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BFD Expert Voices - Climate Deals

BFD Expert Voices

Note: Companies in gray are climate tech. Data: CB Insights. Chart: Tory Lysik/Axios

Climate tech companies drove six of the top 10 deals in Q3 global venture capital, Alan writes.

Why it matters: VCs see green in this sector even as the economic headwinds gather speed. 

Driving the news: CB Insights issued its latest global "State of Venture" report. Northvolt, a Swedish battery maker, led the list. Among the others:

TeraWatt, a San Francisc0-based EV charging infrastructure company

TerraPower, a Washington-based nuclear energy developer backed by Bill Gates

Black Sesame, a China-based software developer whose products include vehicle-to-everything charging technology

Of note: Within the climate tech category, batteries, advanced nuclear energy, EVs, renewables, manufacturing and SaaS are attracting the most money, according to CB Insights. 

1 big thing: Climate tech's summer love from VCs

GreenPlaces, a carbon accounting and emissions management software maker, raised $4 million in seed funding from Felicis Ventures, the company exclusively tells Megan. 

Why it's the BFD: The round links up GreenPlaces with one of Silicon Valley's best-known investors and its portfolio network.

Details: Felicis Ventures is not getting a board seat as part of the all-equity funding round, which closed in August. Bull City Ventures and a number of angel investors also participated in the round. GreenPlaces CEO Alex Lassiter declined to disclose the company's valuation.

How it works: GreenPlaces' carbon accounting and recommendation software caters to small and medium businesses that do not have dedicated teams internally to manage or measure sustainability goals, Lassiter says.

The subscription includes an API-based data analysis to generate a number for a company's emissions and how to lower them. 

What they're saying: "We want every company to understand their impact on their environment and become GreenPlaces certified, similar to how consumers use their credit scores," Felicis Ventures general partner Viviana Faga tells Megan.

The bottom line: GreenPlaces is going for quantity over quality in its bid to win in the increasingly competitive carbon software market.

2. The BFD: Felicis stakes $4M carbon accounting claim

Illustration of cloud dollar sign disappearing into the air

Today we're talking to Noor Sweid, founder and general partner of Global Ventures.

Why she matters: Sweid's firm invests primarily in emerging markets across Africa and the Middle East that are often overlooked by larger firms. 

Many of the founders Sweid invests in are not pitching sustainability as a business, but incorporate sustainability elements as a cost of doing business in areas that do not have access to affordable power or are battling food insecurity.

The below has been lightly edited for length and clarity.

What in your view has been the big story in clean energy/climate tech this week?

The global unfolding of Europe's energy crisis and its wider ripple effect. For example, Bangladesh's massive blackout on October 4 affected 130 million people who were cut from access to power for a total of seven hours.

This illustrates the disproportionate impact the gas crisis has had on developing countries. Europe and the U.S. have priority on the limited supplies available, leaving emerging markets with inflated gas prices and limited quantities. In a single year, the price of LNG rose 60%.

While true, this only paints a quarter of the picture. While geopolitical events in Europe have certainly exacerbated the challenge, what Europe is facing is what 6 billion people in emerging markets have been facing for decades. Challenges with energy — especially access — have been a consistent reality for emerging market countries. Indeed, of the 758 million people around the world without access to an electricity source, 80% are in the Middle East and Africa, creating a ripple effect impacting food security and access to water.

By contrast, what is not receiving the attention you feel it deserves?

The stories of private companies from the Middle East and Africa that are proactively tackling these challenges for the world. Because of the longstanding nature of these challenges in emerging markets, founders there have focused on innovation to build sustainable solutions from the get-go.

Saudi-based Red Sea is one example. Its mission is to address food production in the planet's most inhospitable, resource-strapped desert environments. Red Sea's saltwater and sunlight-based agriculture systems save 300 liters of freshwater per kilogram of produce and reduce energy requirements tenfold. This is a solution for the region and the world, with the company currently implementing its agriculture system in harsh environments such as Arizona in the U.S.

In three-ish words, what change would you make to clean energy/climate-tech investing?

Pay closer attention to frontier markets and the solutions its entrepreneurs are building for the world.

3. Expert Voices: Global Ventures' Noor Sweid

Photo illustration of Noor Sweid and abstract shapes

Photo illustration: Gabriella Turrisi/Axios. Photo: Courtesy of Entrepreneur Middle East

 💰 Huh, a SPAC: Alternus Energy Group, an independent power producer based in Dublin, has executed a SPAC merger agreement with Clean Earth Acquisitions, based in Texas.

The combined entity, Clean Earth, will have a value of about $863 million, the companies say, citing 168 MW of operational projects, 649 MW said to be “in-development,” and another 845 MW in contracted acquisitions.

Clean Earth will issue 55 million shares at closing, plus 35 million shares subject to earn-out provisions. Alternus will be the majority shareholder, with about 64% at closing.

The combined company will have about $220 million cash at closing.

👷‍♀️ A Brooklyn fight for green jobs pays off: Community organizers in the Sunset Park neighborhood have won commitments from Equinor and BP to train local residents for jobs in the offshore wind industry.

The nearby South Brooklyn Marine Terminal will soon become a hub for offshore wind projects in the region.

Local groups such as UPROSE joined together to push Equinor and BP to invest $5 million in an “ecosystem fund” for job training. Canary Media has more.

