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Harish is providing the Amazon Prime fulfillment experience to everyone else through a combination of AI and an asset-light network of warehouses across the United States.

Alex is automating workflows for the world’s largest enterprises by using process mining to build the connective tissue for businesses.

Mayan is delivering Autonomous IT to the largest companies in the world through systems of intelligence.

Carsten built one of the largest commerce platforms in the world, which powers enterprise merchants and retailers across the globe and now serves as the SAP commerce engine.

Soups is stopping financial crime in its tracks by building the first end-to-end platform for fraud, risk, and compliance.

Adam is enabling restaurant owners to take back their customer relationships by digitizing their entire online and offline operations in a single platform.

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Activant is a research-led global investment firm that partners with high-growth companies.

We partner with founders who have won their initial battles and are ready for the next challenge.

We typically invest when two things come together. First, the company has the potential to achieve escape velocity and transform an entire industry. Second, we believe the founders can lead the company through hyper growth, and our support can significantly increase the probability of this success. 

The critical time window to escape competitors and transform an industry is not open for long.

That’s why after we invest, the real work begins.

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We only partner with a few founders per year. But when we do, we’re fully committed.

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Founders who aspire to build something bigger than themselves chose to partner with us at their most critical point.

Team

After graduating as valedictorian from the Rotterdam School of Management, he joined Amsterdam-based fund HPE Growth. There, he caught the bug of the rapidly evolving startup ecosystem in Europe and completed several growth-stage transactions.

Josh then joined a consumer startup in the automotive sector as a Founder’s Associate, focused on finance & strategy. As one of the first employees, he gained a first-hand understanding for the entrepreneurial challenges of building intelligent operations.

At Activant, Josh aims to combine his learnings from both the investor and operator side and is excited about building out Activant’s European presence from Berlin.

"I am fascinated by the holistic nature of entrepreneurship - every fiber of a business is interconnected. As investors, we have the unique privilege to spend our days trying to deeply understand markets and companies in order to help founders manage this incredible complexity."

HPE Growth is a pan-European private equity firm focused on early-mid growth capital investments in technology companies throughout Europe.

F.A.T. International is an independent consumer brand and communication platform that operates self-owned and -managed hospitality locations and events, produces its own merchandise while also acting as an alternative communication channel for established brands across the automotive and luxury space. Past products include co-branded luxury timepieces manufactured by Porsche Design, and event partners include Audi, Lamborghini, Porsche and BMW-Mini, among others.

The past few years have been tumultuous to say the least. Global businesses have had to operate through a pandemic, two wars, and economic uncertainty that has seen supply chain risk multiply and annual losses from supply chain disruptions increase to 

 Disruptions lasting a month or longer now happen every 

 and a single long-term disruption to production could cost companies as much as 

 It’s no wonder that supply chain overhauls are now a CEO-level problem, with resilience and sustainability a top priority for executives around the world.

Supply chains have traditionally been designed for cost efficiency, not resilience. As a result, organizations have had opaque relationships with suppliers – often relying on manual data collection and analysis. 

With the help of supplier intelligence tools, this is changing.

Supplier intelligence platforms enable a holistic view of opportunity and risk by analyzing existing and potential suppliers across multiple key financial, operational, environmental, social and governance (ESG), labor, and security risk domains. This allows companies to monitor their entire supply chain and equip users with the ability to execute preventive and corrective measures, thereby minimizing risk and enhancing individual supplier performance.

Supply chain specialists have long had access to large platforms like Oracle and SAP, but these platforms lack additional intelligence on where supply chains could potentially break. These weak links in the supply chain could be anything from factories that violate child labor laws to shifts in government trade policies that are not observed. Much of the data that is provided by legacy players is static. Few of these players can offer the predictive risk features that newer entrants to the market have built.

McKinsey estimates that it takes an average of three months to complete a single supplier search and more than 

 With customer preferences constantly in a state of flux, the ability to quickly identify, qualify, and onboard new suppliers has become table stakes for businesses that want to survive. Through newer supplier intelligence solutions, supplier discovery is no longer the time-consuming and manual process that it once was.

