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BFD Expert Voices - Climate Deals

BFD Expert Voices

Election season will make fundraising harder starting in Q3, but that's no reason for startups to rush into a fresh round of funding, Engine Ventures' Katie Rae told Alan at the MIT Energy Conference in Boston yesterday.

Why it matters: The firm invests in what it calls "tough tech": ambitious but potentially game-changing tech such as green steel, multi-day batteries, and fusion energy.

Highlights from the conversation include a look at surprises in different areas and advice for the second half of 2024.

The answers have been slightly edited for clarity and length.

"Companies that were invested in on this 10-year timeframe are coming to market. We are seeing the physicality of what is happening. Not just three companies — it's five, it's 10."

What's moving more slowly than you would have expected?

"Anything in tough tech. You have multiple capital gaps that have to get solved. The first one is, 'How do you get out of the lab?' That's cute compared to a first-of-a-kind-factory that costs between $50 million and $3 billion."

"Jumping those capital gaps requires creativity, long-term thinking, government and corporate partnership. I see the beginnings of that happening."

Which states or regulatory regions are moving with speed, relatively speaking, to compete in this space?

"Texas, Oklahoma, almost anywhere in the South."

"It's no mistake that Form Energy opened in West Virginia. Their state rolled out the red carpet — they got a factory built very quickly, they got all the permits they needed. At the city and state level, everybody was coordinated."

Do you see Rivian pausing construction on their planned $5 billion factory in Georgia having a disproportionate impact on red states that have so far been relatively open to clean energy investment?

"A factory being built means thousands of jobs and all the ripple effects of business development. I don't think, just because that happened in Georgia, it's going to cool somewhere else."

We're in an election year. What are you telling your startups to prepare for whatever may happen?

"I always try to take a step back: focus on your core business."

"Do I think it will be slightly more difficult in Q3 to raise capital? Yes. We're going to have a lot of distractions. But it's steady as you go, stay the course, get meaningful stuff done."

1 big thing: "Get meaningful stuff done"

A photo of Engine Ventures CEO Katie Rae talking on-stage at a conference with Axios reporter Alan Neuhauser. Both are seated in chairs, with a black backdrop behind them.

Katie Rae of Engine Ventures, left, and Alan on stage yesterday in Boston. Photo: Courtesy Aiyah Josiah-Faeduwor, via the MIT Energy Conference.

Cybersecurity company Nozomi Networks raised a $100 million Series E round, Katie writes.

Why it matters: There are growing cybersecurity threats on energy infrastructure from electricity grids to oil and gas systems.

Between the lines: The late-stage funding by the 10-year-old San Francisco-based company highlights startups opting for private rounds as the public markets remain challenging.

Nozomi says it's done over 12,000 installations of its cybersecurity systems, which seek to protect infrastructure from criminal and nation-state cyber threats.

Strategic investors Mitsubishi Electric and Schneider Electric participated in this round.

Previous strategic investors include Honeywell, Johnson Controls, Samsung, Porsche Ventures, and Telefónica Ventures.

The big picture: The energy sector is the target of most infrastructure-focused cybersecurity attacks.

The majority of these attacks are state-affiliated. FBI Director Christopher Wray said recently that threats from China on U.S. infrastructure are at an unprecedented scale.

The cybersecurity industry is filled with large players like CrowdStrike and Siemens, but there's also a ton of startups that specialize in specific pain points or sectors.

Nozomi CEO Edgard Capdevielle told the Wall Street Journal that the company still has ambitions for an IPO.

2. The BFD: Nozomi's $100M for cyber threats

Illustration of a wireframe futuristic landscape with large power lines, surrounded by abstract circles and radical colors

We're seeing a fresh round of Hill Democratic anxiety about implementation of the IRA's energy manufacturing incentives, Nick Sobczyk writes in Energy Policy.

Why it matters: It highlights a fundamental tension in the law between quickly decarbonizing and decoupling wind, solar and EV supply chains from China.

Big picture: Democrats in manufacturing and extracting states want the Treasury Department to do more under the IRA to bring supply chains to the U.S.

Driving the news: At a Senate Finance hearing yesterday, Sen. Sherrod Brown, D-Ohio, said he's working with lawmakers "on both sides of the aisle to tighten restrictions on the 45X credit to ensure that taxpayer money isn't going to Chinese companies."

That incentive is for companies that manufacture wind, solar and battery components in the U.S.

3. Democrats have some IRA anxieties

Illustration of a wrench turning the dot under a question mark

 🥩 Bezos snacks on alt-meat: The Bezos Earth Fund is providing an initial $60 million to create "Bezos Centers for Sustainable Protein," part of a wider $1 billion program on climate-friendly food systems, Axios Generate's Ben Geman writes.

"The Centers will target major technological barriers to reducing cost, increasing quality, and boosting nutritional benefit of alternative proteins by advancing science and technology," the announcement states.

🛑 BYD's overseas setbacks: Despite BYD's new title as the largest global EV seller, the company is struggling to meet its sales goals internationally due to a slower-than-expected EV market, and quality control issues, among other things.

The company looks unlikely to meet its internal goals of selling 400,000 cars outside China this year, compared with 242,765 sold last year.

🚗 BMW's new Urban-X cohort: BMW's climate accelerator Urban-X announced its 14th cohort of 7 companies with ideas around climate.

Startups include: Vertify Analytics, Lectrium, Rego, Velo.ai, Popwheels, Chargely and Virtus Solis.

