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BFD Expert Voices - Climate Deals

BFD Expert Voices

Investors continue to back startups plotting to build machines that capture carbon dioxide from the air, Katie writes.

Why it matters: Scientists argue that carbon removal tech will be necessary to curtail the worst of climate change, and dozens of direct air capture (DAC) companies have emerged to meet that need.

Driving the news: Startup 280 Earth, which was spun out of Google's Moonshot Factory X, has closed a $50 million Series B round.

Investors in the company, based in Mountain View, Calif., include Builders VC, Alphabet, and former Facebook CTO Gideon Yu.

CEO John Pimentel told Axios that 280 will use the funds to operate and conduct R&D with its first 500-ton removal facility in The Dalles, Ore. That plant is already built and operating.

280 Earth plans to build a 5,000-ton removal facility by 2025, and Pimentel said that the company aims to raise a Series C round to get that second plant up and running.

The big picture: The oil sector has grown increasingly interested in DAC tech as a way to remove the emissions associated with fossil fuels and as a way to develop the market for carbon.

The U.S. government is also supporting direct air capture through its DAC hubs program and potentially as a customer.

There's also growing momentum for large corporates, like Microsoft, to buy carbon removal credits from these types of removal projects. Tech companies with a growing data center footprint are particularly interested in DAC.

Yes, but: DAC is still in a relatively early stage of deployment and is generally too expensive.

Investors are hoping DAC machines will follow the cost curve of other climate technologies, like solar panels and wind turbines, that become a lot cheaper as the tech is produced and deployed in larger volumes.

State of play: 280 Earth is the latest DAC startup to raise funds on the road to commercialization.

On Friday, Spiritus announced a deal with Saudi Arabia oil giant Aramco, to potentially build Spiritus' DAC machines in the kingdom. Aramco's VC arm, Aramco Ventures, also has made an equity investment in the startup.

In March, CarbonCapture said it had closed a Series A round of $80 million from investors including Prime Movers Lab, Aramco Ventures, Amazon's Climate Pledge Fund, Siemens Financial Services, Idealab X, and TimeVentures.

Last year, Occidental acquired direct air capture startup Carbon Engineering for $1.1 billion, kicking off a wave of interest and strong valuations in the sector.

1 big thing: 💵 Wallets still open for DAC

A facility that houses direct air capture machines built by startup 280 Earth in The Dalles, Oregon.

A facility that houses direct air capture machines built by startup 280 Earth in The Dalles, Ore. Photo: Courtesy of 280 Earth.

Enduring Planet, a loan provider for climate startups, closed $4.1 million for its Fund II on Friday, the firm tells Alan exclusively.

Why it's the BFD: The firm wants to provide a lifeline to climate founders that doesn't chip away at their equity.

The big picture: Enduring Planet, which has financed 35 climate startups since 2022, will raise $20 million to $40 million for the fund.

Based in Portland, Ore., and Washington, D.C., the firm started raising the fund in November and expects to reach final close in mid-2025.

Investors include Green Spark Ventures, ImpactAssets, the Toniic impact investor network, and clients of Figure 8 Investment Strategies.

How it works: It de-risks its loans by targeting startups that have secured government backing, such as through a grant or purchase order.

"The government is a very good payer," COO Erin Davis says.

The approach also fills a funding gap. Government bureaucracy moves slowly, and grants are often only paid as reimbursements.

Zoom in: Fund II will make loans between $100,000 and $1 million, typically spanning six to 18 months.

"We tie repayment to when the company gets the inflow from the government," Davis tells Alan. It promises returns of about 10%.

What we're watching: Separately, Enduring Planet has raised $2.5 million toward a targeted $3.3 million equity raise to fund its own operations, which include a fractional CFO service in addition to its loan business.

K Street Capital led the first close, joined by Avesta Capital, Resolute Ventures, Dangerous Ventures, Portland Seed Fund, and E8 Angels.

2. The BFD: Enduring Planet raising up to $40M for climate finance

Illustration of a hand watering a tree in a pot with money for leaves

🇺🇸 USA, USA: Arizona solar manufacturer First Solar on Friday became the world's most valuable solar company, the first time a U.S. company has held the top spot since 2018, per Bloomberg.

First Solar overtook China's Sungrow Power Supply after a 1.5% pop in stock price pushed First Solar's market cap to $21.1 billion. Sungrow meanwhile experienced a 4.2% decline, causing its market cap to fall to $20.8 billion.

💸 An extra grand: The Biden administration's new tariffs on Chinese EV components could add roughly $1,000 to the price of a standard-range Tesla Model 3, per an admittedly "crude calculation" by WSJ.

