You know I'm sorry you can't be here in person, but you know it's a fine view and I feel it's a good day to do an interview together great feeling quite obvious of you. I guess you're in central lisbon today, right?

Stewart Noakes:

yes, that's correct okay now we obviously know each other from your time at InnoEnergy and I know you have a big mix of corporate and angel investing experience. So for people watching this and who don't know who you are, how do you introduce Renato to them?

Renato Braz:

yeah, and thank you for the invitations, stuart. It's true we we do go, uh, some years back. Um, how would I introduce myself? Well, um, I've been lucky enough to be first. First of all, I have an engineering background, lucky enough to be working in the clean energy space, and with an investment angle, for a bit over 10 years now.

Stewart Noakes:

So previously I was at the.

Renato Braz:

Pan-European Investor, managing the investments here in Portugal, and now I'm at the corporate energy company here in Portugal as well, also setting up and managing the corporate venture capital. I'm a bit of an energy geek.

Stewart Noakes:

That's a fair comment yeah.

Renato Braz:

So, by my background and by, I think it's a sector that is changing a lot and is really passionate about everything that's happening with the trilemma, or the quadrilemma of energy, with decarbonization, with the energy transition, with affordability, with reliability of supply, with availability. Nowadays it's a big topic as well, with AI Suddenly increasing the demand for electricity a lot and we don't even know where that's going to stop, so it's a big hot topic. And now also, with all the everything we see in the news every day with the possibility of supply shocks, it's as hot as ever in terms of sector and, of course, venture capital plays a big role in it, because it's where technologies that will disrupt it and make the system better come from. So I'm very, very happy to work in this area and to invest in this area.

Stewart Noakes:

So are you a geek from an engineering perspective? Are you a geek from an investment perspective? Are you a geek from a people's perspective? What do you like most about the energy sector?

Renato Braz:

Yeah, I think a mix of all, but I would say the engineering perspective lost a bit of relevance in the recent years because it's really impossible for you to have an engineering understanding of such a broad range of topics. So I rely more and more and more on people either colleagues at my current company or external experts to kind of go deep on the engineering route. But on the business side of it and on the people side of it I tend to be as crisp as I can, because that's where we really need to kind of nail it, especially, as always, from pre-seeds to growth stage, the team and the people that are behind the adventure are what, in the end, makes what makes the difference.

Stewart Noakes:

I mean part of the interview series for Investor Circle. We ask everybody, you know what are your main criteria for investing, and is people the number one, the number two, the number seven? You know what is people the criteria priority for you?

Renato Braz:

Well, it varies a lot. Of course, it's always number one, but from my experience, as the deal and the venture matures and moves towards later stage, the role of the key people is not as relevant. Of course, course it's always relevant, but it's more relevant in early stage.

Renato Braz:

Earlier stage Because in later stage the ball starts to be very big and very complex and the importance of one individual, it, gets more and more diluted, whereas in the beginning that group of individuals two or three or whatever are the co-founders makes all the difference in the world. But when the train is running already at a fast pace and it has left the station, so to say, there are many other factors.

Stewart Noakes:

I agree, I agree and it's interesting. I mean, we obviously served on a board together and seen a progressing company go through a few years and go through that phase. But I know in your brain you've got sort of like long-term pan-European investment mentality and you've also got a corporate, pretty medium to long-term mentality and you've got an angel mentality in your brain. So how do you feel these three change or do you feel you do the same thing in each of the three rooms when you've been there?

Renato Braz:

well, uh, it's, it's very different uh approaches. So, uh, as a business angel, usually these are pretty early stage, sometimes even unvalidated uh ideas, not with with some commercial indication of potential success, and there it's essentially about the people and the relevance of the problem that they are proposing to solve, and so it's pretty much around that. As we move then into the more corporate, later stage type of investments, then it becomes a much more complex equation because we need to layer on top of all the things that typically constitute a good opportunity and a good deal. We have to layer in the strategic angle for the company. So why is this specific company a good shareholder for this specific venture? And that's where it gets really complex. And also the need to socialize the proposal or whatever the entrepreneurs are developing, to make sure that everyone is aligned and to work with everyone that is contributing to the process. This is much more time-consuming and complex, but in the end it makes your decision much stronger, of course in my activity as a business angel.

Renato Braz:

I also don't invest alone. We invest as a group, so we have a bit of that as well.

Stewart Noakes:

But it is your money, right. When you're an angel, at least some of it is coming out of your very own pocket, whereas the corporate is not quite the same. Right, there's not a lot of your money going into that.

Renato Braz:

It's not, but I don't make a distinction there.

Stewart Noakes:

You don't make a distinction.

