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BFD Expert Voices - Climate Deals

BFD Expert Voices

Data: BloombergNEF; Note: *Through Feb. 22, 2024; Chart: Axios Visuals

Venture capital firms have raised around $3.2 billion across 18 new climate-focused funds since the start of the year. That compares with $4.1 billion raised for 16 funds through all of Q1 2023.

Why it matters: The burst of activity has climate funders and founders sounding upbeat, though clouds continue to loom overhead, Alan writes.

Zoom in: Climate-focused firms ArcTern Ventures, Voyager Ventures, Equal Ventures and Overture Climate VC have together announced $670 million in new early-stage funds since Jan. 1.

Meanwhile Congruent Ventures ended 2023 by announcing a new $275 million fund.

Context: The climate tech industry has hoped for a thaw in venture markets. Global investment last year plummeted 40% from 2022.

Climate tech was slightly insulated by government green incentives and corporate ESG mandates, which continued driving money into the space. 

Behind the scenes: Climate investors tell Axios that they're seeing a fresh surge in dealmaking, sounding far different than they did at this time last year.

Pension systems, university endowments, family offices and similar LPs still have green mandates to meet. Federal agencies are slowly but steadily implementing incentives introduced in 2022's Inflation Reduction Act.

Bottom line: Climate investors may be sounding more energized, but it will be a few weeks before we find out if the data supports the anecdotes.

1 big thing: Q1 funding momentum

Shares in mining exploration company Critical Metals plunged by more than 20% this morning in its Nasdaq debut, following the completion of its SPAC, writes Katie.

Why it matters: Facing headwinds for both SPACs and the lithium market, the move is a bold play to test the public market's appetite for European lithium for EVs.

Zoom in: The key asset of the company is a mine in Austria, called the Wolfsberg Lithium Project, south of Vienna, which is expected to produce enough lithium to power about 200,000 EVs per year.

Shares of Critical Metals, trading under the symbol CRML, fell by around 25% to $12.75 per share within the first hour of trading today.

The company says the Wolfsberg project is the first permitted lithium mine in Europe, and auto giant BMW will buy the lithium via an offtake agreement.

Critical Metals is a SPAC union of Sizzle Acquisition Corp and mining explorer European Lithium, which also trades on Australia's ASX market.

Critical Metals' debut on the Nasdaq will help position it for fundraising, and it plans to raise $450 million to build out the mine, said Executive Chairman Tony Sage, an Australian entrepreneur with a long history of investing in and developing mineral resource projects.

Big picture: Beyond the SPAC risk and lithium's icy market, Critical Metals has two things that investors might eventually warm to: the BMW deal and the advancement of the mine.

Electric vehicles are taking off more rapidly in Europe, with EVs projected to make up 42% of new passenger vehicle sales in Europe by 2026, according to figures from BNEF.

Sage, who rang the opening bell today, says: "The proof's in the pudding on Wednesday to see how the market in the U.S. reacts to a lithium project in Europe."

2. The BFD: Critical Metals slides in Nasdaq debut

Workers in orange vests walk down a dark lithium mine in Australia, carrying flashlights.

Inside a planned lithium mine in Austria that will be developed by Critical Metals. Image courtesy of Critical Metals

Shortly after the newsletter published yesterday, we reported that geothermal energy developer Fervo Energy is raising $221 million in new funding, per an SEC filing, Alan writes.

Big picture: The Houston-based startup uses drilling tech from oil and gas sectors to generate electricity from hot rock deep beneath the earth's surface.

Geothermal energy production accounted for just 0.4% of electricity generation in the U.S. in 2022.

But that share is rapidly growing, especially as tech companies look to geothermal as a source of around-the-clock clean energy for power-hungry data centers.

The latest: Fervo said in an SEC filing that it's raised about $138.5 million toward a targeted $221 million.

The company began reaching out to investors in late 2023, people familiar with the raise tell Axios.

The round follows a $138 million Series C that Fervo raised in 2022.

DCVC led that round, joined by the Canadian Pension Plan Investment Board, Liberty Energy, Macquarie, Grantham Foundation, Impact Science Ventures and Prelude Ventures.

What's next: Fervo is building a 5-MW site in Nevada to support Google data centers and infrastructure.

It's also constructing a site to supply 40 MW to East Bay Community Energy in California.

3. ICYMI: Fervo is raising $221M for geothermal

👋 Farewell, Apple EV project: Apple's so-called Project Titan, a decade-long, expensive, and secret-ish plan to build an autonomous EV, is getting the ax, according to a report in Bloomberg, which cites "people familiar with the matter."

The report says that a portion of the 2,000 Apple employees who worked on the car project will be shifted over to AI projects, and others might get laid off.

Apple shares rose on the news yesterday, and Tesla CEO Elon Musk responded by sending a post on X with a saluting emoji.

🥑 Chipotle doubles down: Chipotle is committing an additional $50 million to its venture fund, two years after the fund made its debut, showing its commitment to sustainability and driving efficiencies in kitchens and farms, writes Axios Pro Retail's Kimberly Chin.

With the new funding, the company will continue to invest in supply chain, agriculture, restaurant innovation, and automation startups.

