As the CVC arm of the Techint Group's Energy Transition Division, TechEnergy Ventures (TEV) operates at the intersection of corporate strategy and cutting-edge technology. It leverages the Group's industrial expertise to drive decarbonization and diversification efforts in critical sectors such as clean energy, carbon management, and sustainable metals. Its thesis-driven investment strategy, rigorous investigation process, and alignment with the Techint Group's long-term goals all illustrate the nuanced challenges and opportunities inherent in balancing strategic impact with financial return.

Prepared by Assistant Professor Rebecca Karp and Research Assistant Lena Duchene, from the Strategy Unit at Harvard Business School (HSB), the case study was funded by HBS and published in September 2024. It examines TechEnergy Ventures' role in fostering innovation and navigating the energy transition while advancing corporate objectives. The study illustrates the broader implications of CVC as a strategic lever for growth in high-stakes, rapidly evolving industries.

Launched in 2021 as the corporate venture capital (CVC) arm of Tecpetrol's Energy Transition Division; its experience over the last three years has provided formative insights into how corporations can engage with innovation in the energy industry to support transformation. From the outset, TEV's purpose has centered on diversifying business opportunities for Tecpetrol, while supporting the achievement of the Techint Group's sustainability goals, a global industrial conglomerate with roots in energy, steel, and infrastructure that recognized the urgent need to adapt to a rapidly changing energy landscape towards the end of the last decade. With nearly 96% of its 2020 EBITDA derived from traditional industries like oil, gas, and steel, the Group recognized the opportunity to diversify and build initiatives that are aligned with global decarbonization efforts.

To meet these challenges head-on, Tecpetrol established its Energy Transition Unit, primed to identify new profit streams through decarbonized energy sources such as lithium, and subsequently built Latin America's first Direct Lithium Extraction pilot plant in northern Argentina. As lithium gained momentum, the Unit began investigating geothermal energy and carbon capture, both in the early stages of development. However, Andrea Rocca, Energy Transition President, pointed out: "Our business development approach wasn't suited to early-stage technologies. For Techint to engage in fields like geothermal, we had to adopt a corporate venture capital approach."

Focused on advancing strategic objectives centered on emerging climate technologies, TechEnergy Ventures received an initial five-year commitment of USD 150 million from Tecpetrol.

"Our CVC must create a pipeline of opportunities that Tecpetrol can deploy at scale when they become viable," explained Alejandro Solé, TEV's Chief Investment Officer, to the paper's authors. "As Tecpetrol's CVC, its business development team is our client. We are a tool for Tecpetrol to develop business through some of the technologies that we invest in," added Rocca.

Rocca pointed out, "If we work with a company on a technology and discover issues with it, we can leverage this knowledge to develop different projects or change focus… the insight gained can provide strategic value to the Energy Transition Unit, even when we don’t end up investing."

The vertical-first approach ensures that investments not only align with Tecpetrol's strategic objectives but also have the potential to transform industries. Each one of its focus areas—carbon management, hydrogen, clean fuels, clean power and electrification, and sustainable metals—was defined by developing a thesis around the specific segment to determine whether the fund was correctly positioned to become competitive in the sector, by leveraging the Group's expertise and infrastructure. The thesis was validated and accepted based on whether it was a strategic fit, technologically disruptive enough to be competitive, and scalable.

For example, the rationale for investing in geothermal technologies stems not only from the fact that Latin America's subsurface conditions are highly conducive to geothermal energy but is also supported by Tecpetrol's experience in subsurface geology and reservoir management, Tenaris ability to deliver the casing for well construction, and Techint Engineering & Construction's expertise in infrastructure and power generation. This positions the Group as a candidate to lead geothermal development.

Since its inception, TEV, based in Italy and Argentina with a team of six dedicated experts with substantial experience in different areas of the energy transition, has invested in 13 companies across six verticals. By mid-2024, when the study was completed, the startups were still in the early stages of technology development, mainly in the United States, with some in Europe and Israel. Notable areas of interest include:

> Geothermal energy: Investments in Quaise Energy, Luminescent, and Eden GeoPower are an opportunity for TEV to show its leadership in geothermal innovation. These startups focus on technologies like ultra-deep drilling and efficient heat collection, which are essential for making geothermal energy a scalable and reliable power source. As Solé points out, "These pre-commercial investments, if successful, will build upon each other and position us as major players in global geothermal development, especially in Latin America."

> Sustainable Aviation Fuels (SAF): Recognizing the potential of SAF to transform aviation, TEV invested in OXCCU and Aether Fuels. While SAF lies slightly outside Tecpetrol's traditional focus, it offers diversification opportunities and aligns with broader energy activities. For Solé, "We saw interesting opportunities and ultimately learned that we could build a strategic case for Latina America and our Group around sustainable fuels."

> Critical minerals and metals: TEV's investments in Helios and other startups reflect its ability to identify synergies with Tenova, Techint Techint's metal technology arm. TEV contributes to the energy transition and the Group's industrial diversification by supporting innovative clean metal production technologies.

TEV's investments are designed to accelerate innovation, provide market insights, and enhance the Group's competitive position. The fund also works with other climate-tech CVCs.

The idea is to support entrepreneurs from early startup to the growth capital stage, accompanying technology development and helping the startup move from a Technology Readiness Level (TRL) 4 to TRL 6 or 7. Earmarking USD 1.5 million per project in the pre-seed to seed phases, each project is bolstered by engineering support and access to non-dilutive capital. "Investing today in early-stage companies gives us an edge in understanding future energy systems and business opportunities," emphasized Rocca. Another key aspect was ensuring that the Group's different Business Development (BD) teams could capitalize on these technologies to build industrial projects and secure a competitive advantage.

As TEV approaches the end of its initial five-year mandate, it faces critical questions about its future direction. Should it continue to focus on scaling existing investments or explore entirely new opportunities, such as fusion energy? Solé shared his thoughts about this dilemma: "There are areas where investment is imperative. For example, neglecting geothermal energy, regardless of its success, would be a glaring oversight. However, abstaining in other areas is acceptable if we're not entirely confident."

Despite these challenges, TEV's achievements over the past three years highlight its capacity to navigate complexity. Its investments advance the Techint Group's strategic goals and position it as a leader in the global energy transition. The HBS study concludes that TechEnergy Ventures exemplifies corporate venture capital's transformative potential in addressing the energy transition challenges. By combining strategic focus with innovative investments, TEV has established itself as a key driver of decarbonization and diversification within the Techint Group.