💲 AT&T buys carbon removal from Oxy: AT&T says it plans to buy carbon dioxide removal credits from 1PointFive, a subsidiary of oil company Oxy.

The credits will come from Oxy's direct air capture facility, Stratos, under construction in Texas, which will use tech from Carbon Engineering, the DAC company it acquired.

4. Temperature check

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

• Voi, a Stockholm-based micromobility operator, raised $25m from VNV Global, Raine Group, Nineyards Equity, Balderton, Creandum, Project A, Stena, and Black Ice Capital. https://axios.link/48LY30F

• Quaise Energy, a next-gen geothermal startup based in Cambridge, Mass., raised $21m led by Prelude Ventures and Safar Partners and including Mitsubishi Corporation and Standard Investments. https://axios.link/3TyUZk8

• Simera Sense, a Belgium-based supplier of optical imaging tech for Earth-observation satellites, raised €13.5m from NewSpace Capital and Knife Capital. https://axios.link/4cfLj5q

• Tierra Biosciences, a San Leandro, Calif.-based protein synthesis developer, raised a $11.4m Series A led by Material Impact, joined by Prosus Ventures, In-Q-Tel, Hillspire, Freeflow Ventures, Creative Ventures, and Social Capital. https://axios.link/3TcZak4

• Packfleet, a UK-based carbon-neutral courier service, raised a $10m Series A led by General Catalyst and Voyager Ventures, joined by insiders Creandum, Entree Capital, and Founder Collective. https://axios.link/3IwnU1X

• Necture, a Vienna-based EV fleet management provider, raised a €7m Series A led by Smart Energy Innovationsfonds and Verbund X Ventures, joined by existing investors Speedinvest and Smartworks Innovation. https://axios.link/3wUkB1Z

• Telo, a San Carlos, Calif.-based developer of electric pickup trucks, raised $5.4m from Neo and Spero Ventures. https://axios.link/3TiNv3c

• GScan, an Estonian developer of infrastructure maintenance tech, raised a €3m seed round. https://axios.link/3VfegYS

• UK-based Anaphite, which is developing dry-coating battery tech, raised £1.6m, consisting of £880k from Elbow Beach Capital, Wealth Club, and Bristol Private Equity Club, and £685k in grant funding. https://axios.link/3wMB9Zw

• SolarMente, a Spain-based solar subscription service, announced an undisclosed investment from actor Leonardo DiCaprio. https://axios.link/3TCAdQI

• Ada Ventures, a London-based VC firm focused on inclusion, raised £63m for its second fund from LPs including Denmark's Export and Investment Fund, the University Of Edinburgh, Molten Ventures, and Legal & General Capital. https://axios.link/3TcZ1gB

• Energy developer Ørsted signed a ~$300m deal to sell an equity stake in four wind farms totaling 957 MW to investment firm Stonepeak. https://axios.link/48Nmz1r

• Booz Allen Hamilton, a defense contractor based in McLean, Va., says it's secured a $550m 10-year contract to support the Department of Energy's ARPA-E program. https://axios.link/3VfTuIJ

• Cargill, the Minnesota-based commodities giant, is considering installing wind sails on some ships, per Bloomberg. https://axios.link/48OaWXP

• Teck Resources, the Vancouver-based copper and zinc miner, is considering building a lithium-ion battery recycling facility in British Columbia, per Reuters. https://axios.link/48XkdwO

• Taiga Motors, the Canadian powersports company, is supplying electric snowmobiles for ski resort operator Alterra Mountain Company. https://axios.link/3TzfPjc

• Climeworks, the Swiss DAC developer, opened U.S. headquarters in Austin, Texas. https://axios.link/3Izcjir

5. Hot deals

• Social Capital, the VC firm led by Chamath Palihapitiya, fired partners Jay Zaveri and Ravi Tanuku. Dan Primack has more in Pro Rata. https://axios.link/43c3WmF

• Vince Canino was named president and CEO of Capstone Green Energy, the LA-based microturbine developer. Canino was previously COO of ESS. He succeeds interim president and CEO Robert Flexon. https://axios.link/3vbo7V8

• Andrew Walton joined Lumio, a Lehi, Utah-based residential solar company, as CEO. Walton was previously president of Sunrun subsidiary SNR Solar. https://axios.link/3wUplEP

• Raman Bhatia, the CEO of UK energy supplier Ovo, is joining UK bank Starling Bank as CEO. https://axios.link/3T7CcLe

• Jack Leunig was named COO of Wildcat Discovery Technologies, a San Diego-based battery cathode materials manufacturer. Leunig was previously SVP for operations at Compass Minerals. https://axios.link/3wZAuUE

• Jake Wilson joined Cirba Solutions, the Charlotte, N.C.-based battery recycler, as chief legal officer. Wilson was previously VP, corporate business development strategy, at Albemarle. https://axios.link/4afiqo5

6. It's personnel

Situational awareness: Enviva, the largest U.S. exporter of wood pellets, filed for bankruptcy, per WSJ. The Bethesda, Md.-based company was reportedly undone by falling pellet prices.

😛 Katie's family is talking a lot about roly polies lately. 

🚪 Alan got locked in the basement by the 2.5-year-old this weekend. The next-door neighbor had to come over to let him out. 

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 climate enthusiasts.

March 13, 2024

1 big thing: "Get meaningful stuff done"