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BFD Expert Voices - Climate Deals

BFD Expert Voices

🥸 Speaking of that, here's one for you: How do you hide a camel? Answer below. 

Situational awareness: Will Rivian's VW deal help it take on Tesla? More below. 

Rondo Energy, a startup making thermal batteries that store heat instead of electrons, is preparing to raise over $100 million, CEO Eric Trusiewicz tells Axios.

Why it matters: The Bill Gates-backed company is expanding from a small demonstration to three commercial projects, driven by $75 million in new grant funding and debt.

Zoom in: Rondo Energy aims to replace power-hungry boilers used for cement kilns, polymer plants, and other factories with zero-emissions batteries that can heat to 1,500 degrees Celsius.

Driving the news: The startup is planning a "large growth round" that will be "well north of $100 million," Trusiewicz told Axios at the Breakthrough Energy Summit in London.

Trusiewicz was named CEO this month. He was previously the company's president.

Separately, Rondo Energy said today it plans to build its first three commercial projects through $75 million in grant and debt funding from Gates' Breakthrough Energy, the European Commission, and European Investment Bank.

The buildouts follow a 2 MWh demonstration that Rondo brought online at a biofuels plant in California.

The funding will bankroll thermal batteries at a Covestro polymer plant in Germany, a GreenLab industrial park in Denmark, and an undisclosed food and beverage plant in Portugal, Breakthrough Energy's Mario Fernandez told reporters yesterday in London.

By the numbers: The grant comes from Breakthrough Energy Catalyst, a $1 billion-plus fund backing startups as they expand from small demonstrations to first commercial deployments.

Zoom in: Catalyst typically makes infrastructure-style equity investments, but it occasionally uses non-dilutive grants to subsidize expensive first projects.

The idea is to allow startups to show lenders that their novel technology can compete at commercial scale, enabling companies to attract conventional debt financing for subsequent projects.

State of play: Rondo Energy's growth round would add to $60 million that it raised last year from investors including Gates-funded Breakthrough Energy Ventures, as well as Microsoft's Climate Innovation Fund and Rio Tinto.

The Alameda, California-based company closed a $22 million Series A in 2022.

Rondo's planned $100M+ fund raise

Illustration of a battery with a dollar bill wrapped around it. 

Volkswagen's plan to invest up to $5 billion into electric truck upstart Rivian is a game-changing lifeline for the young company, writes Katie.

Why it's the BFD: The capital infusion could help the popular but cash-strapped Rivian lower its costs of manufacturing and reliance on core customer Amazon.

Driving the news: VW said yesterday it will initially invest $1 billion into Rivian through an unsecured convertible note that will convert into Rivian's common stock, reported Axios' Nathan Bomey.

The rest of the investment includes a $1 billion purchase of Rivian's common stock in 2025 and again in 2026, plus a $2 billion investment in a joint venture.

The companies say that they'll develop an equally controlled and owned JV around EV software and electrical architecture that both automakers will use.

Catch up quick: Rivian has been selling two EVs for several years, the R1T pickup and the R1S SUV, and has garnered a growing fanbase.

The company delivered about 50,000 vehicles in 2023 and earlier this year unveiled three upcoming buzzy models.

But in recent months, Rivian paused construction of its Georgia factory, laid off staff and saw its share price plummet on financial struggles.

The big picture: Growing manufacturing from a handful of cars to mass production has challenged all independent EV companies. 

Tesla's Elon Musk famously referred to that period as production "hell." Many companies don't make it through and go under. 

The VW deal could help Rivian invest in its manufacturing capacity to the extent that it can lower its costs of production, a crucial metric. 

The deal could also help Rivian grow enough to rival Tesla, which has long dominated global EV sales (though that might not last long).

The intrigue: Rivian has long relied on a historic deal with Amazon to lift its sails. It's been working on delivering 100,000 customized electric delivery vans to the logistics giant by 2030. 

Yet, its Amazon project has also diverted resources from Rivian's goals to develop manufacturing of its passenger vehicles. 

With another deep-pocketed partner, it can more effectively focus on its core business.

What's next: While the financing is invaluable to Rivian, it's less clear what longer-term value Volkswagen will get out of the deal. 

Big automakers are looking for next-gen tech and a buzz-worthy brand. When Tesla was a young company, it had tie-ups with Daimler and Toyota.

Volkswagen's shares slipped in morning trading, while Rivian's rocketed. 

The BFD: Rivian's $5B Volkswagen lifeline

Illustration of a hundred dollar bill stylized as an electric symbol.

British climate risk startup Climate X has raised a Series A round of $18 million led by Google Ventures.

Why it matters: AI is increasingly being used to assess risk as the changing climate boosts the threat of extreme weather and wildfires.

Zoom in: Climate X CEO and co-founder Lukky Ahmed tells Axios that the company plans to spend the funds on building out the product and expanding to the U.S.

Ahmed said he'll be moving to New York to set up a U.S. and global presence.

Climate X's software helps companies like banks and real estate owners assess the risks of climate, such as floods or heat waves, to buildings and infrastructure like rail and bridges. Customers include CBRE, Virgin Money, and Legal & General.

The startup's round also included Pale blue dot, CommerzVentures, A/O, Blue Wire Capital, PT1, Unconventional Ventures and Western Technology Investment.

The big picture: AI is increasingly being used to assess a murky topic like climate risk.

