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BFD Expert Voices - Climate Deals

BFD Expert Voices

Upside Foods and Good Meat yesterday became the first U.S. companies to win federal approval to begin selling lab-grown chicken, Alan writes.

Why it matters: The sign-off from the U.S. Department of Agriculture makes the U.S. only the second country, after Singapore, to approve sales of meat made in a lab instead of a farm.

The latest: The USDA cleared the way for restaurants to begin serving "cell-cultivated chicken" from rival California startups Upside Foods and Good Meat.

Upside says its chicken will be on the menu at Bar Crenn in San Francisco.

Good Meat will be served at a yet-to-be-named José Andrés restaurant in D.C.

Yes, but: It'll be years before either company's lab-grown chicken is available on store shelves.

The USDA granted "label approval" for food service and distribution.

The agency will need to approve a retail label, an Upside spokesperson tells Axios.

Between the lines: The "cell-cultivated" label is a win for such startups, which fought efforts by conventional meat companies to apply terms like "lab-grown" or entirely bar the use of words such as "chicken."

Upside and Good Meat are the first to finish the review process by both the USDA and the Food and Drug Administration.

A USDA spokesperson declined to disclose how many other companies are seeking similar label approval.

By the numbers: Investment in alternative proteins sagged in Q1 as food-tech dealmaking fell 40% from Q1 2022, per PitchBook.

Upside Foods has raised $608 million, a spokesperson tells Axios.

Good Meat's parent company, Eat Just, has raised about $800 million.

Of note: Meat and dairy production generate about 14.5% of global greenhouse gas emissions, per the UN. 

The other side: At least one study has raised doubts whether lab-grown meat is better — and found that it may in fact be worse.

1 big thing: Lab-grown chicken is on the menu

Illustration of a chicken with dollar signs for eyes.

Supercritical, a startup building a carbon removal marketplace, has raised a $13 million series A led by Lightspeed Venture Partners, Katie writes.

Why it's the BFD: Companies are increasingly setting net zero goals, but are becoming wary of using carbon offsets as a way to hit their targets.

Details: RTP Global, Greencode Ventures and MMC Ventures joined the round.

How it works: London-based Supercritical works with corporate partners — mostly U.K. tech firms today — and aggregates their demand to buy offsets from carbon removal projects.

Carbon removal is a broad sector and includes diverse methods like installing direct air capture machines, or producing a biochar that captures carbon dioxide.

Supercritical also uses carbon accounting software to help its customers track and manage their emissions.

The startup says it has a team of scientists that vet all the projects it includes in its marketplace.

Supercritical plans to use the funding to hire and expand the team and bring in customers beyond the tech sector.

Zoom in: Scientists caution that to prevent the worst effects of climate change, the world needs to remove carbon from the atmosphere, not just halt global carbon emissions.

Voluntary carbon offsets have been plagued with controversy, and many companies are looking for alternatives to help achieve challenging net zero goals.

Carbon removal offsets have come into fashion as a more authentic way to reach reduction targets, and companies like Stripe have led the way by pledging large investments into carbon removal projects.

The big picture: Carbon removal technologies are at an early stage, and some, like direct air capture, have yet to be proved at scale.

Many of the projects that remove carbon from the atmosphere are expensive, costing far more than $100 per ton.

Supercritical has found some traction in the tech sector because profit margins can be high enough to afford the premium cost of carbon removal.

To move beyond tech buyers, carbon removal projects need to grow in scale and come down in costs.

Of note: The co-founder and CEO, Michelle You, previously founded SongKick, which sold most of its assets to Warner Music Group several years ago.

She found climate religion while backpacking around the world and reading the Patagonia founder's book on environmentalism and business.

2. The BFD: Supercritical $13M carbon removal deal

Illustration of a vacuum sucking up CO2 molecules from the air.

Hyfé closed a $9 million seed round this month to convert food processing wastewater into a core ingredient for meatless protein, the company tells Alan exclusively.

Why it matters: Hyfé says its process produces a cheaper, more sustainable alternative to the sugars commonly used to fuel protein production.