Businesses have begun to realize that supply chain disruptions expose them to significant brand, operational and financial risks. In their Annual Global Supply Chain Report conducted in spring of 2021, Interos reported that organizations surveyed, on average, lose 

 McKinsey estimates that the situation could get even worse with supply chain disruptions costing companies 

Enterprises also experience severe problems resulting from misinformation and outdated supplier records. A Tealbook survey found that 

 of surveyed procurement organizations reported financial loss attributed to bad supplier 

 In addition, shortages of products and materials brought about by disruption result in delayed and stalled revenue-building business activity. With 

 of organizations lacking awareness of sub-tier supplier disruptions for up to 48 hours, the need for supplier intelligence solutions is 

There are several tailwinds supporting supplier intelligence solutions, but 

regulation has been a particularly strong driving force of adoption

. Europe leads with regards to regulatory pressure. The German Supply Chain Act requires large companies to track both human rights violations and environmental risks through their supply chains. Those that do not comply will be fined 

 of their annual global turnover, depending on their 

 In addition, in March 2024, the Corporate Sustainability Due Diligence Directive (CS3D) was endorsed by the EU council. This is expected to impact around 5,000 companies in the EU that have at least €450 million net worldwide turnover. The new rules are centred around mandatory sustainability due diligence, requiring companies to identify — and to prevent, end or mitigate — adverse impacts on human rights or the environment because of their activities across their global “chain of activities”, with consequences including pecuniary penalties and civil liability for non-compliance.

The U.S. Inflation Reduction Act (IRA) requires automakers to demonstrate the percentage of minerals within their batteries that are extracted and processed in the U.S. (or a country with which the U.S. has a free trade agreement) to meet the threshold criteria for vehicles to qualify for tax credits. This means that a company needs to be able to accurately and responsibly trace its supply chain all the way back to the raw materials.

Shameek Ghosh, Co-founder & CEO, Trustrace

The exhibit below provides an overview of the key regulation impacting global supply chains. If the recent past is anything to go by, regulation will continue to increase, and supplier visibility will be an imperative. 

Timeline of Key Regulation

Supplier Intelligence as a Foundation for Procurement

We would be remiss to not highlight the role that supplier intelligence solutions play within the procurement process. The process flow map below attempts to highlight the events that take place when a product is needed to be supplied. 

Our View: Procurement Process Flow

Whether or not a product has been previously procured plays a large part in which aspects of supplier intelligence come into play. More specifically, when an organization is looking to purchase an alternative from an OEM, and once clear product specifications are defined, multiple components of supplier intelligence are triggered. This includes:

The process of identifying, assessing, and understanding the relationships between a company and its suppliers. It involves creating a detailed overview of the entire supply chain, including the flow of raw materials to finished products.

Identifying potential suppliers who can meet the organization’s needs.

 Evaluating suppliers based on criteria such as reliability, geographic location, compliance regulations, quality, etc.

Following on from the typical supplier intelligence components, is 

managing contracts effectively by understanding terms, conditions, and compliance requirements to ensure value for money and mitigate risks.

 is at play across the entire process and data can help to identify potential vulnerabilities within the supply chain such as reliance on single suppliers or geographic concentration. 

 also relies on the data to streamline and improve interactions between an organization and its suppliers. It is through these features that procurement teams can effectively vet suppliers and focus on those that are most reliable and meet the company’s needs.

The supplier intelligence landscape can be best mapped across a value chain. There is a clear overlap between the core elements of supplier intelligence and the procurement process flow mentioned above. 

Supplier intelligence provides the critical data and insights that underpin effective procurement decisions

. Together, the two drive strategic sourcing and supply chain optimization.

We have identified numerous startups that operate across the supplier intelligence value chain, with supplier mapping and supplier discovery players being a vital part of the first link of the chain. Supplier performance evaluation and supplier relationship management are two important elements that follow. Lastly, we see ongoing supplier risk assessment as one of the most exciting components of the value chain. Unlike traditional, static assessments, this approach recognizes that the business environment is constantly changing.