🚗 Growing energy demand for EV self-driving cars: The computing power required for highly automated driving is growing as self-driving projects become more mature and companies like Tesla invest in supercomputer projects like Dojo.

That's causing a concern that EVs might guzzle compute power rather than gasoline. The latest California data found that over 88% of the kilometers driven by robotaxis in the state were handled by battery-electric vehicles.

4. Temperature check

Illustration of a pattern of repeating thermometers with different temperature levels.

• Oishii, a Kearny, N.J.-based vertical farming startup growing $13 strawberries, closed a $134m Series B round led by Japan's NTT. https://axios.link/3TaPyaJ

• Unseenlabs, a French satellite startup tracking illegal fishing and other unlawful activities at sea, raised €85m in equity and debt, led by Supernova Invest, Isalt and Unexco. 360 Capital, Omnes, Breizh Up, S2G Ventures, and Bpifrance joined. https://axios.link/3v08e3A

• AiDash, a San Jose, Calif.-based grid AI startup, says Duke Investments has contributed to its $50m Series C round. https://axios.link/3UXwoGS

• Range Energy, a Mountain View, Calif.-based startup that makes battery-propelled trucking trailers, has raised $23.5 million led by Trousdale Ventures, and including UP.Partners, R7, and Yamaha Motor Ventures. https://axios.link/3USBGDr

• Logan Energy, a Scottish engineering startup focused on hydrogen tech, announced a £5m investment from Lanxing New Energy. https://axios.link/3wIGUY4

• Sunhat, a German sustainable data company, raised €5m in a seed round from EnBW New Ventures, along with Capnamic Ventures, WEPA Ventures, and xdeck ventures. https://axios.link/49RFZCW

• Axiom Cloud, a San Jose, Calif.-based developer of refrigeration management software to reduce energy consumption, raised $5m from Toshiba Tec and Windsail Capital Group. https://axios.link/3URXkrm

• Mondra, a U.K.-based SaaS for tracking food supply-chain emissions, raised £3.6m from 7 Generation Ventures, AlbionVC, GC Foodtech Ventures, Foodsparks by Peakbridge, Ponderosa Ventures, and Vala Capital. https://axios.link/49Qpp6z

• Looq AI, a San Diego survey service for digitizing critical infrastructure, raised a $2.6m seed round led by BootstrapLabs, joined by Longley Capital and Spatial Capital. https://axios.link/49U9LHx

• American Electric Power, the Columbus, Ohio-based utility, sold its 50% interest in New Mexico Renewable Development to Exus North America Holdings, netting $104m cash. https://axios.link/42YaJzX

• Fuse, a Palo Alto, Calif.-based fusion tech developer, was selected to receive a Small Business Innovation Research contract from the Department of the Air Force's innovation arm, AFwerx. https://axios.link/3uRWGiV

• Beyond Meat, based in El Segundo, Calif., is discontinuing its plant-based jerky line and planning price U.S. price increases, per AgFunder News. https://axios.link/49tOILT

5. Hot deals

• Stephen Trauber was appointed chairman and global head of energy and clean technology at Moelis, the NYC-based investment bank. Trauber was previously vice chairman and global co-head of natural resources and clean energy transition at Citi. https://axios.link/4bRCjTM

• Ben Kaun has joined Bay Area-based grid battery startup Inlyte Energy as chief commercial officer. Kaun was previously the president of CMBlu Energy. https://axios.link/3P1oesW

• Trond Westlie and Patrick Harnett will join Denmark's clean energy company Orsted as CFO and COO, respectively. https://axios.link/3SWTp9X

• Barbara Burger was appointed to the board of Milestone Environmental Services. Burger was previously a VP at Chevron. https://axios.link/4bSHOkW

• Chelsea L. Nickles was appointed to the board of SolarBank Corporation. Nickles is a director with Ørsted. https://axios.link/49Si9ae

6. It's personnel

"Everyday people are responsible for generating the emissions too."

That was ExxonMobil CEO Darren Woods, speaking on a recent "Fortune" podcast. 

"People who are generating the emissions need to be aware of [it] and pay the price," Woods said. "That's ultimately how you solve the problem."

💭 Alan's thought bubble: No question, it's as rich as a stick of European butter to hear this coming from the head of an oil major that spent decades obfuscating climate science and fighting emissions regulations. 

But the conglomerate has — at least publicly — backed calls for a carbon tax. And the "green premium," whether borne by companies or by individuals, remains a challenge.

7. Quote of the day: Chutzpah edition

📌 ICYMI: Our 2nd annual Pro subscriber survey is open for one more week! Please take 5 minutes to share your feedback and enter to win one of two $100 Amazon gift cards.

🍵 Katie went to a climate VC dinner event last night with a silent tea ceremony. Very San Francisco!

☕ Headed to CERAweek? Let Alan know! He'll be in Houston for the annual energy conference March 19-21. 

Thank you to Michael Flaherty and Chris Speckhard for today's edits.

And thank you for reading Climate Deals! Please share with your friends, family and fund-trackers.

February 28, 2024

1 big thing: Q1 funding momentum