What's happening: San Francisco-based Hyfé takes wastewater from food production plants and turns it into feedstock for fermentation.

Fermentation is one of the main methods for making alternative proteins. It's also used to produce fuels, materials and chemicals.

Zoom in: Hyfé plans to install its equipment at food production plants.

The feedstock it makes will be sold to "biomanufacturers" that brew proteins and other products through fermentation.

Meanwhile, it'll sell treated clean water back to the food companies, which it says it can do at a lower price than traditional water treatment.

What they're saying: "If you're boiling beans and you're generating water, before you toss that water down the drain, we capture it," CEO Michelle Ruiz says.

"In your kitchen, you can make a cocktail with it, aquafaba. At the factory, it's considered wastewater."

Details: Synthesis Capital led the all-equity round, which closed June 8.

The Engine, Refactor Capital, Supply Change Capital, Overwater Ventures, X Factor Ventures and Alumni Ventures participated.

Synthesis Capital partner Rosie Wardle is joining the board.

Of note: Ruiz previously ran a waste treatment plant for ExxonMobil.

Chief technology officer Andrea Schoen was an early U.S. hire for LanzaTech, which uses gas fermentation for fuels production.

What's next: Hyfé is finishing feasibility studies with food brands. It'll narrow those to three pilot projects.

3. Exclusive: Changing bean water into big bucks

Illustration of an open tin can with a hundred dollar bill on it

WindBorne Systems has raised a $6 million seed round to deploy more of its long-endurance smart weather balloons, Katie reports exclusively.

Why it matters: Accurate and real-time weather data is crucial for sectors like energy and for extreme weather event predictions, but the current data methods are lacking.

Details: The startup's seed round was led by Footwork, an early-stage venture firm with a 2-year-old $175 million fund.

Khosla Ventures, Pear VC, Ubiquity Ventures, Harvest Ventures, Humba Ventures, Jetstream, and Convective Capital participated in the round.

How it works: Governments and organizations commonly use low-cost balloons to collect weather data (and for other data-collection purposes, hi China 👀👋🏻). But those balloons typically float uncontrolled in the atmosphere for a couple of hours before they pop.

WindBorne has developed a weather balloon that can be controlled remotely using the lifting gas (hydrogen), enabling the balloon to move up and down in the atmosphere and potentially last for a month —or eventually even years — in flight.

Despite being much smarter than a regular weather balloon, the startup's balloons cost the same as the standard ones.

The balloons' various weather sensors collect temperature, wind pressure and direction data and deliver that info to the ground using a satellite connection. They use a solar panel for power.

4. Exclusive: $6M smart balloon deal

A WindBorne Global Sounding Balloon above Svalbard, Norway. Photo courtesy of WindBorne Systems

⛏️ Minnesota’s load of nickel: State regulators are beginning to review a key nickel mining proposal that promises to help the U.S. develop domestic supplies of raw materials for climate tech, Ben Geman and Jael Holzman report.

Talon Metals yesterday formally filed paperwork that will launch a state environmental review of its proposal to build an underground mine in northern Minnesota.

It already counts electric vehicle giant Tesla among its customers, if the project comes to fruition.

⚡ Fuel cells turn a profit: German fuel cell maker SFC Energy has become the first such company to report a profit, Eric Wesoff reported this week in Canary Media. 

It's a lone bright spot, he writes: "Ballard Power is in its fourth decade as a profitless company. Plug Power lost $724 million on $701 million in sales last year. Bloom Energy’s revenue is growing, but so are its losses."

🕹️ The newest ESG darling is Nvidia: The company is best known among gamers, for its high-powered graphics cards, but it’s become newly popular among ESG funds, Bloomberg reports.

The company has drawn more investment from ESG funds than either Tesla and Vestas Wind Systems, largely because of its climate disclosures and risk management.

🤔 Companies seek shelter: There are more public companies being taken private than there are private companies going public, Bloomberg reports, citing ongoing market turmoil.

There have been 47 deals to take a public firm private, compared with 39 private companies that have gone public via IPO.