We believe that this market is not a ‘winner-takes-all’ across the different process steps of mapping, discovery and intelligence. Instead, we believe it’s more likely that each step will see individual winners, with the market consolidating across steps as it matures (which we believe is still at least three years out, if not longer). Being able to serve different verticals to an equal degree of granularity is a significant as it expands the addressable market and proves the underlying product’s capabilities.

Supplier Intelligence Value Chain

There are multiple players offering supplier intelligence solutions. Many of the early winners are incorporating AI, automated supplier scoring and public data/incident monitoring into their solutions. We like the solutions offered by:

, a supply chain risk intelligence platform that helps enterprises to reduce the cost of supply chain disruptions, proactively prevent supply chain concentration to improve resilience, monitor regulatory changes and provide compliance certifications on regulations like the German Supply Chain Act (LkSG) and many others.

 develops AI-powered software that enables procurement teams to identify suppliers 10x faster. This type of sourcing automation enables more efficient supplier discovery.

 use their AI technology to allow businesses to access ESG insights on any private and public companies. Their diverse client base includes private equity firms, asset managers, index providers and global corporations.

 focuses on multi-tier value chain visibility, focusing on creating a comprehensive view of a company’s extended global supply chain network. This has enabled them to be a go-to player for risk, resilience & decision support.

 helps supply chain and procurement professionals discover, evaluate, and monitor suppliers to create stronger supply chain resilience. The startup provides 360-degree visibility into a company’s supply base.

 offers a platform that is dedicated to product traceability and compliance. The technology developed by the company empowers global brands and suppliers to standardize the capture, digitization, and sharing of supply chain and material traceability data.

We are just at the beginning of truly understanding the supplier intelligence space, but we are certain that these solutions are addressing a real pain point. Those that do not know their suppliers inside and out will ultimately fall behind. If you’re building a dynamic solution within this space, reach out to us.

The information contained herein is provided for informational purposes only and should not be construed as investment advice. The opinions, views, forecasts, performance, estimates, etc. expressed herein are subject to change without notice. Certain statements contained herein reflect the subjective views and opinions of Activant. Past performance is not indicative of future results. No representation is made that any investment will or is likely to achieve its objectives. All investments involve risk and may result in loss. This newsletter does not constitute an offer to sell or a solicitation of an offer to buy any security. Activant does not provide tax or legal advice and you are encouraged to seek the advice of a tax or legal professional regarding your individual circumstances.

This content may not under any circumstances be relied upon when making a decision to invest in any fund or investment, including those managed by Activant. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by Activant. While taken from sources believed to be reliable, Activant has not independently verified such information and makes no representations about the current or enduring accuracy of the information or its appropriateness for a given situation.

Activant does not solicit or make its services available to the public. The content provided herein may include information regarding past and/or present portfolio companies or investments managed by Activant, its affiliates and/or personnel. References to specific companies are for illustrative purposes only and do not necessarily reflect Activant investments. It should not be assumed that investments made in the future will have similar characteristics. Please see “full list of investments” at https://activantcapital.com/companies/ for a full list of investments. Any portfolio companies discussed herein should not be assumed to have been profitable. Certain information herein constitutes “forward-looking statements.” All forward-looking statements represent only the intent and belief of Activant as of the date such statements were made. None of Activant or any of its affiliates (i) assumes any responsibility for the accuracy and completeness of any forward-looking statements or (ii) undertakes any obligation to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in their expectation with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking statements.

Cost efficiency and resiliency through insights

Supplier Intelligence

You’ve probably already heard about the fourth industrial revolution, or Industry 4.0, which has been described thoroughly by Klaus Schwab as a fusion of technologies that is blurring the lines between the physical, digital and biological spheres. It is a revolutionary phase in the digitization of the manufacturing 

 We’ve been spending time looking at what we believe to be the central nervous system of Industry 4.0, 

the Industrial Internet of Things (IIoT).

