First movers towards advanced market commits #104

FMC expands to $10B of demand for unmucking dirty industries

Happy Tuesday post Memorial Day Weekend! Thanks to all that have served, we’re grateful for your sacrifice this weekend and every weekend.

The First Movers Coalition came back for a banging low-carbon-procurement announcement since their launch at COP26. Offtake agreements mean big dollars and a big target for carbon reduction, with particularly big impact in hard-to-abate industrial sectors. A multinational public-private supported solution is needed to kickstart these sectors off the starting block in the race to Net Zero. The FMC updates were aptly announced at Davos where - despite war in Europe, food shortages and global inflation - one third of the discussion focused on climate.

In deals this week, onsite-power generation, an on-chain carbon market, and India-based EV ride hailing and charging lead our top deals. In the news, the climate bill blows past the MDW deadline, airline carbon offsets get questioned, and new climate-friendly refrigerants are approved to hit ACs.

We’re offline for the next two weeks, stopping to smell the flowers and working on something special. Catch us back in your inbox on June 13th!

Thanks for reading!

FMC (First Movers Coalition) pushes AMCs

Launched at COP26 and organized by Climate Envoy Kerry, the First Movers Coalition (FMC) is a public-private partnership of industry titans from the hardest to decarbonize sectors, who’ve made significant commitments to purchase from low-carbon suppliers with the explicit goal of accelerating emerging climate technologies to market. It’s quite the crew: 50+ corporates ($8.5T market value) and 9 governments (40% global GDP) tackling 8 carbon-intensive industry sectors (30% of global emissions).

Now last week as world leaders gathered in Davos amid war, de-globalization, and looming economic slowdown, there was at least one thing everyone could agree on: addressing the climate crisis. FMC updates added to the sense of traction:

💰 $10B of low-carbon industrial demand by 2030

💼 20 new corporates from big tech (Alphabet, Microsoft), energy (Vestas, Enel, Schneider), mining & industrial (BHP, HeidelbergCement) to transportation (FedEx, Ford)

🌐 8 new government partners from India, Singapore, Sweden, Norway, Italy, Britain, Japan, and Denmark

🏭 2 new sector commitments of CDR and aluminum add to the 4 existing sectoral pledges (aviation, shipping, steel trucking)

Key Takeaways

We sat down with the FMC team (Varun, David, Madison) since our invite to Davos got lost in the mail ;)

Demand drives dollars for decarbonization. First adopters willing to make specific-volume offtake commitments for low-carbon products, send the necessary demand signal to the market to spend R&D money on innovation in order to get a bite at the massive demand pie. Says the FMC team, “Ultimately, the FMC purchase commitments across all six sectors are valued at more than $10 billion during this decade. Therefore, the companies that are able to supply FMC demand will rapidly commercialize and scale up their technologies to serve these substantial early markets. [...] Advance market commitments can create the firm early market demand to induce innovators and investors to commercialize these critical technologies.”
CDR is the FMC AMC black sheep. CDR stands out from the herd as an entirely new type of procurement - one focused on removal of a negative externality rather than direct mitigation through low-carbon supply. “FMC members [do not] already have long-standing procurement teams with deep expertise and relationships to contract for things [like they do in] steel or aviation fuel,” notes the FMC team. But the challenges and goals remain the same. “CDR faces an uncertain market for clear offtake, which presents a major barrier to financing facilities and scaling deployment.”
Each sector has a unique blueprint. Top-down is not the name of the game. “The commitments are set by sector in partnership with sector-specific experts and organizations. Each sector commitment is structured differently - for example, the steel and aluminum commitments are for 10% of purchased metal by 2030 to be from near-zero sources [while…] the CDR pillar will focus on standards setting and the development of approaches to procurement.” Here’s the list of specific commitments by sector.
Corporates catalyze, governments grow. “While, in many cases, private sector companies are the first movers when it comes to purchase commitments, governments play a critical role in catalyzing demand, supply, and supportive policy,” says the FMC team. Governments have the power of the biggest purse, especially in sectors such as cement and concrete “where governments are the single largest purchaser and have enormous leverage in shaping those markets.” Given the looming economic headwinds of inflation and revaluation of public equities, such public-private partners will likely become increasingly co-dependent in their decarbonization goals as the macroeconomic seas get choppier.

Deals of the Week (5/23-5/30)

⚡ Mainspring Energy, a Menlo Park, CA-based onsite power generation company, raised $150m in Series E funding from Lightrock, Khosla Ventures, Bill Gates, Fine Structure Ventures, Princeville Capital, and Lineage Ventures.