Companies can use digital twins of the Earth and train algorithms using vast arrays of data around both the environment and physical infrastructure.

Google Ventures backs Climate X

Illustration of a robotic hand holding a glowing dollar sign.

Venture capital firm Blackhorn Ventures has closed its third fund of $150 million to invest in early stage digital infrastructure and energy startups.

Why it matters: In a tough funding environment, VCs focused on digital climate, instead of high capex hardware, are maintaining momentum.

Zoom in: Blackhorn has already backed 20 startups out of the new fund and 80 across all its funds beginning in 2017.

The Denver, Colo.-based firm focuses on how AI and software can make energy and transportation more efficient and cleaner.

It's backed startups including on-demand robot company Formic, AI grid developer ThinkLabs, and EV battery maker Electric Era.

LPs in the fund include the Grantham Foundation, real estate developer Jonathan Rose, Mitsubishi Electric, and Westlake Corporation.

What's next: Blackthorn's Micah Kotch said he's been following the growing trend of startups using generative AI in an industrial setting.

Third time's a charm 

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

🇺🇸 America's biggest offshore wind project: Vineyard Wind 1 off the coast of Massachusetts has become the largest operating offshore wind project in the U.S.

Developers Avangrid and Copenhagen Infrastructure Partners brought another five turbines online at the site, raising the total to 10 turbines generating up to 136 MW. Crews are building the 22nd turbine at the site, which will ultimately reach 806 MW of capacity.

🏆 We're No. 1: Speaking of America, the U.S. once again topped EY's annual list of the most attractive markets for renewables investment and deployment, citing robust federal policy supports.

In spite of grid connection backlogs, labor shortages, and permitting delays, the country added 32.4 GW of solar and 6 GW of utility-scale wind in 2023.

⚡ Last-minute hydro push: Congressional lawmakers may overhaul hydropower licensing during the lame-duck session following November's elections, Axios Pro's Nick Sobczyk reports in Energy Policy.

The approach would fit Congress's piecemeal approach to energy policy, which has so far taken the place of a big permitting bill. There are big hurdles, but one GOP senator tells Nick he's "cautiously optimistic."

💰ARPA-E's next picks: The Department of Energy announced four companies to potentially receive up to $63.5 million through its competitive ARPA-E program.

The startups are thermal battery maker Antora Energy, solid-state lithium-metal battery developer Ion Storage Systems, cementitious materials producer Queens Carbon, and AeroShield Materials, which makes aerogels for efficient insulated glass.

Temperature check

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

• Solus Power, a UK developer of portable EV charters, raised £22m from Dubai-based Petra Equity Partners. axios.link/3VJ5z7Z

• Belgian DAC developer Sirona Technologies raised a €6m seed round led by LocalGlobe and XAnge, joined by Look Up Ventures, Satgana, Voyagers, Syndicate One and Renaud Visage. axios.link/3zia6qx

• Valpas, a Finnish startup that's developed bed legs that can trap and kill bedbugs without pesticides, raised €4m in seed funding led by Zenith VC, joined by Icebreaker VC, Finnish Industry Investment, Canon Marketing Japan MIRAI Fund, Activum SG Ventures, Houghton Street Ventures, Rockaway Ventures and Morrow Ventures. axios.link/4bArpAB

• Foray Bioscience, a Cambridge, Mass., startup cultivating plant cells outside plants to make molecules, materials and other products, raised $3m in seed funding led by ReGen Ventures, joined by The Engine Ventures, Susquehanna Sustainable Investments, Understorey Ventures and Superorganism. axios.link/3xJzl4l

• LanzaJet, a Deerfield, Ill., ethanol-to-SAF producer, announced an undisclosed investment from MUFG. The company in April was raising a $100m round, per sources familiar. axios.link/45Duyy5

• Wisk Aero, the Mountain View, Calif., eVTOL developer, acquired Verocel, a Westford, Mass., software verification and validation provider with a focus on certifying aerospace software. axios.link/4cbV3Ns

• ExxonMobil signed a nonbinding MOU with EV battery maker SK On for a potential multiyear offtake agreement of up to 100,000 metric tons of Mobil Lithium from ExxonMobil's first planned project in Arkansas. axios.link/4bm7MMv

• Fastned, a Dutch EV fast-charging network, issued €32.9m in bonds. axios.link/3XDDvVY

• Swiss solar manufacturer Meyer Burger started production at its module assembly plant in Goodyear, Ariz. axios.link/3L1MPM8

Hot deals

• Paddy Padmanathan has joined private equity firm Permira as its climate strategy senior adviser. Padmanathan was previously the president and CEO of ACWA Power. https://axios.link/3VVv07A

It's personnel

The answer of course on how to hide a camel is: camelflage!

⌨️ Katie tried out the 9Zero climate-focused co-working space this week. Highly recommend! 

⏱️ While Alan is in London, his wife Terry has been tracking how early she's been able to get their toddler down for bedtime — potentially demonstrating it can reliably be done before 8 p.m. Last night was 7:30; tonight Terry's aiming for 7:15. 

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 Rivian drivers.

1 big thing: Rondo's planned $100M+ fund raise

2. The BFD: Rivian's $5B Volkswagen lifeline

3. Google Ventures backs Climate X

June 26, 2024

1 big thing: Rondo's planned $100M+ fund raise