"Not unaffordable, but inconvenient when Tesla is desperate to remove costs wherever possible," the publication writes. Tesla assembles its Model 3 in Fremont, Calif., but uses Chinese lithium iron phosphate batteries.

🛢️ Shell's climate conundrum: Oil giant Shell will hold its annual general meeting tomorrow, which will act as a referendum on the oil giant's posture on climate and the energy transition, Ben Geman writes in Axios Generate.

Shareholders will vote on an activist resolution demanding tougher emissions targets, which management opposes. Shell is also putting its own strategy, which it has softened slightly, up for a vote.

🔎 New solar probe: The U.S. Department of Commerce last week launched an anti-dumping investigation into solar cell imports from Southeast Asia.

The probe was sparked by a petition last month from trade group American Alliance for Solar Manufacturing Trade Committee, made up of solar manufacturers with U.S. operations. PV Tech has the details.

3. Temperature check

a box of matches that pictures a small outline of the earth and text that reads "Temperature Check"

• UlemCo, a UK startup converting commercial vehicles to run on both hydrogen and diesel, raised £5m+ led by Mercia Ventures, joined by insiders Equity Gap, the North West Fund and Scottish Enterprise. axios.link/4dOLjtA

• Companion.energy, a Belgium developer of industrial energy monitoring software, raised €2.1m led by Übermorgen Ventures and Cavalry Ventures, who were joined by Entourage and Imec.istart. axios.link/3V4Dwkd

• Metrovate, a New Zealand developer of bio-based crop stimulant, raised NZ$1m led by Sprout Agritech, joined by Finistere Ventures, dairy firm Fonterra, OurCrowd, and Te Pokapū Auaha Callaghan Innovation's Deep Tech Incubator. axios.link/4bKS7qi

• Angeles Ventures, a Latino and woman-led early-stage VC firm in Chicago, received an undisclosed equity investment from Bank of America. axios.link/4dOP9Dm

• The insurance business of KKR has provided a $300m corporate financing facility to Origis Energy to support the build of solar and storage projects. axios.link/3ykF5l2

• Polestar, the Swedish EV maker owned by Volvo Cars, received a deficiency notice from Nasdaq for failing to file its 20-F annual report for 2023. axios.link/3V8G2FW

• ADNOC, the United Arab Emirates' state-owned oil and gas heavyweight, acquired an 11.7% stake in NextDecade's Rio Grande LNG project, marking ADNOC's "first strategic investment" in the U.S., Ben Geman reports in Generate. axios.link/3WPgWgK

• Quinbrook Infrastructure Partners announced US$2.4b plans to develop an iron ore mine and lower-carbon processing facility in Australia. axios.link/4bLdVm0

• Canadian miner Fortune Minerals received a US$6.4m Defense Production Act grant to expand production of cobalt for battery and alloy supply chains. axios.link/3Kc7KeV

• The U.S National Highway Traffic Safety Administration is investigating 12 complaints that vehicle doors on the Volkswagen ID.4 electric SUV open while driving, per Reuters. axios.link/4amSkz6

• Surf Air Mobility, a Hawthorne, Calif., electrified aircraft developer and regional air service, began scheduled commuter service between West Lafayette/Purdue University Airport and Chicago O'Hare Airport, with support from Purdue University. axios.link/3yrWMzc

• Japan's No. 3 steelmaker, Kobe Steel, is considering building an electric arc furnace to replace one of its two blast furnaces in Kakogawa. axios.link/4bLPjt4

5. Hot deals

• Scott Griffith was named CEO of Motiv, a Foster City, Calif., manufacturer of medium-duty electric trucks. Griffith was previously CEO of Ford's autonomous vehicles and mobility businesses. axios.link/4arfSmy

• Matthew Porter joined Etasca, a London energy transition and chemicals consulting firm, as director. axios.link/3QUnUNH

6. It's personnel 

👀 What we're watching: Deal flow as we approach the fundraising crunch Katie Rae mentioned ahead of the election.

Hit reply and tell us what you're seeing!

🎤 Katie caught a local kids' play of "Footloose" yesterday. Awesome!

🎧 Alan isn't a huge Of Montreal fan, but the psychedelic indie group's brand-new single, "Soporific Cell", is a certified jam. (Tangentially, the first song that sparked a reaction from the toddler, when she was a baby? "Wraith Pinned to the Mist." Alan is convinced it was the bass line.)

Thank you to George Moriarty and Chris Speckhard for today's edits.

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

May 20, 2024

1 big thing: 💵 Wallets still open for DAC