💨 Flowcarbon, New York, NY-based crypto platform building an on-chain carbon market raised $70m in funding ($32m equity, $38m token sale) from a16z crypto, General Catalyst, Samsung Next, Invesco Private Capital, 166 2nd, Fifth Wall, Box Group, the Celo Foundation, RSE Ventures, Allegory Labs, and WeWork founder Adam Neuman.

🌾 Moa Technology, a UK-based ag biotech startup tackling herbicide resistance, raised $44m in Series B funding from Lansdowne Partners, Oxford Sciences Innovation, Parkwalk Advisors, Bits x Bites, Business Growth Fund, and IP Group.

🌾 Regrow, Durham, NH-based regenerative agriculture software platform, raised $38m in Series B funding from Galvanize Climate Solutions, TIME Ventures, Cargill, Main Sequence Ventures, Ajax Strategies, Neglected Climate Opportunities (NCO), Microsoft’s M12 and others.

⚡ BluSmart, an India-based EV ridehailing and charging startup, raised $25m ($15m equity, $10m debt) in Series A funding from BP Ventures, Green Frontier Capital, Stride Ventures, Alteria Capital, BlackSoil and UCIC.

⚡ SparkCharge, a Somerville, MA-based mobile EV charging network, raised $23m in Series A funding from Tale Venture Partners, Pendulum, Revolution’s Rise of the Rest Seed Fund, the Mark Cuban Companies, Silicon Valley Bank, and Pusha-T.

🚧 Converge, a London-based construction materials decarbonization startup raised $18.9m in Series A funding from OGCI Climate Investments and TO Ventures.

🌱 NatureMetrics, a UK-based developer of biodiversity monitoring products, raised $15m in Series B funding from 2150VC, Ananda Impact Ventures, BNP Paribas, Blue Ocean Partners, Systemiq Capital.

🌎 Ecolytiq, a Berlin-based climate education financial services platform, raised $14.5m in Series A funding from Visa, Segenia Capital, VCM Global Asset Management and btov Partners.

♻️ Greyparrot, a London-based AI waste analytics platform, raised $11m in Series A funding from Una Terra, Closed Loop Partners, Speedinvest, Unreasonable Collective, 360 Capital, Archipelago Eco Investors, Accelerating Growth Fund Ltd and TI Capital.

♻️ FloorFound, an Austin, TX-based oversized retail recommerce platform, raised $10.5m in Series A funding from Next Coast Ventures, LiveOak Venture Partners, FlyBridge Capital Partners, Schematic Ventures, and Data Point Capital.

💨 Planet FWD, a San Francisco, CA-based consumer carbon management platform, raised $10m in Series A funding from Acre Venture Partners, Congruent Ventures, BBG Ventures, Precursor, Concrete Rose, January Ventures, Elemental Excelerator, Cleo Capital and Rethink Food.

🌱 Shellworks, a London-based sustainable plastic packaging, raised $6.2m in Seed funding from LocalGlobe and Founder Collective.

🌱 Allinfra, a Hong Kong-based blockchain platform helping institutions achieve their sustainability goals, raised $6m in Series A funding from Nomura.

⚡ Singularity Energy, a Somerville, MA-based grid carbon emissions platform, raised a $4.5m Seed round from Spero Ventures and Energy Impact Partners.

🌾 Switch Bioworks, a San Carlos, CA-based sustainable biofertilizer company, raised $4.3m in Pre-seed funding from Anthos Capital, Acre Venture Partners, Emerson Collective and others.

🌾 Foodsteps, a London-based platform assessing the food industry’s carbon impact, raised $4.1m in Seed funding from Octopus Ventures, Metaplanet, Ascension, and the Conduit EIS Impact Fund.

💨 Noble Gas Systems, a Novi, MI-based provider of hydrogen gas storage tanks, raised $3.5m from AP Ventures.

🐝 Humble Bee Bio, a New Zealand-based using synthetic biology derived from bees to make bioplastics, raised $3.2m in Series A funding from undisclosed investors.

🔋 Natrion, Binghamton, NY-based solid state battery developer, raised $2m in Seed funding from TechNexus Venture Collaborative, Mark Cuban, Illinois Ventures, and Tamarack Global.

🚲 Roetz, an Amsterdam-based circular bicycle brand, raised $1.9m in Seed funding from Veth Investments.

💨 Scope Zero, a San Francisco, CA-based startup developing a carbon savings account, raised an undisclosed amount in Pre-seed funding from Collaborative Fund.

Submit deals here

Exits & New Funds:

Synthesis Capital, a London-based food technology and alternative protein investor, closed its first fund with more than $300m in capital commitments.

Arcadia, a Washington DC-based energy platform, acquired Urjanet, a utility data provider, to integrate with Arcadia's data and API platform, Arc.

