Venture capital and private equity funding of cleantech projects and funds is off to a strong start in 2019, after a very strong 2018. We take a look at this as well as other developments in the cleantech and sustainable finance spaces, in this news briefing.
Corporate Sustainability Partnerships and Investments
Google parent company Alphabet is at the top of the Carbon Clean 200 list, a ranking of companies by clean energy revenue that’s produced by nonprofit group As You Sow. Among Alphabet’s clean energy endeavors is running on 100% renewable energy and building a $600 million data center that will run on solar energy. After Alphabet, the rest of the top five in the list are Siemens, Toyota, Cisco Systems and HP.
Alphabet is also developing new clean technologies: in February, subsidiary Makani Power secured a partnership with Shell’s wind development arm to test its kite-based wind power generation device offshore. Makani also receives funding from X — formerly Google X, Alphabet’s semi-secredte research arm.
Shell wants to help commercialize Makani’s kites for offshore deployment, where they could be anchored to deep-water buoys with much less effort than it takes to secure a traditional floating turbine. The deal makes Shell a minority shareholder in the startup.
And in December, X spun out Malta, an energy storage that converts electricity into thermal energy using molten salt. Malta then raised $26 million from Breakthrough Energy Ventures, Concord New Energy and Alfa Laval.
More on Shell’s Recent Investments and Acquisitions
Shell, one of the world’s largest oil companies, on Feb. 15 acquired German solar-PV-plus-storage system developer Sonnen. This comes after Shell Ventures led a $71 million investment round in the company last year.
In January, Shell acquired Los Angeles-based Greenlots, a startup that develops smart EV charging stations combined with energy management services and behind-the-meter energy storage. Shell has made previous investments in the EV space, having acquired NewMotion, a major EV charging provider in Europe, in 2017.
Other recent activity by Shell includes a Feb. 7 investment in self-driving-car startup Aurora’s $530 million Series B funding round, which was led by Sequoia Capital and was also backed by Amazon and T. Rowe Price. That same month, Shell invested in Nordsol, which uses organic waste streams to develop biogas for the heavy duty, long-haul transportation sector.
Other major oil companies are investing in EV charging stations as well. In December, BP Ventures led FreeWire Technologies’ $15 million Series A funding round. Earlier in 2018, BP spent about $170 million to buy Chargemaster, the UK’s largest EV charging company. BP said it intends to add the technology to its existing gas station network.
Meanwhile, institutional investors are increasingly factoring climate change risk into their portfolios, and many are divesting from their fossil fuel investments and engaging with major oil and gas companies to drive their transition to more sustainable forms of energy.
For example, on March 3, Norway’s trillion-dollar sovereign wealth fund said it will dump investments in firms that explore for oil and gas, though it will still hold stakes in firms such as BP and Shell that have renewable energy divisions. Other big investors demanding that oil and gas companies curb their emissions include San Francisco Employees’ Retirement System, NYC Pension Funds, and the Church of England.
Last week, Shell published its Annual Report for 2018 in which it revealed the company’s first carbon emissions reduction target of between 2-3% by 2021. Based on this recent activity, it appears that investor engagement efforts are working (see CleanTechIQ’s coverage of fossil fuel divestment trends here.)
Robust Cleantech Venture Capital Funding Activity
Overall venture and private equity investment in cleantech for 2018 totaled $9.2 billion, the highest since 2010, according to Bloomberg New Energy Finance. That total was up 127% over 2017. The biggest such deal in 2018 was smart window maker View’s $1.1 billion of expansion capital, followed by a $795 million venture investment in Chinese EV firm Youxia Motors.
Among the notable venture funding deals so far in 2019:
Vancouver-based clean food technology provider Terramera received C$13 million ($9.8 million) in subordinated debt financing from the Business Development Bank of Canada on Feb. 21. The startup works on on plant-based replacements for synthetic chemical pesticides and fertilizers in order to increase agricultural yields. IKEA’s venture capital arm invested in Terramera in 2016.
