1Mby1M Virtual Accelerator Investor Forum: With Julie Lein, Managing Partner at Urban Innovation Fund (Part 3)

Sramana Mitra: Let’s do some case studies of companies that you’ve invested in that you’re passionate about everything. As you talk through them, talk about what they’re doing. Also, talk about at what stage and in what condition you encountered this company. What was it about that situation that made you write your check?

Julie Lein: One example I can give is our first investment out of our current fund in December 2019. The company is called Electriphi. They are a software solution to manage the transition for fleet owners to electric vehicles. This is an area that we’ve been passionate about for a long time. We deeply believe that the electrification of vehicles is coming.

We were introduced to this team through an early angel investor in the company. I first met the team and I was blown away by their experience. They had really strong tech credentials. They had both worked at big companies and startups like Amazon and ChargePoint.

What got us really excited is the market opportunity. We did think that electrification was going to come more quickly than people realize. We saw some of the regulatory tailwinds coming from Europe and California. We realized that there was really a lot of momentum in the space.

What impressed us about the approach was the way they went about building their product. It was a software-only, asset-light product. They were hardware-agnostic, so they can work with a variety of operators and hardware developers.

To the point around customer validation, we did a customer reference with one of their initial customers. They were the largest electric school bus fleet in the US. They just raved about it. They said, “We started with a small fleet of electric vehicles. With Electriphi, we expanded to every fleet that we have. It was the passion and conviction that this early customer had that got us excited.” We ended up leading that seed round.

The company went into COVID. Everything was a question mark about what would happen in the space. Would people care about climate tech? Would there be money for it? What we saw was this massive acceleration in the electrification trend whether it be the Federal government announcing that the whole fleet would be electrified by 2035. I think those tailwinds gave a lot of momentum to Electriphi.

They got acquired in June this past year by Ford to build out Ford’s electrification efforts. It was a very quick turnaround from our initial investment in 2019 to their acquisition, but it showed how quickly a company can grow and scale especially with the right leadership.

Sramana Mitra: How much money had gone into that company?

Julie Lein: Just that seed round – $3.5 million.

Sramana Mitra: How much did they get acquired for?

Julie Lein: That’s not public information, but everyone was extremely happy including investors, founders, and employees. It was a great outcome for everyone.

Sramana Mitra: We are big believers in small capital-efficient companies and then relatively early acquisitions. It’s often very expensive to build the entire sales channel whereas you could go to market through a larger company’s channel.

Julie Lein: We don’t push our companies to an early exit. We want our companies to focus on growing big generation-defining companies. I do think that there can be opportunities along the way that are favorable and can enhance the outcomes of some of these companies. Electriphi was a great example of that. I do think capital efficiency is undervalued in today’s narrative and dialogue. Capital efficiency is huge. Just because you can raise a massive seed doesn’t mean that it’s in the best interest of everyone. People need to be circumspect around what they want to raise and what kind of outcomes they can have.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Julie Lein, Managing Partner at Urban Innovation Fund
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