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BFD Expert Voices - Climate Deals

BFD Expert Voices

RenewaFi, a New York-based climate tech startup that helps companies buy and sell renewable energy, raised $3 million in seed funding, the company tells Megan exclusively.

Why it matters: Now that renewable energy can be generated efficiently, investors see it as time to rethink the way companies buy and sell it.  

The details: First Round Capital, Floating Point, BoxGroup and Powerhouse Ventures participated in the funding round along with angel investors Arcadia CEO Kiran Bhatraju and Apollo Global Management partner Corinne Still.

RenewaFi CEO Noam Yaffe declined to disclose the valuation of the round. None of the investors will have board seats, he confirmed.

State of play: Buying and selling renewable energy is a time- and capital-intensive process, Yaffe tells Megan. 

Prior to starting RenewaFi, he worked on the sell-side for a power plant developer in Austin. Power purchase agreements (PPA) would take months to close and would often delay construction on new plants.

PPA fees, paid to the entity executing the contract, could run upwards of $2 million for a months-long process in addition to the contract cost itself.

How it works: RenewaFi took a page from fintech's playbook and moved the market for renewables online. 

Instead of paying fees and working with outside firms to secure a PPA, RenewaFi lets buyers submit projects for bids from sellers and select which proposal best suits their needs.

RenewaFi takes a success fee from each completed PPA, which Yaffe says is minimal compared to other firms' fees. 

Quick take: Yaffe likened RenewaFi to a stock trading app and the traditional PPA process to calling an individual stock broker on the phone to execute trades. 

Though the latter works for some people, others may prefer a more DIY approach and save on the fees, Yaffe says. 

1 big thing: A next-gen renewables middleman nets $3M

Illustration of a wind turbine blowing money

German startup Theion emerged from stealth Tuesday to unveil a battery design, and CEO Ulrich Ehmes tells Alan the company will be raising a pre-Series A in the coming weeks. 

Why it matters: The novel lithium-sulfur design, set to first deploy in space rockets, could enable cars to travel 600-plus miles on a single charge, Ehmes tells Axios. It would also enable a significant expansion in electric air travel.  

Go deeper: Theion has raised about €5 million (~$5.5 million), largely from Lukasz Gadowski, CEO of the technology-focused holding company Team Global.

The startup is preparing a "pre-Series A" funding round "in the next couple weeks," where it will seek "low-single-digit million Euros," Ehmes says.

The company is also planning for a "double-digit-million Series A" round. It is currently "fully equity funded," he adds.

Driving the news: There's no shortage of startups pursuing battery designs that last longer, charge faster and rely less on critical minerals that come with a heavy human and environmental price tag. 

Theion's unique design eliminates the need for cobalt, copper and most other metals typically used in batteries, including nickel.

The company says its design will provide three times the energy density at one-third of the size and one-third of the weight of conventional lithium-ion batteries.

Russia's invasion of Ukraine has unleashed a global frenzy to secure the critical minerals, such as nickel, needed to meet breakneck demand for batteries and renewable sources of energy. Russia is an enormous source of nickel. 

What's next: Theion expects to ship its first samples to two undisclosed French space companies at the end of this year. 

The company plans to expand to the emerging air-taxi segment in 2023, and then to longer-range electric aircraft and the automotive industry in 2024.

The company also aims to open a mass production line in Germany in 2025.

Of note: Team Global's Gadowski has investments in the air-taxi startups Volocopter and AutoFlight.

What they're saying: "Our process is completely different from the one traditional companies are using," Ehmes tells Alan. "We get rid of all this nickel, manganese, aluminum, copper — we just need lithium, sulfur, and carbon."

2. BFD: German battery startup coming to market

Illustration of an extra long battery with many charge indicator bars glowing green.

Sourceful, a startup that helps e-commerce companies create sustainable packaging, raised $20 million in Series A funding led by Index Ventures, Megan reports.

Why it matters: As consumers become more educated around supply chain sustainability, Index's portfolio companies, which include consumer startups and large direct-to-consumer companies, will need to rethink every aspect of their existing suppliers.

Driving the news: Sourceful raised the Series A to help e-commerce companies design more eco-friendly packaging, offering a first step in reducing companies' Scope 3 emissions in accordance with the proposed SEC rules.

Index Ventures led the round after also leading Sourceful's $12.2 million seed in September 2021. Coatue and Eka Ventures also participated in the most recent round.

Sourceful CEO Wing Chan declined to disclose the round's valuation. Index Ventures partner Danny Rimer will retain his board seat from the seed round.

How it works: Sourceful uses a mix of publicly available and proprietary data to calculate emissions projections on individual packaging components.

Its software lets companies design packaging virtually and see where they can reduce overall emissions. For example, a company can opt to forgo plastic wrapping inside a mailer or change to paper.

Context: If approved, the proposed SEC rules would require companies to track and report Scope 3 emissions. Companies have pushed back, arguing that doing so is a complex and inaccurate depiction of their overall emissions.

