Target Information

Energize Capital is pleased to announce its substantial investment in 5, a technology-driven energy advisory firm specializing in serving commercial and industrial (C&I) clients throughout North America. This investment marks a significant milestone in Energize’s Endurance strategy, aimed at supporting digitally-enabled climate solutions that are either profitable or close to achieving profitability. Furthermore, it represents Energize’s inaugural entry into tech-enabled services, utilizing the Level5 data analytics platform to enhance expert consultancy offerings. Following this investment, Energize’s John Tough and Kevin Stevens will join 5’s board of directors.

Industry Overview

The ongoing energy transition involves not only an increase in clean energy generation but also ensuring that this energy is accessible, reliable, and cost-effective for all sectors of the economy. Central to this transition is the C&I sector, responsible for approximately 60% of retail electricity consumption in the United States. Over 20 million C&I establishments are connected to the grid, collectively consuming over 2,400 TWh and spending nearly $258 billion on energy in 2023 alone. Given this scale, decisions about energy sourcing can have significant impacts on organizational operations and the wider energy economy.

In recent years, the energy landscape for C&I organizations has become increasingly intricate, driven by several pivotal factors. Energy markets have experienced heightened volatility, as evidenced by a threefold increase in the standard deviation of energy prices over the past five years. Coupled with rising costs during peak demand periods, consumers are turning to advisors like 5 who can provide guidance on managing energy usage and implementing strategies such as demand response, on-site energy storage, or selling excess energy back to the grid.

Utility costs are escalating, fueled by aging infrastructure, increased demand loads, and the integration of renewable energy sources, with transmission and distribution charges projected to rise by 50% by 2034. This trend makes it increasingly arduous for customers to manage energy expenses effectively, particularly given the complexity of the modern energy landscape. Incidents of blackouts and disruptions are on the rise due to extreme weather conditions and insufficient investment in grid infrastructure, urging consumers to invest in strategies that bolster energy resilience and operational continuity.

Rationale Behind the Deal

5 emerges as a vital player in this complex arena. It provides trusted advisory services for large-scale industrial and commercial clients, focusing on power procurement, energy risk management, demand-side management, sustainability, bill analysis, compliance, and regional incentives. Founded by seasoned experts, 5 has established a strong advisory team renowned for delivering exceptional client experiences, serving over 4,600 organizations including notable names like Empire State Realty Trust and Xerox.

Since its establishment in 2011, 5 has distinguished itself through its innovative technology. Its advanced digital platform, Level5, enables comprehensive market analysis and aids clients in understanding their energy expenditure and consumption patterns, thus optimizing their energy strategies. With a current client retention rate surpassing 90%, 5’s commitment to excellence has facilitated over 50% growth in both team size and client base within the last three years, showcasing a culture that nurtures talent and delivers exceptional service.

Investor Information

At Energize, our investment philosophy emphasizes the backing of digitally-enabled climate solutions that facilitate and accelerate the energy transition. By supporting C&I adoption of renewable technologies and enhancing resource efficiency, we view 5 as an exemplary hybrid model in the market. With a unique customer base reliant on state-of-the-art technology and industry expertise, 5 stands poised for further growth. Our extensive experience in climate software allows us to provide valuable insights that will help 5 expand its digital capabilities and continue on its profitable trajectory.

View of Dealert

The partnership between Energize Capital and 5 is an encouraging development for both entities. Our extensive evaluation of the energy advisory landscape and our targeted investment strategy position us to enhance the capabilities of 5 significantly. This deal underscores a strong alignment of cultural and operational values between the two organizations, fostering a shared commitment to client satisfaction and innovation in the energy sector.

Our years of interaction with 5 have revealed a deep-seated alignment in our vision and approach to the market. We recognize the rarity of a combination that marries operational excellence with high-touch service alongside robust digital integration. This investment not only reflects our commitment to supporting expert-led businesses but also highlights our confidence in 5’s potential to scale effectively within the growing market for energy solutions.

Furthermore, with the energy sector evolving digitally, our collaboration with 5 is strategic, positioning the firm to enhance its offerings and client services. Together, we aim to drive growth and innovation, reinforcing our mutual mission to advance the transition to a sustainable energy future. The investment signifies an exciting chapter for 5, one that prioritizes client experience while fostering advancements that resonate with current market demands.

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