SensorFlow, an energy management startup based in Singapore, raised $2.7 million in Series A funding on Feb. 20. The round was led by private investor Pierre Lorinet and brought SensorFlow’s total funds raised to date to $3.5 million. The company aims to use Internet of Things technology to allow hotels to monitor, analyze and automate hotel room environments, with a goal of optimizing energy efficiency.
Dutch cleantech startup ViriCiti raised €6.25 million ($7.1 million) in late January in a funding round led by Energy impact Partners and Mainport Innovation Fund II. ViriCiti, founded in 2012, is an online telematics platform for electric and mixed bus fleets.
In December, Montreal-based auto technology company Effenco closed a C$12 million ($9 million) Series A funding round. The round was led by a C$6 million ($4.5 million) investment from BDC; Investissement Quebec also invested.
Major Ongoing Activity in Alternative Proteins
Tyson Foods says it will speed up plans to develop its alternative-protein business line, intending to use a range of ingredients including peas, legumes, mushrooms and even insects. Late last month, the firm said its chief sustainability officer, Justin Whitmore, will also become the head of its alternative protein business. He tells Bloomberg that Tyson will make “significant investments in the space.” The agriculture business needs to evolve to survive, company officials say.
French insect-farming startup Ÿnsect raised $125 million in a Series C funding round in February. Among the investors was Singapore venture capital firm VisVires New Protein. VisVires closed its first fund in June with $40 million, and said in September it plans to launch a second fund, worth up to $100 million, in 2019.
In December, New Crop Capital raised $100 million from investors for its New Protein Fund, which will focus on plant-based protein and “clean meat.” It also named Dao Ventures as its partner in its plans to focus on China’s fast-growing alternative protein market. (See CleanTechIQ’s coverage of this trend here.)
Other New Funds & Fundraising Activity
Montreal-based cleantech venture capital firm Cycle Capital Management said in February it raised $109 million in the initial close of its fourth fund. Commitments included $50 million from Investissement Québec; other LPs included Teralys Capital, Fonds de solidarité FTQ, Fondaction, Suez, Hydro-Québec, Innergex Renewable Energy, the McConnell Foundation, Rio Tinto, Vancity and the Trottier Family Foundation.
The Cycle Capital fund aims to raise up to $250 million and will target energy storage and efficiency, green chemistry, clean transportation and smart city technologies, green internet of things, big data and artificial intelligence, and agricultural technologies.
Meanwhile, in January, Ecofuel Fund, a seed fund affiliated with Cycle Capital that invests in clean tech startups located in Québec and Eastern Canada, said it secured $41 million in a second close. Investors in the fund included BDC Capital, CRIBIQ, Desjardins Capital, Fonds de solidarité FTQ, Fondaction and Investissement Québec.
Oakland-based incubator Powerhouse launched its first fund, Powerhouse Ventures, in January after raising $5.5 million to invest in clean tech startups. Investors include energy strategics Total Energy Ventures and Centrica Innovations as well as individual investors
Green Bonds and Sustainable Financing
The sustainable finance market surged 26% in 2018, with a record $247 billion worth of sustainability-themed debt instruments raised during the year. Green bonds issued totaled $182.2 billion in 2018, while a new product, sustainability-linked loans, reached $36.4 billion, according to Bloomberg New Energy Finance.
Canadian pension fund OPTrust bought $100 million in green bonds issued by the Ontario government earlier this month. The purchase brings OPTrust’s total Canadian green bond holdings to about 1% of total assets under management. Ontario is the largest issuer of Canadian dollar green bonds and uses the money for transit and energy efficiency projects.
Tata Cleantech Capital raised about $25 million from the Netherlands-based development bank FMO via a green bond issuance. Tata Cleantech Capital is a joint venture between Tata Capital and the International Finance Corp., the private sector arm of the World Bank. The money will be used to finance renewable energy projects across India.