5. Temperature check

Illustration of an earth in space covered in red and blue meteorological color lines.

• Focused Energy, an Austin-based laser-based nuclear fusion startup, added $11m to its Series A funding, bringing the round to $82m. Prime Movers Lab led, joined by VCP Capital and investor Tony Florence. https://axios.link/3NJQYXd

• TreaTech, a Swiss waste treatment startup, closed a ~$10.1m Series A led by Engie New Venture. Montrose Environmental Group, the European Innovation Council Fund, Sipchem, CMA-CGM and Holdigaz participated. https://axios.link/3Pr2rfA

• Kubik, a Kenya-based plastics upcycler, raised $3.3m in seed funding from Plug & Play, Bestseller Foundation, GIIG Africa Fund, Satgana, Unruly Capital, Savannah Fund, African Renaissance Partners, Kazana Fund, Princeton Alumni Angels and Andav Capital. https://axios.link/3XkAIPj

• Nabors Energy Transition II, an energy transition SPAC formed by Nabors Industries, filed for a $300m IPO. https://axios.link/3JmK0Vu

• Arcadia, the D.C.-based energy data provider, acquired community solar developer Oregon Shines. https://axios.link/449b2aI

• Rivian Automotive acquired Swedish mapping provider Iternio, the parent company of EV route-planning app ABetterRouteplanner. https://axios.link/43JJtVD

• VSK Energy, a venture firm backed by Indian solar panel maker Vikram Solar, announced plans to invest up to $1.5b to establish a U.S. solar energy supply chain, starting with a planned factory in Colorado next year, per Reuters. https://axios.link/3CENXB4

• Great Bay Renewables, a Portsmouth, N.H.-based royalty investor, closed a $45m royalty investment in Hexagon Energy, a Charlottesville, Va.-based solar and storage developer. https://axios.link/3XiLMwk

• Viridi Energy, the Northridge, Calif.-based RNG developer, partnered with American Organic Energy, a Westbury, N.Y.-based anaerobic digester developer, to develop a food-waste-to-RNG facility in Yaphank, N.Y. https://axios.link/3qYIxhL

• Ultra Safe Nuclear Corp., the Seattle-based nuclear microreactor developer, announced plans to build a factory, testing and inspection site in Gadsden, Ala. https://axios.link/449KmGP

• Swedish bus maker Nova Bus is closing its U.S. production plants to refocus on its Canadian factories. The company’s vehicles include electric buses. https://axios.link/3NEMYaj

6. Hot deals

• Suzette Long is retiring as chief legal officer and general counsel of Caterpillar, the Irving, Texas-based manufacturer of construction and mining equipment, including electric vehicles. VP and deputy general counsel Derek Owens will assume the role of SVP and general counsel July 1. https://axios.link/3CEShjw

• William Sparks joined Jones Walker as a partner in the Houston law firm's litigation practice on the energy, environmental and natural resources team. https://axios.link/3Pq8eSf

• James Griffiths joined Piedmont Lithium, the Belmont, N.C.-based lithium resources developer, as SVP of corporate development and treasury. Griffiths was previously a director in Bank of America’s global industrials group. https://axios.link/3JtcMDF

• Kara deBorde also joined Piedmont Lithium as VP of risk management. DeBorde was previously senior director of risk management at TC Transcontinental. https://axios.link/3JtcMDF

7. It's personnel

Welcome to Thursday! The climate deal wheel is spinning today. 

💸 Situational awareness: Ford has won conditional commitment for a $9.2 billion Department of Energy loan to build three factories to make batteries for electric vehicles. The loan is one of the largest to come out of the Department of Energy's loan program's office, Katie writes. 

  🏰 Katie is excited to jump on trampolines this weekend at a House of Air kids birthday party. 

🍴 Alan had his first fried clam strips of the season. They were 👍.

Thank you to George Moriarty and Brad Bonhall for today's edits.

And thank you for reading Climate Deals! Please share with your friends, family and poultry farmers.

June 22, 2023

1 big thing: Lab-grown chicken is on the menu