For humans, the central nervous system acts as a sophisticated communication network, constantly monitoring our environment and coordinating our organs responses. But factory operations didn’t (and many still don’t) have such a nervous system, that is… until recent years. IIoT is essentially the nervous system of operations, enabling industrial environments to be smarter.

The idea of machines being able to interact with each other and share data may have sounded crazy a few years back, but IIoT has changed the status quo. The idea was that through the adoption of IIoT, manufacturers could finally make use of the large amounts of data produced by machines in industrial settings. This has allowed for smarter and more sophisticated operations – resulting in major efficiency gains. In fact, in our 

 piece we attempted to quantify these efficiency 

 Companies using intelligent software, such as IIoT, see improvements not just in energy use (-24%), but also in productivity (+52%), labor costs (-32%) and manufacturing costs 

 Taking all of this into account, we estimate that the global manufacturing sector could save 

 The resulting global savings would be equivalent to the GDP of France!

Industrial Intelligence means unlocking all the operational data that these organizations generate and leveraging it to drive efficiency, increase returns, and meet sustainability targets. The “Internet of Things” (IoT) is a major component of being able to capture this data. Despite this, the uptake of these solutions has not lived up to expectations.

While the need for Industrial Intelligence has never been stronger, these modern technologies have never quite taken off. We will highlight several reasons for this below, as well as discuss why we feel that this may be changing in our opinion. There is still enormous upside to be captured. 

The Internet of Things (IoT) is a network of physical objects connected by the Internet through sensors and software. This can be as simple as controlling a thermostat on your mobile device or as complicated as automating inventory management for a large warehouse. Any device that can connect to the internet and communicate information from an object can become an IoT asset.

IoT originated in the 1990s when computer engineers were adding sensors and processors to everyday objects, with RFID tags being the first to track expensive equipment. Currently, computer chips are inexpensive and combining them with rapid bandwidth telecommunication has led to billions of devices being connected to the internet. By 2025, there will be an estimated 

 IoT devices connected to the internet ready to transmit and receive 

The Industrial Internet of Things (IIoT) is IoT applied to industrial sectors and applications. Using smart sensors and actuators, IIoT can improve manufacturing and industrial processes. For example, one of Nvidia’s leading manufacturing partners has been able to use IoT data to reduce end-to-end cycle times by 

One founder pointed out that whilst you cannot have IIoT without IoT, the two have distinct features. A key differentiator between IIoT and IoT is the number of devices needed and the amount of data collected. With IIoT, the devices are fewer, but the volume of data collected is much higher. In addition, devices within IIoT are much more heterogeneous.

Traditionally, visibility within factory operations was often limited due to outdated processes and a lack of access to data. Organizations would know what assets were in their factories but any data on the status, location or performance of these assets was limited. IIoT enables increased operational efficiency and productivity by addressing:

Equipment failure can have a significant impact on productivity, which may limit revenue. Unplanned downtime is estimated to cost businesses as much as 

IIoT enables manufacturers to have access to predictive maintenance technology, which decreases the risk of unplanned downtime and thus minimizes the corresponding revenue losses. Deloitte research suggests that companies that implement predictive maintenance can expect to see a 

 reduction in maintenance costs, a 20%-25% reduction in equipment downtime and a 5%-10% increase in production 

The use of IoT in manufacturing can reduce energy usage. For example, Armal, a manufacturer of portable toilets, found that real-time IoT monitoring of the production line helped reduce the energy costs of machinery by almost 

While automating manual processes using IoT systems requires an up-front investment in technology, those expenses are steadily recouped in saved labor costs over time. In addition, by introducing IIoT, workers are freed up of repetitive tasks.

The National Safety Council estimates that workplace injuries cost businesses more than 

 Workers in construction, manufacturing and warehousing experience some of the highest rates of injury and real-time monitoring and alerts through IIoT can reduce the number and frequency of workplace accidents.

