This story is part of a BostInno series, ‘Inno on the Road,’ that explores innovation communities around New England. Stay tuned this week as we explore Portland, Maine. Next week we’re headed to Western Massachusetts, and after that we’ll take a trip to New Hampshire.
One of Maine's largest publicly traded companies, with an $8 billion market cap, is betting $100 million that electric vehicles will be a key part not only of consumer mobility but also commercial mobility.
Portland-based WEX Inc. (NYSE: WEX), which bills itself as one of the world's premier commercial fuel card providers, in July launched a corporate venture capital arm to invest in innovations within the commercial EV ecosystem, from fleet electrification to EV charging solutions.
"We're focused on software solutions that provide insight, control, and utility to our commercial vehicle customer base," said Jay Dearborn, WEX's chief strategy officer, in a recent interview.
The money for WEX Venture Capital comes directly from the payment tech company's balance sheet, with board authorization to deploy through 2025.
Electric vehicle fleet investments
The fund's area of focus speaks directly to WEX's "fleet solutions" division, the company's money-making engine with 18 million vehicles and 800,000 customers. Last year, that division alone accounted for over 60% — or $1.44 billion — of WEX's $2.35 billion in total revenue.
The adoption of EVs has been on the rise in recent years, with the International Energy Agency reporting earlier this year a "booming" demand for electric cars determining a "sea change" in the global auto industry. To date, the U.S. is the third-largest market in the world for EVs, after China and Europe.
For Dearborn, the ongoing shift means that "at least for the next decade or two" commercial fleets will be made up of both EVs and internal-combustion-engine vehicles. WEX's job, he added, is to provide both, as well as to discover new business models and solutions in the space.
"Commercially, we have yet to see adoption [of EVs] in any meaningful way, but we know it's coming," he said.
Hence, the new fund. WEX Venture Capital plans to cut checks ranging from $1 million to $5 million to companies entering the commercialization phase with a proven product and revenue flow — the textbook definition of the Series A and B stages. The fund doesn't plan to ever be the leading investor, but is definitely open at buying the companies piquing its interest.
"Our role is to follow and to be a good partner with the lead investor and to be a great partner for the target," Dearborn said. "This can be a pipeline for us."
David Klein, head of WEX Venture Capital, is the investment recommender to both Dearborn and Carlos Carriedo, WEX's COO International in London. Both Klein and Dearborn sits among WEX's approximately 1,200 workers in Maine.
The fund has already made a couple of minority investments in Chargetrip and ev.energy, both based outside the U.S., and plans to continue deployment regardless of geography. As of mid-August, some undisclosed potential target companies are based in New England, but none in Maine.
"One of the benefits of being here in Maine, we have noticed, is when we invite our target companies to our global headquarters here, particularly on a beautiful sunny day, and on a Thursday where we have beer in the afternoon," Dearborn said. "It tends to be a great selling point."