Renato Braz:

I mean, when you put your hand in your pocket it's very different to putting your hand in a cupboard right. The sum of money is much larger when I'm investing on the corporate's behalf. So on the corporate's behalf we do. Most of our exposure is in funds, so it's multiple million dollar commitments, and in the angels it's a completely different ballgame. So when I make the decisions on the corporate's behalf, of course I'm not the decision maker In the end the executive committee is the decision maker. But I kind of own the process and throughout the process, of course, a lot of influence on what information is gathered, what information is shared. So I would say I have a big influence on all the processes managed. But I manage it as it was my money it's my interest.

Renato Braz:

If the investment goes well, it's my career, it's my reputation as an investor. If it doesn't go well, again, it's my reputation so investor. If it doesn't go well, again, it's my reputation.

Stewart Noakes:

So that's why you had deputies, so that, when it doesn't go well, you can call on them, right?

Renato Braz:

Maybe even more important than being my money.

Stewart Noakes:

Okay, okay, interesting. And how does that compare to, say, the pan-European stuff before which was very much more about? You know, we met through some of the stuff I did with you around the boot camps and stuff and you guys had a very holistic ecosystem building mindset. Right, this was a 20, 30, 50 year mindset. And do you think that's different again to the corporate and different again to the angel, or is it very similar to the corporate?

Renato Braz:

Well, no, it's the mindset for why to invest is quite different in all this bucket. So to say so, in the corporate we invest because we want to be exposed to topics that we believe are going to be relevant in the near future for the transformation of the company, in the near future for the transformation of the company, but are not mature or consolidated enough to be taken by the normal business units nowadays. So corporate venture capital is a way to be involved in those topics and to learn and to also help them develop and to establish these trust-based relationships with the entrepreneurs so that whenever they're doing matures, we are in a good position to develop something together.

Renato Braz:

So that's the mindset and that's very specific for the specific deal that we're doing, whereas previously, at the Pan-European Investor it was much more kind of a role of accelerating the energy transition as a whole and so providing support and tools to whoever was developing solutions for the energy transition and in the Business Angels group. It's much more about where we can add value in terms of helping these entrepreneurs achieving their goals and, of course, the financial return.

Renato Braz:

it's as relevant as any of the others, but it's so it's in all cases. There's a mix of strategic and mission with financial. That's why we are investing, so to get this return, but the mindset for all of them is quite different.

Stewart Noakes:

So I got three really tough questions for you. I'll give you the easier of the three so far, right. So, as the first one, what do you think makes you really good at your job? What's the attribute or the bit of your personality as Renato that makes you really good at your job? What's the attribute or the bit of your personality as Renato that makes you really good at?

Renato Braz:

it. You said, that's the easiest one.

Stewart Noakes:

Yeah, that's the easiest one.

Renato Braz:

Well, I would say that's a question best asked to others, to people that work with me and entrepreneurs that have been invested by either one of my activities. So, yeah, I would refer the question to you.

Stewart Noakes:

Well, I can tell you, one of the qualities that I admire in you and serving on the same board as you is that you always turned up to help the founder with the best interests of both the company and the founder in mind, and you were the person that could be called at 10 o'clock on a Saturday morning, because it was really difficult and nobody really knew what to do and they just needed to talk to you.

Stewart Noakes:

And, and not only that, they wanted to talk to you. You know and this was a sort of quality that I don't see in everybody when they're an investor, you usually know an investor's interests, but you don't always see them working for the bigger picture, the, the and and very much for the person. And that's what I've seen with you in many places, where you turn up and you you don't have to make yourself, or maybe you do, but we don't see it but you, you turn up for that person and you say how can I help you? And it seems very genuine and authentic and you genuinely find compromises and ways forward. That really helps and that's a quality I've really admired.

Renato Braz:

Thank you. Yeah, I think that's one of the things I do care. I tend to try to put myself in the shoes of the other and, be it in the negotiation for, for an investment, or in kind of trying to, uh, to establish a collaboration um, I do. I think the best way is to. Of course, I I do have my, my agenda and my interests, depending on on on the topic at hand, but I try to be fair and to do that. I do this exercise of being very mindful of the other people, of the other person's position, and I think that, through time, that helps to build trust and, in the end, helps to get things done, which is what we all want.

Stewart Noakes:

It's kind of the opposite to Trump diplomacy, though, right, it's not quite the same approach that everybody takes, all right. Second question maybe Is it tough, I don't know, maybe it is Um, do you believe in exits?

Renato Braz:

If I believe in exits, yeah, Of course. Otherwise why? Well, there's a number of could be a number of philanthropic reasons to invest, but I do believe in exits, sure?