It has been technologically possible to implement IIoT-based use cases since the early 2000s. However, we found that multiple manufacturers either have no IIoT system in place or have attempted to build from scratch through internal dev teams using AWS or Google frameworks. We think that this is changing. What we are witnessing now is the opening of completely new possibilities for implementing sophisticated, innovative use cases in a streamlined way.

Aaron Allsbrook, Chief Technology Officer & Co-Founder, ClearBlade

Falling data storage and hardware costs, along with expanded internet connectivity promised unlimited gains from IIoT. The expected result of this progress was that it would be easier for IIoT to be implemented at scale. Given the magnitude of the cost decreases and spread of connectivity, it’s easy to see why:

declining data storage and hardware costs

 would make IIoT more accessible. In the early 2000s, storing 1GB of data would cost more than 

. Today, 1GB of data can be stored for 4-7 days for as low as 

smaller and cheaper sensors, chips and communication modules

 were expected to make IoT devices more affordable and easier to integrate into various applications. In the early 2000s, the average unit price per sensor was more than 

. Today, this price has fallen to less than $0.50 per 

 was also predicted to trigger meaningful growth in the adoption of IIoT. Enhanced coverage and wider adoption of technologies like 5G, Low Power Wide Area Networks (LPWANs), and satellite connectivity are enabling more devices to connect and transmit data seamlessly. The growth of the number of 5G networks across multiple industries was predicted to result in a meaningful increase in the number of IoT devices, and hence both are considered beacons of the Fourth Industrial Revolution.

Despite all of this, IoT has failed to deliver on its promises. Much of the anticipation surrounding IoT has been nothing more than hype. Below are what we believe to be four major reasons why the adoption and success of IIoT has stalled:

Aligning technology with organizational needs: 

IoT has failed in the past due to players trying to piece things together haphazardly in the cloud. It turns out that what you need for IoT is not necessarily the same as what you’ve built in the cloud. Consequently, the IoT market has been mired in build-versus-buy for the past decade. We believe that this is changing. Deployment remains tricky, but there are more guidelines and how-to’s than ever before. Manufacturers are taking a more cautious approach to how they implement IIoT solutions, better aligning the technology and the organization from the start.

Willem Sundblad, CEO & Co-Founder, Oden Technologies

, that are focusing on providing lean, cost-effective and flexible solutions. IIoT platforms are recognizing that customers need flexibility to be able to have the industrial middleware to connect to the components that they’ve had for decades. In a nutshell, the market needs more managed services that are flexible. More services mean more stickiness. Customers aren’t looking for solutions that take years to build and mature; they need a quick ROI and the ability to grow.

Limitations associated with security, integrity, and privacy of data in connected devices – 

As the number of connected devices grows, so does the need for data protection and privacy. These devices and networks could include sensitive and personal data that attackers could use. Data exploitation may emerge because of the rising reliance on connected devices, reflecting design flaws and the vulnerabilities of connected devices. Adopting operational technology (OT) security tools into a tech-stacks is one way of combatting some of the vulnerabilities identified.

Difficulty achieving real scalability –

 Despite widespread piloting of digital initiatives in manufacturing, few organizations have successfully scaled their IIoT use cases to achieve significant operational or financial gains. This "pilot trap" likely stems from the perception of IIoT as a purely technical challenge, often championed by IT and OT specialists. To unlock the true potential of IIoT, leadership commitment is crucial. Players that have successfully implemented IIoT solutions insist that the initiatives transcend departmental boundaries and become company-wide transformation efforts.

 Many organizations wonder, for example, how to overcome the challenges caused by heterogeneous systems and application landscapes, or how to analyze which functions should be supported by which systems (for example, product life-cycle management, enterprise resource planning, manufacturing execution, supply-chain management). Finding a supplier that supports the scale and size of your business is key, and it is helpful to partner with suppliers that are hardware-agnostic and connect to standard industry protocols.

As previously mentioned, through the implementation of IIoT, operators have been able to access large amounts of factory data. The trouble is that this data has traditionally not been leveraged to its full potential. The rapid development of AI is changing this.

