The future client of an energy utility company will be a machine
Toasters, buildings, e-cars, dishwashers as customers
“Rather than focus on specific areas of the energy market and incremental technological advances, we instead start with what we see as the fundamental technological trends that will shape the energy system in the coming decades. For example, buildings and machines will ultimately engage with each other autonomously and largely without human intervention. How can we ensure that this machine powered economy works efficiently and for the benefit of people? These are the kinds of questions we’ve been exploring at the innogy Innovation Hub.”
Thomas Birr, SVP Innovation & Business Transformation, innogy SE and CEO of the innogy Innovation Hub
In a nutshell, we believe that the future client of an energy system will be a machine (a responsive IoT Device) that is able to generate, aggregate, buy and trade energy or flexibility autonomously. A machine could be anything, an electric vehicle, a solar plant, a home battery or even your toaster which mines Bitcoin to pay off its gambling debts to the fridge.
This quote describes very well how the future could look like and what’s the nature of the machine economy: everything will be smart, autonomous and connected, economically independent and most likely managed by a new technical backbone — and not by old mainframes anymore.
Between 2020 and 2025 our world will be populated by a new species of 50 billion connected devices, 100 Million Robots and 20 million Electric vehicles. This is also confirmed by the world economic forum, where they assume that 30% of Accounting, Procurement and Settlement will be done by blockchain and AI. 10% of GDP will be based on blockchain technologies by 2025 and society will be surrounded by a new species of autonomous machines, self driving cars, decision-making AIs and CRISPR DNA editing robots …
Machines are the customer of the future …
That’s how we came to the hypothesis that machines will become the customers of the future. Using APIs, distributed ledger technologies and AI there will be a shift from user centred design to a more machine centric ux: Here APIs will represent the communication channel. AIs will manage the rating KPIs for goods, availability and price and DLT will reduce the latency between transaction and settlement, especially in supply chains by cutting out the time-consuming and cost-intensive middleman.
We assume that machines will sooner or later have integrated wallets. First attempts in this direction have already been made. With Ethereum one can deploy wallets with smart contracts, Micro Raiden supports M2M microtransactions, and IOTA pursues a similar goal with the Tangle. New revenue streams are generated on the basis of micro-transactions at API level, not only for vendors of software solutions but also for hardware providers. Everything can be tokenized: A new token economy is emerging in the IoT space, where frictions of services can be monetized:
- Gateway requests
- GPS requests
- Proof of Location
- Proof of Identity
- Proof of Existence
From now on, People and machines can shape and grow entire new economies or networks with their own goods and services (e.g. computation power, energy, storage, bandwidth) and being paid at the same time: P2P or M2M.
innogy plans to become a key player in this new game …
However, this also means individuals must take more responsibility: The price for freedom and independence is to allocate time to gain knowledge. One has to understand (high-level) the principles of the underlying technology or token design. A person has to understand what risks (such as the loss of the private key) exist, how to minimise them and how to take advantage of this new responsibility. The decrease of technological and financial illiteracy is more important than ever before. The government, on the other hand, has to develop a new legal framework (taxation, ICOs, foundations) for token based business models to protect people, startups and corporates and to foster innovation.
Let’s meet the needs of machines … !
To make this happen, we focus on several startup investments: We want to shape the machine economy by building a portfolio of companies that literally meet the needs of machines. That’s why we apply the Maslow pyramid. This helps us to answer the question: What are the most important building blocks to shape and grow a decentralized economy where not only humans but also devices can talk to each other and do business with each other. For Humans the base of the pyramid consists of physiological needs such as air, water and food. For machines we can apply a very similar hierarchy: It starts with the most basic of needs.
Computing power and network connectivity.
