Motive Drilling is a venture backed software player in the oilfield services space. Funded by GE, Hunt Oil, and BUILDERSVC’s precursor fund Formation 8, Motive connects into the operations of existing drilling rigs to optimize di- rectional drilling decisions via data analytics, drilling dynamics, and economic modeling. The system provides turn-by-turn downhole navigation guidance over miles of vertical and horizontal drilling, resulting in the most efficient drilling costs and maximum production impact. The largest independent oil companies have experienced 50% reduction in directional drilling costs as a 4 result of Motive’s technology. Exits Can Be Robust and Lower Risk The exit potential of industrial technology companies is clouded with misper- ceptions that it is too difficult to build a company of scale in the space and valuations are not compelling. In fact, recent examples prove otherwise. GE alone has acquired ServiceMax ($915 million; estimated 10x revenue multi- ple), Bit Stew, Wise.io, Daintree Networks, and Wurldtec. Cisco too has been highly acquisitive, including its acquisition last year of Jasper Technologies ($1.4 billion; estimated 10x revenue multiple). Certain verticals such as oilfield services have robust annual M&A activity, with companies driving new capa- bilities or enhancing production efficiency routinely acquired at attractive multiples. Public equity markets are also receptive to high growth, high mar- gin industrial technology companies and award them high valuation multi- ples. One example is Aspen Technology, which makes optimization software for supply chain applications in process industries (particularly oil and gas and chemicals). Aspen has a $4.3 billion market cap and trades at 9x revenue. Investing In The Opportunity While the arguments for investment in industrial technology center around 1) an antiquated industry ripe for technology improvements, 2) strong value proposition creating economic benefit, 3) large industrial players who recog- nize the need but are slow to move, and 4) attractive exit opportunities pro- viding optionality for investors and entrepreneurs, most venture investors will continue to avoid this space. The lack of understanding around customer be- havior and the need to get out of Silicon Valley, Boston, and LA to visit compa- nies in Dallas, Detroit, and Alpharetta will deter all but those who have strong conviction in the opportunity. Navin Bhargava Jim Kim 4 http://www.motivedrilling.com/case-studies/eagle-ford-s-texas