Various applications of industrial data can be made possible through the development and deployment of AI models. The hope is that the data will paint a clearer picture of operations. The end goal is to have data that can start to automate decisions. 

In this way, we see a shift in the value of IIoT to manufacturers.

 By leveraging AI, the data captured from IIoT solutions can finally enable industrial settings to become more agile, responsive and cost efficient.

Christian Meinerding, CEO & Co-founder, HiveMQ

The IIoT ecosystem can be mapped across a value chain to reflect the core modules of IoT. This segmentation includes smart devices, components, connectivity sources, IoT/Cloud Platforms and Applications. In addition, Operational Technology (OT) Security Tools sit on top of the first three links within the chain.

IIoT connectivity refers to the network infrastructure and communication technologies that allow various industrial devices, sensors, machines, and systems to connect and exchange data in an industrial setting. Note that we separate IIoT applications from platforms since applications sit on top of data infrastructure and are able to effectively make use of the data, whilst IIoT platforms operate as data aggregators that facilitate the deployment, management and operation of IIoT systems.

Hardware is an essential element of IIoT, typically in the form of smart devices or components. At Activant we are primarily focused on software-enabled business models and have thus chosen not to consider those players with purely-hardware offerings in as much detail. On the exhibit below we have attempted to lay out the value chain as we see it, and differentiated between hardware, software and hybrid players.

Our View on IIoT 

We believe that the answer to the IIoT problem lies in systems that address IIoT connectivity, as well as IIoT platforms themselves, and operational technology (OT) security tools. If IIoT is going to live up to its full potential, these are the solutions that are going to get it there. We depict this on our Activant IIoT Thesis Map.

Many companies are attempting to change the IIoT landscape but we are most excited by the companies that are focusing on the 

, the software muscle behind the IIoT operation, as a vital piece of the puzzle and are intrigued by 

operational technology (OT) security tools

Industrial Internet of Things (IIoT)

This is the foundation that enables all the communication and data processing needed to run industrial applications. It is essentially the network of devices, software, and communication protocols that connect industrial machines, sensors, and other equipment to gather, analyze, and utilize data. We like what 

 are doing in the space. HiveMQ is a Message Queuing Telemetry Transport (MQTT) Platform, which is essentially the “de-facto standard for IoT messaging”. Blues offers 

, a developer-friendly, production-ready embeddable chip that enables the collection and delivery of data from any physical device to the cloud (any cloud application). Blues, are at the forefront of the “intelligent edge,” encompassing any company—be it transformers, disruptors, or innovators—that aims to develop intelligent edge products, which of course includes industrials.

IIoT platforms are the “central nervous system” connecting all the industrial devices, collecting data, and transforming it into actionable insights. Manufacturers are taking note of the importance of these platforms. Gartner reported that 

 of large global industrial companies will acquire or invest in an IIoT platform by 

 McKinsey estimates that as a result of strong underlying demand and increasing use-case availability, IIoT spending will increase from 

 One notable player within this space is Activant portfolio company 

, a provider of telematics and fleet management solutions to enhance fleet operations and driver experiences.

 focuses on providing a flexible and secure IoT platform with a platform that works across various systems, networks, protocols and devices. Flexibility is a key buying criteria and market feedback suggests this platform is an attractive option. We were also excited by how 

 is using IoT for process optimization directly on the factory floor. Their AI-driven software is enabling the manufacturing frontline to achieve peak factory performance. With the challenges around operator shortages, we see these types of tools as vital.

Operational Technology (OT) Security Tools

These tools are specifically designed to safeguard the industrial control systems (ICS) and devices that manage physical processes in critical infrastructure industries like manufacturing, power generation, water treatment, and transportation. Unlike traditional IT security tools focused on data confidentiality, OT security prioritizes the 

 of these control systems. We are bullish on the growth of this space, given that approximately 

 of business leaders indicate the need to invest in OT 

 However, we are wary of the implementation challenges that are associated with these tools, with approximately 

 of those who have invested in OT security tools facing implementation 

, a provider of comprehensive security solutions for extended IoT environments.

