This VC wins deals at lower valuations than her Silicon Valley rivals. Here's why CEOs choose her over deeper-pocketed funds.

Energize Ventures

Amy Francetic, MD at Energize Ventures

• Specialized VC funds are winning deals to fund companies at lower valuations than the competition in Silicon Valley.
• Some funds, like Energize Ventures, focus on a specific area of the market to leverage their expertise, experience, and, importantly, connections to win business from startups.
• It's a sign that some founders value the opportunity to partner with funds over pure valuation numbers and could be a shift in the Bay Area mindset in some sectors.

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Amid a period of record amounts of cash available to VCs, the competition to provide the most value to companies is hotting up.

However, you can still get on to deals without having the most cash by showing your value to founders and CEOs, according to Amy Francetic, managing director of Energize Ventures.

Silicon Valley has become increasingly competitive with more and more funds chasing deals, driving valuations sky high. In the US, 2018 was a record year for VC spending, with $130.9 billion deployed, surpassing the dotcom boom, according to PitchBook. One way to beat that competition is for funds to specialize and target specific sectors.

Energize Ventures has done just that, and focuses on renewable energy companies. Francetic says specialization has allowed it to win places on deals where it offered a lower valuation than competitors. Namely on deals with Nozomi Networks, Zededa, and SiteTracker.

"We could have got a higher valuation in our oversubscribed fundraisings," Edgard Capdevielle, CEO of Nozomi Networks, told Business Insider in an interview. "But we ranked the connections and expertise of Energize higher when it came to choosing investors."

The company, which provides cyber security for energy projects, partnered with Energize on its $15 million Series B which closed in January 2018 and then subsequently for its $30 million Series C in October 2018.

"We have a background in energy and industry - as operators we often quickly understand the general market, sales process and cycle, customer engagement, and the pain points of their customers," Francetic said in an interview with Business Insider. "We can quickly cut through and get to detailed discussions with the companies about their technology."

Francetic says that her fund has an advantage over Silicon Valley's big tech funds as a result.

Having limited partners in her fund who manage major potential clients and have incredible industry connections are a "significant value that we bring to the table," she added.

Similarly, rather than pure cash value, Francetic believes the fund's connections give them a distinct edge.

"It's more about our network, contacts, and who we can introduce them to," she added. "As well as talking to our portfolio companies - they are really the proof points on what we are like to work with."

Targeting specific sectors is an attempt from funds to differentiate themselves from the competition. The rise in space tech companies in the past decade has also seen a rise in the number of specialized VC funds targeting space.

And some major Silicon Valley funds, like Andreessen Horowitz and Union Square Ventures, have raised specific funds within their organisations aimed at particular sectors - such as blockchain and cryptocurrency.

It could be a sign that in the competitive culture of the Bay Area, funds are making sure they have more to offer than just a strong track record and piles of cash.