Search for climate-tech unicorns

Bessemer Venture Partners, a San Francisco based venture capital firm, has an interesting tab on its website where it highlights the start-up investment opportunities it missed. Those lapses included companies like Facebook, Apple and Google, which could have meant billions of dollars in gains. The challenge today, however, is to identify start-ups that are set to play a stellar role in the global energy transition, whether it is designing software, next generation batteries or cars, carbon capture solutions or even nuclear technologies. The investors who can spot the winners in the cycles of innovation and disruption — the unicorns, or start-ups that reach a valuation of $1 billion — will stand to make handsome gains.

Indeed, investors are taking their places. Climate-tech start-ups raised $15.7 billion in the first quarter of this year, which is more than double the $6.8 billion mobilised in the same period last year from accelerators, angel investors, seed financiers, venture capitalists and private equity firms, according to BloombergNEF.

Start-ups in the transport sector secured the most capital in the latter two months of the quarter — $4.4 billion spread across 95 deals. Twelve of the biggest deals (over $100 million) in February and March were for transport start-ups, of which nine relate to companies in the battery electric vehicles space. The energy sector attracted the second-highest amount of capital after transport.
 

BNEF expects funding raised by climate-tech start-ups this year to beat the $54 billion raised last year. Start-ups in the climate space are also the focus of philanthropists and impact investors, among others. Shared Future Fund, for instance, offers rapid funding to early-stage entrepreneurs working to solve the global climate crisis. It aims to provide $100,000 to 100 start-ups this year. Some interesting start-ups that have been in the news recently include:

Carbon Clean Solutions, which makes small modular units to capture carbon emissions. It recently raised $150 million from investors that include the venture arms of Chevron, Saudi Aramco, Marubeni and Samsung Group. The company has tested its technology at more than 40 sites around the world and says it can capture as much as 97 per cent of carbon dioxide released by steel and cement factories and power plants, Bloomberg News reported. “Making carbon capture technology accessible for hard-to-abate sectors is a huge opportunity. We will use this new funding to scale production of our breakthrough fully modular technology which will overcome the biggest challenges facing widespread adoption of carbon capture, utilisation and storage — cost and scale,” said CEO Aniruddha Sharma.

Climate Robotics develops agricultural implements to produce biochar — a soil amendment that improves soil health while sequestering carbon.

Buyofuel is an online marketplace for biofuels in India. It connects raw material aggregators, biofuel manufacturers, fuel consumers and waste generators through one app.

ZeroAvia designs and develops zero-emission, hydrogen-electric aviation powertrains, targeting a 500-mile range in 10–20 seat aircraft.

Carbfix captures carbon dioxide and turns it into stone underground, it says, in less than two years.

6K has developed an advanced microwave-based plasma technology to enable the production of next-generation battery materials. Investors in the recently completed series D funding round included a division of Koch Industries and Albemarle.

Kairos Power has developed a novel advanced reactor technology to complement renewable energy sources.

Nuvve offers a patented vehicle-to-grid, or V2G, technology that optimises electric vehicle charging, lowers the total cost of ownership for electric vehicles and increases their positive environmental impact by supporting the introduction of renewable energy sources as an alternative to fossil fuel power plants. “As the electrification of everything unfolds simultaneously with decarbonisation, the challenge of synchronising energy production with load becomes more complex. At Nuvve, we’re focused on intelligently electrifying the planet,” said CEO Gregory Poilasne.

Climeworks, a Swiss start-up working to remove carbon dioxide from the atmosphere via direct air capture, raised $650 million recently in what is being billed as the largest investment in direct air capture to date. Investors included Partners Group, GIC, Baillie Gifford, Carbon Removal Partners and Swiss Re.

Arcadia offers unprecedented access to energy data through its technology platform. It raised $200 million last month with investments coming in from new investors, including JPMorgan’s recently launched Sustainable Growth Equity Team, Keyframe Capital, Broadscale Group and Triangle Peak Partners as well as existing partners Camber Creek, Tiger Global Management, Wellington Management, Salesforce Ventures and Drawdown Fund, among others. “Arcadia is pursuing one of the largest software opportunities in the clean energy transition,” Tanya Barnes, a co-managing partner at JPMorgan Sustainable Growth Equity, said in a statement. 

GreenJoules specialises in making renewable energy from agricultural residue and wastes from agro processing industries.

The writer is the New York based Editor – Global Policy for BloombergNEF, reachable at vgombar@bloomberg.net