Exclusive: Google Ventures leads $40M round for geothermal growth
Dandelion Energy installs geothermal heating and cooling systems in homes, mostly on the East Coast. Photo: Courtesy of Dandelion Energy
Geothermal startup Dandelion Energy has closed a $40 million Series C round, led by Alphabet's investing arm, to grow across the U.S.
Why it matters: The funding for Dandelion Energy highlights how geothermal systems that can heat and cool homes are improving in efficiency and growing in demand.
Zoom in: GV (Google Ventures) led the round. Participating investors included Collaborative Fund, Breakthrough Energy Ventures, NGP and LenX, the corporate venture arm of home building giant Lennar.
- Dandelion, which spun out of Alphabet's X in 2017, plans to use the funding to sell its tech nationally and also work with new home and apartment building developers.
- Last week Dandelion said it's now using its own heat pump that it combines with its drilling and installation service. The new tech can help lower costs and boost efficiency.
- Dandelion CEO Dan Yates was previously the co-founder and CEO of Opower, which went public and then sold to Oracle for $532 million.
How it works: Dandelion drills a 500-foot-deep hole and buries a loop in that hole that exchanges heat with the earth.
- The company then digs a trench to the house and puts in heat pumps that communicate with the loop.
- The systems are meant to replace heating and cooling systems that run off fossil fuels like natural gas, heating oil or propane.
- Yates tells Axios that Dandelion has installed 3,000 heat pumps for over 2,000 homes.
Follow the money: It's a difficult time for any climate startup trying to close a growth round, and many investors continue to wait until after the election to make financing decisions.
- But with lower interest rates ahead, investors could be more willing to write checks at the end of 2024 and into 2025.
- "I think things have started to warm up a bit. You can only go so long as a venture fund without making any investments," Yates says.
- Dandelion previously raised $134.5 million from investors including GV, Breakthrough Energy Ventures and NGP.
The big picture: Geothermal systems that heat and cool homes are a tiny sliver of the market because they're typically more expensive than the fossil fuel-based versions.
- But the Inflation Reduction Act now offers a 30% tax credit for homeowners that install new geothermal HVAC systems.
Bottom line: Dandelion is looking to use its tech and its vertical integration to lower the costs and grow the amount of geothermal HVAC systems deployed.