4. 🌡️ Temperature check

Illustration of an earth in a roast pan with a meat thermometer.

• Lightrock, a global private equity firm, closed its inaugural Lightrock Climate Impact Fund with commitments of €860m (~$833m). The fund plans to write checks between €10m-€40m in European and North American growth-stage companies. https://axios.link/3RWZqBg 

• Capital Dynamics, a Swiss asset management firm, announced the final closing of its latest renewable energy fund, Capital Dynamics Clean Energy Infrastructure IX, with €521m (~$503m) in commitments. https://axios.link/3eqjU7M 

• Natural Upcycling, a food waste collection and recycling company based in Rochester, has received undisclosed investments from Trailcreek Capital Group and Plexus Capital, lower middle-market firms based in Denver and Raleigh, respectively. https://axios.link/3TkqSd0 

• Spring Valley Acquisition Corp. II has priced its IPO at $200m, or $10 per unit. The company is targeting the sustainability sector. Its primary sponsor is an affiliate of Pearl Energy Investment Management; Pearl typically targets opportunities requiring $25m to $150m of equity capital. https://axios.link/3Mr6c0R 

• Krane Funds Advisors, a New York-based asset management firm, has launched its KraneShares Electrification Metals ETF on the New York Stock Exchange. The fund tracks the Bloomberg Electrification Metals Index, encompassing futures contracts on aluminum, copper, nickel, zinc, cobalt and lithium. https://axios.link/3g23SRO 

​​• Nikola, the electric trucks and energy infrastructure company, has completed its exchange offer to buy all outstanding shares of common stock of Romeo Power, a California-based designer of lithium-ion battery modules and packs for commercial EVs. The all-stock transaction valued Romeo’s equity at about $144m when announced in August. https://axios.link/3TfP5RV 

• The U.S. International Development Finance Corporation is investing up to $40m in the Energy Entrepreneurs Growth Fund in a mix of junior and senior notes. The fund provides financing and technical assistance to early and growth-stage companies providing energy to off-grid households and businesses in Sub-Saharan Africa. https://axios.link/3TdmYTa 

• Sony and Honda announced plans to begin selling jointly-developed EVs in the U.S. in early 2026. https://axios.link/3CphJJs 

• Volta Trucks, a Sweden-based commercial EV manufacturer, and Siemens Smart Infrastructure have signed an LOI to collaborate on deploying charging infrastructure and software for Volta Trucks customers. https://axios.link/3SWPDME 

• CF Industries, an Illinois-based manufacturer of hydrogen and nitrogen products, has entered into a commercial offtake agreement for ExxonMobil to capture and permanently store up to 2m metric tons of carbon dioxide emissions annually from CF’s manufacturing complex in Louisiana. https://axios.link/3EEkrh5 

• IBC Solar Energy, a German developer, has sold two solar projects in Poland totaling 120 MW to Afcon Renewable Energy, based in Israel. https://axios.link/3Csi3ap 

• Electra Battery Materials, a Toronto-based battery materials supplier, has commissioned its black mass recycling demonstration plant outside Toronto. https://axios.link/3T4mGhV 

• H2 Green Steel, a Stockholm-based steel producer, and Hydro Havrand, a green hydrogen producer, have signed an agreement to potentially develop large-scale green hydrogen production facilities. https://axios.link/3yCs7MS 

• Vestas, the Denmark-based wind turbine manufacturer, has received a 50 MW order from Toda Corporation for the SGET Iwaizumi Wind Farm in Japan. The 12-turbine project is owned by Sparx Green Energy & Technology, based in Tokyo, and built by Toda. https://axios.link/3rUrf2y 

• Bunge, a Missouri-based producer of plant-based oils, and Olleco, the renewables division of Ireland-based ABP Food Group, announced an agreement to form a 50-50 joint venture that will both supply oils and collect used cooking oil for renewable fuels feedstock. https://axios.link/3CRVBsI 

• Li-Cycle, a Toronto-based battery recycler, announced that its Alabama Spoke facility in Tuscaloosa has started commercial operation to recycle and process EV battery packs. https://axios.link/3TfHdQg 

• Chula Vista Elementary School District and Engie North America have completed the district’s $32m, 8.1 MW solar project. https://axios.link/3rPJLsT 

5. Hot deals

• Wells Fargo hired Sesh Raghavan as a managing director and its new head of power, utilities and renewables M&A. https://axios.link/3EAW4Rl

• Galvanize Climate Solutions, Tom Steyer and Katie Hall's climate-focused investment fund, hired four investors: former Goldman real estate investor Joseph Sumberg, former DSAM equities investor Seth Kirkham, former DSAM investor Philip Goldsmith and former TOMS Capital investor Asad Rahman. https://axios.link/3CsM7Td

• Ashton Rosin joined Lowercarbon Capital as a partner and head of capital formation. She previously was with Obvious Ventures. https://axios.link/3Ti6VDG

6. It's personnel

Happy Thursday, climate readers. Let's get to it.

🍻 Megan is excited for tonight's trivia after missing it the past few weeks.

🎒 Alan and Terry had their first "parent-teacher conference" yesterday. Yes, for their 15-month-old. (It was pretty adorable.)

Thanks to Michael Flaherty and Phoebe Neidl for today's edits.

And thank you for reading Climate Deals! Please share with your friends, family and small-business owners.

October 13, 2022

1 big thing: Climate tech's summer love from VCs