*In 2017, we focused on business model innovation and created several use cases within verticals such as mobility, energy and supply chain. For example: Energy and Electric vehicles. This was very simple. We just put a charging pole and a car on the public Ethereum blockchain and provided each of them with a Full Node. Thus, both assets got an unique identity which enabled them to transact with each other automatically … fully regulated without the need for trust (middleman), a bank or a roaming partner. More about Share & Charge
Safety and Security
The next level provides safety and security which in the case of a machine or an IOT Device includes a reliable infrastructure, oracles, a trusted environment for execution and decryption, predictive maintenance and even post quantum resistance.
The next level — social belonging — means that we assign an identity to the machine to realize M2M collaboration. In this stage a machine can make its presence known to another device, communicate with it and complete transactions while maintaining the required level of security for itself.
The next level — self esteem — can already be achieved by machines — It’s simply the ability to learn, optimize and make autonomous decisions thanks to machine learning. We can also sense a certain entrepreneurial attitude when a machine is searching for the best price, when a 3D printer for example is looking for the best rated raw materials, so here we need M2M payments, embedded wallets, KYM for machines (Know your machines) and tokens as programmable money.
And finally we have self-actualization at the very top: That’s the DAO, a decentralized autonomous organization to manifest the desire of self-fulfilment.
Our Investment Strategie: Maslow for Machines.
Our Machine-Economy portfolio includes 11 investments: In 2017, we started with the base layer Energy and our own Corporate Spin-Off Conjoule, a P2P Energy Trading startup based on blockchain and Share & Charge which offers a decentralized charging network for electric vehicles based on the EW Chain. In 2018, we were focusing on global KYC/AML for Web 3, and Tokens as new investment vehicle. In 2019 we are more looking into 1. and 2. Layer protocols, M2M protocols and custody solutions.
Energy — Physiological Needs
Energy Web Foundation: EWF has developed a public, open source and decentralised blockchain to support global applications of blockchain in energy.
Funding Round: B
Secure Infrastructure — Safety and Security
share / charge: The share & charge foundation is working on a public open source infrastructure for electric vehicle charging.
ScanTrust: We also invested in Scantrust which deals with product authentication and very interestingly the “imperfection of ink” as unique identifier.
Funding Round: Seed
Solidified: Solidified is a smart contract audit platform bringing audit demand (code authors) and auditors together in a decentralized and trusted manner. Solidified solves the problem of a very fragmented and centralized auditing and bug bounty market and makes it easy for companies building on Ethereum to secure their smart contracts properly.
Funding Round: Seed and Tokens
Cryptowerk: Another company we invested in, is Cryptowerk: Their line of business is to simplify the development of blockchain enabled applications for enterprise companies. Their technology enables high transaction throughput by bundling individual transactions cryptographically, then anchoring the bundle with only one single transaction into a public blockchain e.g. Bitcoin or Ethereum. In result, it reduces the cost per individual transaction by bundling them. Bundled transactions can be disaggregated on request and verified individually if required.
Funding Round: Seed
Decentralised Database — Social Belonging
BigchainDB: This was one of our first investments: With high throughput, sub-second latency and powerful functionality to automate business processes, BigchainDB looks, acts and feels like a database with added
Funding Round: Seed
Esteem — Token
Neufund: A community owned Cryptofund where companies can conduct security offerings and address retail investors to buy equity tokens with a minimum amount of 10 EUR.
Funding Round: Tokens
Fractal Blockchain: Fractal provides a global KYC/AML service for the Web 3, digital banks and crypto-exchanges.
Funding Round: Seed
Polkadot: Polkadot is a global network of blockchains and the foundation for a new, peer-to-peer internet. It support interoperability between chains and offers pooled security via their relay-chain.
Funding Round: Seed, Private Sale
HypeLabs: HypeLabs provides a hardware-less mesh-SDK for connectivity even without internet.
Funding Round: Seed
That’s how we see the Operative System of the Future in a decentralized World.
We are happy to start a conversation with startups, co-investors and strategic partners. The range for our Ticket Size is normally between 500k late seed and 1 million. We want to be a strategic investor for every company from day one. Our offer as an investor is the network of industry partners, access to our own core business and the flexibility for new investment vehicles like tokens (only utility tokens).
Feel free to contact us!