Stewart Noakes:

And how's your experience? I mean, I obviously appreciate you have certain confidentialities and stuff, but have you experienced enough exits now in the things that you've invested through the vehicles that you've been with, to actually believe that they truly exist and there's a pattern and a way of developing them, or do you still see them as rare things that occasionally happen but we're still not quite sure why?

Renato Braz:

No, I've seen them happen. I know it's possible. So it's how the other game is played. Of course, they are elusive. They are not the. They are not the majority of the of the cases.

Renato Braz:

Yeah, they're not a given right executing a put option for one euro is also an exit. Executing a put option for one euro is also an exit. Or the company going under and just closing down it's also an exit. So we're talking about successful, profitable exits. Those are not the majority and that's part of the game. That's why we need to manage things with a portfolio strategy and try to add as much value as we can and lean in with the experience of the individuals, or of the individuals plus the corporate, to try to improve the odds.

Stewart Noakes:

And this is where it's tricky right, Particularly in the corporate zone, because there's a lot of politics to failing with investments in a corporate structure, failing with investments in a pan-European vehicle. There's a lot of personal pain about failing with investments in a corporate structure, failing with investments in a pan-European vehicle. There's a lot of personal pain about failing with angel investment. But the politic of the other two is much harder to navigate. Certainly for me, it's not an area I play well in.

Renato Braz:

Yeah, certainly it's a matter of communicating and setting expectations to everyone involved in the process. Of course, we need to be very positive and enthusiastic when we are presenting the opportunities to decision makers, but at the same time, we know that many of them will fail, so we need to protect, cover ourselves a bit as well as when we are presenting it, make it attractive and that people want to join in, but also being clear that there's a very good likelihood of failure and that everyone understands that, and so when it happens which is the most likely scenario you will not be killed because of it.

Stewart Noakes:

I mean, do you think the power law is a truism? Do you think you know this approach? To sort of, if you make 20 investments, 2 will return the fund, 10x8 will give the money back and 10 will basically lose all the money you put in. Do you think that's the truth or do you think it's?

Renato Braz:

If you do your job right. It should be something like that. Of course, there are things that tilt the odds in one way or the other. If you just invest randomly, of course I don't believe that. I believe it's much worse than that.

Renato Braz:

If you tend to make your dealings right and carefully pick your deals and pick your teams, pick your founders, pick your founders, and then the co-investor is also quite important to make sure that the co-investors are aligned and with you for the long run, especially in the energy business, because in the energy, electrons and molecules are not bites and so, especially in the last years, with inflation attacking all these things that are in the physical world and that need to be built and that sometimes are capex intensive and where scaling is much more difficult than we were expecting, it's quite important to have the right shareholders with you, the right people that are in there for the long term, that understand that things will always cross more than we were expecting, it will take more time than we were expecting, and it's just not oftentimes, it's just not a software interaction that we can just run again quickly. We need to burn a lot of money to correct whatever needs to be corrected.

Renato Braz:

So yeah having the right shareholders with you is also quite important.

Stewart Noakes:

Thank you for that. You navigate these things very well. So my final question for you, then, which is a much easier one, which is for any first-time founder watching this today what is your best advice for them when they're thinking about raising their first funds?

Renato Braz:

Well, I think that you are the founder, or belong to a founding group, and, of course, you have a vision and the value of what you're building is on that vision and the fact that it's your vision when you start speaking with investors, or speaking with everyone, for that matter everyone has an opinion. Everyone provides feedback. Often times that feedback is good, is valuable, and even if sometimes it's difficult to unpack what the person is really saying, there's usually most of the times there's something there that is, if you understand it and incorporate it, make your path proposal stronger.

Renato Braz:

However, it's important that you understand that it's it. If you're building something, it will be valuable because it's your vision, not the investors, the investor's vision provision. You have the unique skill set to make it work. So, navigating that balance between being open to feedback and generating feedback and somehow staying true to your vision and to your path, I think it's what you need to master to be a successful entrepreneur and founder, and it has to be very difficult. I've been a founder once an investor much more often, and on successful entrepreneurs, I really see that trait of being able to capture feedback but staying true to their vision as really a success factor.

Stewart Noakes:

Thank you, renato, and thank you for doing this today. Really appreciate that you've shown up with your jet lag and done all of this for us and contributed to the community in the way you have, and really I've enjoyed serving alongside with you on the board that we were together on, and really appreciate all the times that you've helped Canopy and the other members in the community across the years. So I think it's nearly a decade now we've been doing different things together, which is kind of crazy to think about.

Renato Braz:

Yeah, thank you so much for today. Thank you for inviting and keep pushing the amazing work you're doing. It's quite important.

Stewart Noakes:

Fantastic.

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Stewart Noakes

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Renato Braz

Guest