September 29, 2022
Photo: Gerardo Mora/Getty Images
Welcome to Thursday’s edition of Protocol Climate. Hurricane Ian has left a trail of destruction in Florida. Today, we’re highlighting the risk climate change-fueled disasters pose to the grid. Then, we’re chatting with VC Amy Duffuor about the climate tech she would buy, sell, and hold. (Her sell pick surprised us.)
It seems every month we’re reminded that our infrastructure is no match for climate change. This month, we’ve had two examples: Hurricane Fiona, which knocked out the entire grid in Puerto Rico, and now Hurricane Ian, which plowed into Florida as a Category 4 monster on Wednesday. Utilities are scrambling to restore power to regions devastated by Ian. What’s really needed, though, is a total grid overhaul as extreme weather worsens.
Lots of people woke up without power. As of this morning, 2.5 million households across Florida are without power, and crews are assessing how much of the grid is repairable and how much will have to be rebuilt.
Telecom companies also had to prepare. Verizon's network infrastructure is “fortified in hurricane-proof facilities,” and metro fiber rings are operating with redundancy. AT&T added “high-water vehicles” to its response fleet, more fiber routing to network hubs, and thousands of fixed generators at cell sites.
The climate crisis is making extreme weather worse — and utilities’ jobs that much harder. It’s not just hurricanes, which are feeding off hotter oceans. Wildfires, heavy downpours, and droughts are all getting more intense due to carbon pollution. And they’re all striking a subpar grid.
Many of those solutions will be costly, though. Utilities could pass those costs onto ratepayers. But there’s also a need for federal and state governments to step in with funding to help strengthen the grid against the impacts of the climate crisis while decarbonizing it at the same time. It’s no small task, but as Ian’s damage shows, the alternative is much worse.
— Nat Rubio-Licht
Climate Week was a blur, but one panel at the HolonIQ Global Impact Summit caught my attention, and not just for the fact that it was an all-female conversation on venture capital (a rarity). Moderator Kim Zou from Climate Tech VC conducted a fun lightning round, asking each of the panelists to name a climate tech sector they would buy, sell, or hold.
Amy Duffuor, one of the panelists and a general partner at Azolla Ventures, had some interesting things to say about the industry at large and her firm’s climate tech investment philosophy, so I caught up with her this week to hear more.
For context, Azolla Ventures is an early-stage climate tech fund based in the Boston area with a pretty unique investment thesis. It specifically targets sectors in the climate space that are overlooked or neglected, “where our presence is really necessary for a company to achieve optimal climate impact,” Duffuor said.
Beyond that, Azolla’s other criteria for investment is an adage that’s quickly becoming familiar in the climate tech VC space: gigaton-scale greenhouse gas reductions. What that means in practice is that portfolio companies tend to be hardware- and “deep tech”-based, as well as more capital-intensive and requiring a longer investing horizon than, say, a software company.
Duffuor’s picks below were edited for brevity and clarity.
Buy: Long-duration energy storage
This area is really critical and only going to grow. People often don’t think about the fact that we will need to store energy for 100 to 200 hours, given the intermittency of renewables as well as all the natural disasters flooding our timelines. Right now, lithium ion is really cost-effective as an energy medium for about four to six hours. If the grid goes out — think Hurricane Fiona in Puerto Rico — a battery that would be able to store energy for hundreds of hours could provide a lot of reprieve to a lot of people. We’ve got a portfolio company called Noon Energy that has developed a novel carbon oxygen battery that is addressing this issue.
Sell: Micromobility and EV charging
I look at this from the vantage point of our investment criteria of additionality: Is our presence necessary to achieve maximum climate impact? Although it’s really important in terms of the climate transition, there’s a lot of money flowing into this sector. There’s been more VC investment focused on this versus, say, decarbonizing maritime shipping or iron and steel technology. I think that’s because it’s easier for people to invest in what they can see and what they know; it’s more relatable. Many people have electric vehicles now, or bikes or scooters, versus thinking about something like how a large steel company is going to decarbonize its core business.
Hold: Direct air capture
Azolla invested in its first DAC company a couple of years ago, and in the last year or two, there’s been a proliferation of DAC companies and a lot more money invested in the space. It was fringe three years ago, and now we get a DAC company pitching us every other week. I would hold on that one because we’re going to need to suck carbon out of the air, but so much depends on having attractive economics. You need to get below $100 per ton and ideally $70. One of our portfolio companies, Verdox, specializes in a novel electro-swing approach for carbon removal. It’s pretty amazing in terms of the technology that the team has developed and the strides they’ve made in the last several years.— Michelle Ma
Every great tech product that you rely on each day, from the smartphone in your pocket to your music streaming service and navigational system in the car, shares one important thing: part of its innovative design is protected by intellectual property (IP) laws.
French bug-farming startup InnovaFeed raised a $250 million series D funding round led by Qatar Investment Authority, the largest-ever agritech round outside the U.S. The biotech company is targeting the agricultural sector as a major customer and positioning its insects as a sustainable alternative to traditional feedstock.
Mobile power startup Moxion Power announced a $100 million series B round led by Tamarack Global. The money will go toward scaling its clean energy manufacturing technology.
Cultured meat company Prolific Machines nabbed $42 million in seed and series A funding led by Breakthrough Energy Ventures for its technology aimed at reinventing the food production assembly line.
Spun out of Colossal Biosciences (of wooly mammoth-resurrecting fame), Form Bio secured $30 million in its series A round led by Jazz Ventures Partners. The spin-out is a research and discovery platform for the life sciences industry.
Decarbonization software startup Sinai Technologies raised a $22 million series A round led by Energize Ventures. The company helps corporate clients measure and mitigate emissions.
EverestLabsbrought in $16.1 million in series A funding for its recyclables recovery and sorting tech. The round was led by Translink Capital.
Czech startup Woltair raised a $15.9 million series A round led by ArcTern Ventures. The company’s digital platform connects consumers with sustainable energy solutions like heat pump and solar panel installers and maintenance technicians.
Renewable bitcoin mining startup Aspen Creek Digital announced $8 million in series A funding led by Galaxy Digital and Polychain Capital.
Carbon reduction platform Climate Club, a carbon-reduction platform used by Meta and Bain & Company, launched with $6.5 million in seed funding led by XYZ Venture Capital and Vestigo Ventures.
Residential EV charging startup Kopperfield raised a $5 million seed round co-led by General Catalyst and Lachy Groom.
You get a charger! You get a charger! The Department of Transportation gave the green light to the electric vehicle charging station plans of 50 states plus both Puerto Rico and Washington, D.C., which means the U.S. officially has plans to build chargers along 75,000 miles of highway.
China isn’t just winning the EV race — it’s crushing the competition. The country is on track to sell more EVs than the rest of the world combined this year. Some models are selling for as low as $4,500. (And they’re pretty cute, TBH!)
Investors can’t get enough of climate tech. Even with a looming recession, money is still pouring into the tech companies and startups that promise to help reduce carbon pollution.
Permitting reform is dead, at least for now. But don’t feel too bad for Sen. Joe Manchin: Lawmakers are reportedly weighing bipartisan talks to keep the effort alive.
Manhattan is getting creative about solar power. There’s not exactly a ton of space, but developers are about to finish the island’s biggest solar project with 1,400 panels and a 3.5 megawatt battery installed at the Javits Center.
If we want our nation’s rich history of innovation to continue, experts say, we must create an IP protection ecosystem that helps ensure that tech innovation will thrive.
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