🌎 A (brief) climate tech SPACback

Happy Monday and 2023!

Welcome back! After a bit of downtime, we're starting the new year swimming in SPACs and California cyclone rains. The first, driven by a sudden comeback of climate tech SPACs at the end of 2022, and the latter, just the latest manifestation of see-sawing climate-exacerbated weather extremes.

In deals, climate capital never sleeps! $245m growth round for battery recycling, $200m for energy efficiency services, $44m Series B for electric heat pumps, and $39m Series A for robotics wind turbine maintenance. In news, a sign of relief as EU gas prices restabilize, USPS delivers good news with a PO for 66,000 EVs, and Telsa’s stock price gets lapped by Exxon.

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2022’s brief “SPACback”’

With 2023 hindsight and wisdom, SPACs feel so 2021. Starting from Nikola’s flaming entrance in March 2020, SPACs took the frothy pandemic markets by storm. These blank check vehicles provide companies a quick and easy backdoor into public markets, and were initially popular exit routes for climate tech companies. But as higher interest rates hit an already-tumultuous public market and the SEC tried to wrangle the SPAC wild west, the SPAC market in 2022 took a heavy blow - with a 90%+ decrease in SPAC IPOs compared to the prior year.

Quick SPAC refresher: SPACs list on stock exchanges, raise money from investors, and use the funds to buy a private company. They have a primary backer (“a sponsor”) when they list. Once a SPAC finds an operating business to merge with, it gets far less regulatory scrutiny than a company selling shares through a traditional public listing.

SPACs go bust

*SPACd climate tech companies are down ~70% since the start of 2022 (source:* *Thematic*)

Climate tech companies that went public through a SPAC are down ~70% since the start of 2022, underperforming the NASDAQ index by more than 2X. Of the 69 climate tech companies that have successfully gone public through SPAC, only two - NuScale Power and Dragonfly Energy - are above their initial $10 price (and barely). Meanwhile, previous climate tech SPAC darlings like Chargepoint ($9.01), Stem ($7.56), and QuantumScape ($5.64) are all below the $10 mark.

Others barely saw the light of day in the public markets. Companies including EVBox, Plus, EO Charging, and Convalt Energy terminated their merger agreements, while Electric Last Mile Solutions and Fast Radius both filed for bankruptcy less than a year after they went public.

A brief SPACback?

But at the end of 2022, the climate tech SPAC market saw a curious resurgence - with 17 announced in Q4’22 alone. What could be driving the “SPACback”?

1% Buyback tax: The IRA imposed a new 1% excise tax on stock buybacks, which would impact SPAC sponsors who return cash to investors starting in 2023 - prompting SPACs to do a deal or close up shop before EOY.

Ticking deadlines. SPACs have a 2 year shelf life to find a target, or otherwise return capital to investors. Couple $163B worth of SPAC money raised during the market peak with a ticking tax bomb, and dealmaking was bound to happen.

All SPACs are not made equal. While SPACs may be an easy out for companies unable to further raise capital in the private markets, they can also create a better alternative pathway to market for climate tech companies with inherently longer timelines and higher technical risks. A few 2022 climate tech SPACs of note include Lanzatech, NET Power, and X-Energy. Many other IRA-hot sectors also saw a pickup in SPACtivity including mining, batteries, and hydrogen.

Deals of the Week (12/19-1/8)

Fundings

🔋 Silicon Ranch, a Nashville, TN-based provider of renewable energy and battery storage solutions, raised $375m from Manulife Investment Management, Mountain Group Capital, and TD Asset Management.

♻️ Cirba Solutions, a Wixom, MI-based battery recycling management company, raised $245m in Growth funding from EQT.

⚡Redaptive, a San Francisco, CA-based energy efficiency as a service company, raised $200m in Growth funding from CPP Investments, CBRE Group, and Linse Capital.

⚡Qvantum, a Sweden-based provider of electric heat pumps, raised $44m in Series B funding from DIG Investment, Gullspång Invest, IMAS Foundation, Mats Wahlström, Munters, SEB Venture Capital, and Thomas von Koch.

🌎 Aerones, a San Jose, CA-based company developing robotics for wind turbine maintenance, raised $39m in Series A funding.

☀️ Exeger, a Stockholm, Stockholms Lan, Sweden-based developer of customizable solar cell material, raised $38m in Series B funding from AMF, Neudi & Co, Santhe Dahl Invest, SEB (Skandinaviska Enskilda Banken), and Stena Sessan.

🌍 EnginZyme, a Sweden-based company developing biomanufacturing processes for sustainable manufacturing, raised $22m in Series B funding from Almi Invest GreenTech, Bunge Ventures, Industrifonden, Navigare Ventures, SEB Venture Capital, and Sofinnova Partners.

