17 April 2022 |

Keep Cool- 04/17/2022

By Nick Van Osdol

DEALS IN FOCUS

Lowercarbon Capital – $350M fund / CarbonCure $30M carbon credit sale 

To cap off a wild couple of weeks in the carbon dioxide removal vertical, Lowercarbon Capital announced a new $350M fund expressly to make investments in carbon removal companies.

The sub header of a short piece about the new fund reads “There has never been a better time to start a carbon removal company.”

That’s definitely true after this week – Stripe & Lowercarbon together earmarked $1.25B+ dollars for carbon removal startups with announcements over the past ~5 days. Whereas Stripe’s capital will flow to carbon removal companies via advanced market commitments, Lowercarbon’s funding will constitute more traditional equity investments in start-ups. 

And Lowercarbon nodded at Stripe’s announcement as a key catalyst for equity investments in carbon removal companies. The main question for the space (alongside the engineering itself) is who is going to pay for carbon removal? Will there be enough demand, and at prices that ‘work’ for carbon removers? Here’s Lowercarbon’s perspective:

When it comes to demand for carbon removal, consider that two years ago, the amount of money trying to buy it rounded down to $0. The few companies attempting removal were basically small demonstrations with no clear path to scaled commercialization. 

… This week, Frontier, an Advance Market Commitment led by Nan Ransohoff, with backing from Stripe, Alphabet, Shopify, Meta, and McKinsey, announced nearly $1 billion to buy durable carbon removal. Add to that, commits from the likes of Microsoft and Airbus, and a growing slate of marketplaces all over the world for carbon removal. That’s a pretty fat stack.

There’s plenty of evidence of Stripe’s influence on this move beyond the timing. Ryan Orbuch, a partner and “CO2 removal lead” at Lowercarbon previously worked at Stripe. And, no surprise, Stripe is an LP in their new fund too.

Back to the big question? Even with $1B from Stripe committed to buy carbon removals over the coming decade… is that enough? Another $8B+ from public procurement would definitely help – for more on that, check out the piece we published on Thursday

Even still, if carbon removal scales to gigaton levels (big if, as that’ll require a millionfold improvement), at a price of $50-$100, there’s still a big gap on the demand side. Whether there’ll be enough buyers waiting in the wings in 5-10 years to close it is probably worth even more exploration. 

To close optimistically, this week also featured another large pre-purchase order for carbon removals; Invert and Ripple will pay CarbonCure, a firm focused on decarbonizing the concrete production process, $30M for carbon credits it will produce in coming years.

What was a trickle of demand for removals is turning into a steady stream. Here’s to hoping it turns into an ocean and that this month isn’t the crescendo for news in the CDR space.

Here’s an “in summary” meme I made this week that the internet seemed to like 😂

DEAL HEAT 🔥

Here are financing rounds and new funds that caught our eyes this week 🙇.

👚 Natural Fiber Welding raised $85M in Series B funding for its plant-based textile material. Evolution VC Partners led the round; apparel giant Ralph Lauren participated. Read more here. (U.S., Consumer Goods)

⚡ ComboCurve raised $50M in Series B funding for its energy analytics software designed to help energy companies better manage their assets and operations. Dragoneer and Bessemer Venture Partners co-led. Read more here(U.S., Software)

💦 Ohmium raised $45M in Series B funding to increase its green hydrogen manufacturing capacity from 500 MW to 2,000 MW annually by end of year. The company designs, manufactures, and deploys PEM Electrolyzers for hydrogen production. Fenice Investment Group led the round. Read more here(U.S., Hardware)

⚡ GridX raised $40M in Series C funding whose software makes it easier for utilities and energy providers to decarbonize and decentralize. For instance, they connect renewable energy producers with distributed energy storage systems and make their offers / data more transparent and easy for customers to access. Energy Impact Partners led the round. Read more here(U.S., Software)

☀️ Raptor Maps raised $22M in Series B funding for its solar analytics and lifecycle management software. MKB led the round. Read more here(U.S., Software)

🔌 Charge Amps raised $16M in funding for its EV charging business. ConcejoLMK Group and Quinary Investment and earlier backers participated. The company is guiding towards an IPO in 2022. Read more here(Sweden, Hardware)

🚗 SWTCH raised $13M in Series A Funding to increase deployment of its electric vehicle charging infrastructure across North America. Active Impact Investments led the round. Read more here(Canada, Hardware)

♻️ OCTA raised $1.7M in Seed funding to power a circular economy in the automobile industry. OCTA connects companies with fleets of inoperative cars with recyclers and fleet owners interested in salvageable parts. VOX CAPITAL led the round. Read more here(Brazil, Software)

📊 Util raised an undisclosed amount in Seed funding to build out its sustainable investment data platform. Eldridge led the round. Read more here(U.K., Software)

💰 Stripe raised a nearly $1B vehicle to make advanced market commitments for carbon removals. Read more here(U.S., Funds)

💰 Lowercarbon Capital raised a new $350M fund to invest in carbon removal startups. Read more here(U.S., Funds)

ELSEWHERE IN CLIMATE TECH

📚 Good reads: The climate debates stalling action and progress (NYT).

🚗 Capital flows: Honda wants to pour $40B into EVs by 2030.

🌬️ Innovation: Getting up to speed on airborne wind energy generation. 

🌏 Geopolitics: Squabbles over who’s still buying Russian gas continue.

🥾 Boots on the ground: Protestors are getting active in West Virginia, protesting Joe Manchin’s role in stalling climate progress

🚫 so good news: As if electrifying the grid + decarbonizing energy weren’t tall enough tasks… malware that can disrupt grid operations continues to get more sophisticated. 

🚫 so good news: Deforestation in the Amazon is hitting a record clip so far this year. 

👍 Good news (close to home): NY approves new renewable energy projects to power NYC!

👍 Good news: Hopefully reading this newsletter shows you there’s plenty of progress happening any given week in climate tech. New studies are taking note of the uptick too though, suggesting that keeping global warming below 2°C is tenable. 

👀 Eye candy: The sexiest EVs + hybrids from the New York Auto show.