Looking at IIoT, we can’t help but draw a comparison to the early days of the internet. There were some initial signs that the internet would be valuable, but this was coupled with lots of scepticism and internet business failures. Once the extensive fiber networks had been laid in the telecom boom, the internet was fast and cheap enough for multiple successful businesses to be born. Similarly, as we see IoT infrastructure becoming more cost-effective and performant, we 

expect the industry 4.0 use cases to multiply exponentially

 We are at the tip of the iceberg when it comes to the applications within the space. The past few years have resulted in us being underwhelmed by IIoT, but we think this is about to change.

IIoT is on track to revolutionize the manufacturing industry

. Despite the implementation challenges, we see a large opportunity and many of startups profiled are making IIoT more accessible, easy to implement, and scalable. In addition, the explosion of AI is enabling greater insights to be captured from the data collected from IIoT solutions.

It’s early days for us as we try to navigate this innovative space and mix of companies. We want to learn more from those that are building in the IIoT space. If your solution can make a real difference in the manufacturing environment, contact us!

What needs to change for it to deliver real value and why we think now is the time

IIoT at a Tipping Point

There’s no debate that the transition to net zero is a global imperative. A study by Oxford University’s Institute for New Economic Thinking at the Oxford Martin School comes to a clear conclusion: there is an 80% chance that the net present cost of a “fast transition” away from fossil fuels by 2050 is lower than that of no transition, regardless of the discount rate used or accounting for any of the severe climate damages that would ensue. At 1.4% and 5% discount rates, the corresponding net present savings are estimated at $12 and $5 trillion globally, 

Regulators and developers are moving in the right direction, with $1.8 

 invested in the energy transition globally in 2023. Of that, ~$600 billion went into renewable energy sources. Renewable power represented ~80% of the generation capacity added in 

 with wind- and solar-generated power growing from almost nothing at the turn of the century to 12.1% of global generation in 

To effectively use a greater share of solar,local grids need to address the intermittency problem caused by early evening peaks in energy demand just as the sun sets and solar generation falls. The so-called “duck curve,” shown in figure 1 on the following page, highlights the issue and the challenge of managing net demand. Battery energy storage solutions (BESS) currently offer one of the most viable mitigants to the intermittency problem by:

Enabling consistent use of renewable energy by charging when production is high (and demand is low) and discharging when these conditions reverse.

Ensuring grid stability by providing so-called 

 that keep the grid continuously balanced. Importantly, technologies, like pumped hydro or molten salt (thermal energy storage), cannot provide these types of services as their discharge time at rated power is currently too 

Reducing the need for “peaker plants” that are turned on when the base load generation cannot meet demand. Using nuclear, waste-to-energy, or biomass temporarily is not economically viable and, therefore, gas-powered “peaker plants” are commonly used even though this decreases the share of renewables.

Put simply, based on currently available technologies, BESS are a vital component in making the energy transition work. Batteries are naturally just one piece of the renewables puzzle, which includes solutions like 

’s solid oxide fuel cell technology that can both convert biogas to electricity and, if there is excess power in the grid, use that power to produce green hydrogen or methane through electrolysis.

To quantify the opportunity, the International Energy Agency (IEA) estimates that the global installed grid-scale (i.e. front-of-meter) battery storage capacity will have to grow from 28 GW in 2022 to 967 GW by 

 to achieve true “net zero.” To put that into perspective, the 1.21 GW needed to send Marty McFly "Back to the Future” would power >10 million light bulbs (or one flux capacitator in a time-traveling DeLorean).

Managing the resulting integrated energy network will be a complex challenge, giving rise to a host of software, hardware and hybrid solutions that will need to operate seamlessly. Activant believes this is a strong investment opportunity.

Energy storage is not a new phenomenon. Simple copper-zinc batteries were developed in 1800, and rechargeable lead-acid batteries were powering railway carriage lights by 1859. These same batteries powered the world’s first electric car in 1888! Lithium-ion batteries emerged in the 1970s and have been the dominant commercial option since 

As energy density increased (5x since the 

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