Yes, but: Chan maintains that whoever is making a product is responsible for its emissions, including those generated in its supply chain. 

Sourceful could take it one step further, Chan tells Megan, by allowing companies to make changes that can reduce their emissions. 

Our thought bubble: A majority of Scope 3 emissions come from products themselves, the manufacturing process and logistics networks. Changes to packaging may feel meaningful but end up being negligible in the grand scheme of things.

3. Index and Coatue invest $20M in sustainable packaging

2 u, 4 u: H2U, a green hydrogen startup, got the green light to use its non-platinum group metal (i.e. not the rare and expensive platinum group metals like palladium) through its partnership with industrial electrochemical manufacturer De Nora. The successful proof-of-concept bodes well for green hydrogen production, which has seen a lot of talk without a ton of action over the past decade. That's a big deal for the grid.

The "Tesla of trees": Living Carbon is a San Francisco startup that has raised more than $15m and is valued above $65m, according to PitchBook data. The company is trying to genetically engineer trees to increase the success rates of tree planting and reforestation campaigns, which have received mixed reactions from climate scientists. The supercharged trees from Living Carbon reportedly grow 53% faster than your lazy run-of-the-mill trees, theoretically absorbing carbon sooner. 

The startup is currently running a trial in Oregon, so it remains to be seen if the super trees will end up in a sci-fi tale or Jetson's-style SNL skit in a few years' time.

Anti-dumps like a truck: The U.S. Department of Commerce is investigating whether Chinese solar panel companies are assembling products in Cambodia, Malaysia, Thailand and Vietnam to evade tariffs. Auxin, a California-based solar modular manufacturer, submitted a complaint alleging its overseas counterparts were using Chinese parts to keep costs low. The news of the investigation generated a cloud of doubt across the industry given 80% of crystalline-silicon modules are imported from abroad. 

4. 🌡️ Temperature check

Illustration of three emojis: a thermometer, a hot face, and a cold face.

💰💰 TPG plans to wrap its debut climate fund, the Rise Fund, at $7.2b. It's also launching Rise Fund III, targeting $3b. http://axios.link/UhnX

💰 Valor Equity Partners is targeting up to $2b for its latest flagship fund but expects to raise up to $2.75b, according to the Wall Street Journal. The Chicago-based growth firm has previously backed Elon Musk's Tesla and SpaceX. http://axios.link/lhke

Itochu Corporation and Tokyo Century Corporation have invested €20m (~$22.2m) in the Clean H2 Infra Fund managed by Hy24Partners. The fund, a venture between Ardian and FiveT Hydrogen, has a €1.5b (~$1.7b) target focused on hydrogen power. http://axios.link/4m2n

Tikehau Capital, an alternative asset management group and investor based in Paris, is launching a real estate fund focused on buying and renovating buildings to reduce their carbon footprint. The move is part of the firm's effort to reach its €5b (~$5.6b) climate fundraising target by 2025. http://axios.link/LX3i

Leaf, a data infrastructure company for agriculture, raised $5m in seed funding via convertible note led by S2G Ventures with participation from existing investors Cultivian, Radicle Growth, and SP Ventures. http://axios.link/3U4G

Treeswift, a Philadelphia-based forest monitoring and data analytics company, raised $4.8M in seed funding led by Pathbreaker Ventures. Other investors include Crosslink Capital, TenOneTen Ventures, Contour Venture Partners, Boom Capital Ventures, Yes VC, Susa Ventures, Draft Ventures, Anorak Ventures, S7 Ventures, Awesome People Ventures, Switch Ventures, Convective Capital, and Dorm Room Fund. http://axios.link/MKpa

Transocean Ltd. (NYSE: RIG) has purchased a minority interest in Ocean Minerals Ltd., which is seeking to collect critical minerals such as cobalt, nickel, copper and manganese, as well as rare earths, from the seabed. http://axios.link/SRA4

🚘 Aramco and Hyundai Motor Group have entered a two-year partnership to research lower emissions fuel, particularly for use in an electrified hybrid vehicle. King Abdullah University of Science and Technology is part of the collaboration. http://axios.link/9Tj9

 Re-nuble, an agtech startup, partnered with the city of Glens Falls, New York, to develop a 480-square-foot vertical farm serving local restaurants and residents. http://axios.link/8yLD

5. Hot deals

🌎 Happy Tuesday and welcome to Climate Deals.

💵 The Biden administration's $5.8 trillion wishlist for FY 2023 includes $3.3 billion for clean energy. We'll, uh, see. 

🐶 Megan is solo dog parenting this week while her partner is on a work trip. It's nice to have two co-workers in her office instead of just one, but it would be really nice if they could hold off on yappy hour until she's powered down for the evening.

💆🏼‍♂️ Alan was off yesterday taking advantage of Axios' quarterly mental health days. He only logged onto Slack once, so that's considered a win.

Thanks for reading Climate Deals, and please be sure to share with your birder friends, climbing partners and others.

March 29, 2022

1 big thing: A next-gen renewables middleman nets $3M