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Silicon Valley's Hot New Investment: Oil and Gas

Industry startups attract $115 million investments in 2015

Technology investors aren't usually known for backing anything related to fossil fuels—they tend to favor solar energy and other environmentally responsible endeavors.

But Peter Thiel, whose Founders Fund recently led a $7 million investment an oil-related startup called RunTitle Inc., isn't your typical Silicon Valley investor. Thiel, Facebook Inc.'s first backer, is known for making contrarian bets. RunTitle is the latest in a series of oil and gas investments by his fund—even amid a slump that has seen the price of oil decline by more than half since June of last year.

RunTitle, essentially a search engine for mineral rights, compiles data on land ownership that's valuable information for oil drillers. The company's name is a play on the expression "running title," a process of digging through public records to figure out who owns what in oil-producing regions.

"The reality is that fossil fuels will continue to be the dominant source of energy for years to come," said Geoff Lewis, a partner at Founders Fund who led the investment in RunTitle. "There have been very few innovations in production."

The San Francisco-based venture firm has also financed Tachyus, a company that sells tools to optimize oil production through data analysis; RigUp, a marketplace for oil-field services; and Modumetal, a materials company that sells to the industry. Founders Fund has also backed nuclear technology and clean energy companies.

While venture capitalists have invested $115 million in 20 deals in 2015, the amount fluctuates widely year-to-year, according to CB Insights. Funding totaled $246 million in 2014 and $125 million in 2013, according to the research firm.

The largest investment this year was $20 million in Seven Lakes Technologies, a provider of analytical tools for oil fields, led by Carrick Capital Partners.

RunTitle, based in Austin, Texas, collects data on land ownership and makes the information easier to find and analyze, cutting down on the need for "landmen," the hired sleuths who manually gather public records and piece together ownership. RunTitle said it plans to raise another $1 million in funding.

"Oil and gas is one of the last giant industries yet to be fundamentally disrupted," said Reid Calhoon, RunTitle's chief executive officer.

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Copyright:
Bloomberg Business
Published on:
October 2, 2015
Source url:
http://www.bloomberg.com
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