Axios Pro: Climate Deals

March 13, 2024

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Happy 🐪 day!

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.

1 big thing: "Get meaningful stuff done"

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

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.

What's changed since last year?

  • "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."

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