[Correction from Issue #102: Emerald Technology Ventures has begun the process of raising its €250m fund focused on institutional investors]

In the News

Democrats blew through the soft Memorial Day deadline for reaching a deal on any reconciliation climate bill with Senator Joe Manchin of West Virginia. Democratic colleagues give it “50-50 odds of a modest bill” getting done. Robinson Meyer from The Atlantic summarizes the significance of this lost moment:

“Missing was any sense that this legislation is a make-or-break moment for the broader Democratic caucus. Gone was any suggestion that if Democrats fail to pass a bill this term, then America’s climate commitment under the Paris Agreement will be out of reach, and worse heat waves, larger wildfires, and damaging famines across the country and around the world within the next decade and a half will be all but assured.”

Moving slowly on climate action is expensive - a Deloitte report finds that impacts from climate inaction could cost the world $178 Trillion in the next 50 years. For perspective, $500T of global wealth exists today. Glass half full: zeroing out GHG emissions could generate a surplus of $43T. The South Asia heat waves and subsequent global food crisis are immediate reminders.

Lockstep with rising gas prices, investments in batteries and EVs are far outpacing investments in lithium mining. Bringing a new resource to production takes 4-10 years, and faces “wars” along the way - like in North Carolina where a Li startup hopes to start digging.

The Land Down Under has been on a climate role-reversal tear recently, with news of the official abandonment of AGL Energy’ demerger plans - notching a win for Atlassian co-founder turned climate activist investor Mike Cannon-Brookes who earlier this month became the utility’s largest shareholder in a push for the utility’s better GHG management.

Pop-up

John Doerr weighs in on the future of climate tech investing at the latest Climate Draft event in partnership with CTVC and Mike Schroepfer.

Sophie discusses clean-energy-powered “neighborhoods of the future” with Mateo Jaramillo from Form Energy, Donnel Baird from BlocPower, and Jan Vrins from Guidehouse at Aspen Ideas Climate.

Carbon removal startups call on the Senate and House Appropriations Committees to increase support for geologic storage and agricultural soil carbon.

The International Electrotechnical Commission approves more climate-friendly refrigerants in air conditioning units and heat pumps.

The Direct Air Capture Coalition launches to mobilize business, policy, and financial leaders to support DAC technology. Look out for a new wave of climate trade associations in the years ahead.

A neat video explainer on the different colors of hydrogen.

The New York Times challenges the impact of airline carbon offsets, raising larger questions about airlines’ carbon accounting.

Climate change surfaces literal ghosts in dry Lake Mead.

Flowcarbon’s recent raise and Verra’s latest crypto crackdown ignite a #respectful Twitter debate on web3 and voluntary carbon markets.

Opportunities & Events:

🗓️ New Frontier of carbon removal: Tune in on May 31 to hear from Stripe's Head of Climate and Frontier founder Nan Ransohoff and Climeworks' Julie Gosalvez about Frontier's nearly $1b advanced market commitment for carbon removal startups.

🗓️ Investing in forestry and biodiversity: Join Pale Blue Dot on June 7 for lightning talks and a discussion with experts from Overstory, Pivotal Future, and Funga about the investable opportunity in forestry and biodiversity.

🗓️ SOSV Climate Tech Meetup: At TechCrunch Sessions: Climate on June 13 in Berkeley, join SOSV and startups from their HAX and IndieBio startup development programs. Use code CTVC for 50% off.

🗓️ Climatetech Summit (London Tech Week): Join London Tech Week on June 14 for an in-person summit discussing topics such as climate tech and cities, food and agriculture, decarbonising the supply chain and Fundraising in the climate space.

🗓️ Techcrunch Sessions: Climate: Join TechCrunch on June 14 for a deep dive into the market forces, planet-aiding startups and the psychology motivating this new era of climate tech innovation.

💡 Sustainability Subscribed: Apply by June 8 to the equity-free Sustainability Subscribed climate accelerator led by Village Capital and Zuora to dive deeper into investment readiness, network with impact investors, and receive efficient mentorship. Accepting 10-12 climate entrepreneurs focused on creating solutions through subscription models in the US.

💡 ESG for Impact Conference Scholarship: Current students and recent graduates should apply by June 15 to win a full scholarship to this large ESG/CSR conference. Fun fact: Sophie was a scholarship recipient in 2015!

💡 LACI’s Innovators and Incubation Program: Apply to LACI’s newest cohorts for cleantech startups looking for support with large-scale pilots and business development.

💡 Ocean Alkalinity Enhancement Engineering Award: Calling all mechanical, industrial, and chemical engineers and innovators to apply to Additional Ventures’ newest award. They are inviting short proposals by July 15th “to develop prototypes that could enable safe, cost-efficient, and scalable OAE”. The budget per project is $750k-$1.5m.