By Dr. Ilian Iliev, CEO of EMV Capital PLC
Whatever the outcome of the ongoing conflict in the Gulf region, energy prices (oil and gas in particular) are likely to remain elevated for a prolonged period. This will have many political and macroeconomic impacts, which I will leave for others to write about.
My focus here is on what we might expect in the world of technology investment from such a significant macroeconomic geopolitical shock, and how EMV Capital’s investment strategy and portfolio are positioned for this environment.
Energy efficiency and alternatives to oil
Every crisis is different, but there are strong echoes of the oil crises of the 1970s, when persistently high oil prices led, amongst other things, to increased investment in energy-efficient technologies, alternative sources of oil production, and some of the early investment in renewable technologies.
Several of our investments fit well within this theme:
- Deeptech Recycling’s technology platform extracts oil from plastic waste. Higher oil prices improve the investment returns for owners of such recycling plants. In addition, investment in such plants increases the economy’s resilience by providing alternative and domestic sources of oil-derived feedstock for the chemicals industry.
- Q-Bot’s robotic underfloor insulation construction technology eliminates energy losses through suspended timber floors and improves the economics of heat pump installation. Already, through the UK Government’s Warm Homes initiative, it benefits from strong policy tailwinds, but the prospect of persistently higher energy prices should further reinforce the commercial case for energy efficiency upgrades.
Further moves towards electrification of transport and heating
Unlike in the 1970s and 1980s, there is already an existing trend towards the electrification of transport and of heating. While EVs are already well established, this energy shock may help to kick-start electrification of heavy industrial transportation. In the housing sector, the economic case for heat pumps will continue to improve.
Within our Martlet Capital Fund Cambridge-focused portfolio, two companies are particularly well positioned: Cambridge Gan Devices, which produces energy-efficient GaN based power devices for automotive and data centres; and Echion, which provides advanced anode materials for superfast-charging lithium-ion (Li-ion) batteries, particularly used in industrial transportation.
In the built environment, Ventive manufactures a passive energy ventilation system Windhive used in schools; and is in advanced stages of development of a heat pump targeted at newbuilds and apartments.
Defence, telecoms and data centre resilience
In a time of rising geopolitical risk, investment in dual-use and defence technologies continues to increase. We were seeing this already during the Ukraine war, but the recent attacks on major Gulf cities will likely accelerate investment in security, defence and infrastructure resilience technologies. We have seen attacks on data centres and AI systems, which will drive discussions about how data centre infrastructure can be made more resilient.
- Sofant’s satellite communications platform is already seeing growing interest from aerospace players ahead of its anticipated market launch later this year. We anticipate this trend to continue as the urgency of resilient satellite and terrestrial communications infrastructure becomes even more apparent.
Healthcare
In the aftermath of most crises, pharma and life science investments have historically continued relatively steadily, as healthcare demand is fundamentally non-cyclical. Therefore, our healthcare portfolio remains well positioned in this environment.
AI platforms – achieving more with less
Historically, the adoption of emerging and disruptive technologies has accelerated during economic crises. Here we anticipate the adoption of AI across the economy will increase, as businesses grapple with complexity and macroeconomic shocks while seeking greater operational efficiency. Earlier this year I covered the topic of data centre energy resilience and the relevance of many of our portfolio companies to this trend (including Paragraf, Nu Quantum, and others) – you can read the full article here.
One overlooked impact on the startup economy is that modestly resourced SMEs can now use AI tools to access capabilities that were previously available only to large enterprises. In areas such as data analytics, IP strategies, legals, marketing, PR and other business functions, management teams can now achieve more with less. In turn this can help accelerate growth with more modest investment rounds.
- Portfolio impact: We are working closely with our Venture Build portfolio to identify where and how companies can leverage the latest AI platforms to accelerate growth while keeping capital requirements relatively modest.
Capital efficient investment strategy: While the above analysis indicates significant opportunities for our portfolio companies, it is also possible that what has already been a challenging investment environment will tighten further – especially if interest rates increase. A core part of our investment approach at EMV Capital is our capital efficient investment strategy. In practice this means working closely with portfolio company management on disciplined capital planning; use of equity, debt and non-dilutive funding channels; working with strategic partners; and willingness to vary the speed of capital deployment.
In conclusion, history shows that periods of sustained resource scarcity accelerate the adoption of deep technology, compress the economics of alternatives, and reward investors who have built positions ahead of the curve. The current environment is a reminder that investment resilience is built long before a crisis arrives. The themes that have shaped EMV Capital’s portfolio — deep tech innovation, capital efficiency and high-impact applications in industrials, energy, and healthcare — are not opportunistic responses to today’s headlines. They reflect a carefully considered view of where durable value is created. We will continue to monitor macro developments carefully and work closely with our portfolio companies to ensure they are positioned to capitalise on the opportunities required by global changes, while prudently managing inevitable uncertainties with discipline and care.