🌾 Liberation Labs, a New York, NY-based company providing precision fermentation platform for alternative proteins, raised $20m in Seed funding from 8090 Industries, Agronomics, CPT Capital, Echo, Siddhi Capital, and Thia Ventures.

☀️ OpenSolar, an Australia-based solar design and sales platform, raised $15m in Series B funding from Telstra Ventures, 2150, and Titan Grove.

💨 AirCarbon Exchange, a Singapore-based carbon trading exchange, raised $15m funding from Banpu, Mubadala, and TRIREC.

⚡ IEQSY, a Spain-based company optimizing energy efficiency, raised $11m in growth funding from Moira Capital Partners.

Concretene, a UK-based developer of concrete alternatives combining graphene and concrete, raised $10m in Seed funding from LocalGlobe.

🌏 Ecozen, an India-based company providing cold chain and irrigation solutions, raised $10m in Series C funding from Nuveen Investments.

🚗 Automotus, a Los Angeles, CA-based curb management software developer, raised $8m in Seed funding from Bridge Investments, CityRock Venture Partners, Irish Angles, Keiki Capital, Los Angeles Cleantech Incubator, New York Angels, Quake Capital Partners, SUM Ventures Srl, and Unbridled.

⚡Zaphiro Technologies, a Switzerland-based smart grid IoT software platform, raised $7m in Series A funding from ABB Technology Ventures, CDP Venture Capital, Club Delgi Investitori, Excellis, and Technology Fund.

🌏 FairSupply, an Australia-based ESG data provider and consulting company, raised $6m in Series A funding from AirTree, Minderoo Foundation, Queensland Investment Corporation, and Tidal Ventures.

🚗 ElectricPe, an India-based EV charging platform, raised $5m in Seed funding from Anchorage Capital Partners, Blume Ventures, Climate Angels, Green Frontier Capital, Micelio Fund, NB Ventures, and Supermorpheus.

☀️ Samara, a Spain-based residential solar platform, raised $5m in Seed funding from Seaya Ventures and Pelion Green Future.

🍎 Arkeon Biotechnologies, an Austria-based company turning CO2 into food ingredients, raised $4m in Seed funding from aws Gründerfonds (aws Founders Fund), ICL Group, and Tet Ventures.

👚 Beni, a Santa Barbara, CA-based second-hand shopping browsing extension, raised $4m in Seed funding from Buoyant Ventures and Better Ventures.

☀️ Suryanesia, an Indonesia-based residential solar installer, raised $2m in Seed funding from Intudo Ventures.

☀️ Voltiris, a Switzerland-based company developing solar modules for greenhouses, raised $2m in Pre-Seed funding from Business Angels Switzerland (BAS), Foundation for Technological Innovation (FIT), Serpentine Ventures, SICTIC, and Swiss Climate Foundation.

♻️ AlterPacks, a Singapore-based company developing materials from food waste, raised $1m in Pre-Seed funding from Alice Foo, Earth Venture Capital, Plug and Play Asia Pacific, and Seeds Capital.

💨 Arcadia eFuels, a Denmark-based low-carbon synfuels producer, raised Seed funding from Swen Capital Partners.

🚗 Eco-Movement, a Netherlands-based EV charging station data provider, raised Series A funding from Arches Capital, Bridford Group, Dow Jones, and Ponooc.

🔋 Lithos Energy, a San Rafael, CA-based lithium ion battery manufacturer, raised funding from Caterpillar.

Share new fundings with us

Exits

X-Energy Reactor Co., a Rockville, MD-based nuclear reactor company is going public at a $2B valuation via a SPAC Ares Acquisition Corporation.

Noco-Noco, a developer of EV battery technologies, is going public at a $1.3B valuation via SPAC Prime Number Acquisition I Corp.

Sparks Energy, a Danville, AL-based provider of power infrastructure services and restoration, is going public at a $475m valuation via SPAC 10X Capital Venture Acquisition Corp. III.

Rain Enhancement Technologies, an Austin-based rainwater technology developer, is going public at a $200m valuation via SPAC dMY Technology Group, Inc. VI.

ConnectM, Marlborough, MA-based provider of clean energy tech, is going public at a $145m valuation via SPAC Monterey Capital Acquisition.

H2B2 Electrolysis Technologies, a Spain-based developer of green hydrogen production systems, is going public via SPAC RMG Acquisition Corp. III.

Myst AI, a San Francisco, CA-based electricity data analysis platform was acquired by Snowflake, a San Mateo, CA-based data platform.

New Funds

General Atlantic closed $3.5B for its inaugural climate solutions fund, BeyondZetZero.

Linse Capital raised $700m to back industrial technology companies across transportation, energy, logistics and real estate.

Vision Blue Resources, raised $61m for its latest fund, targeting battery and technical materials.

In the News

Natural gas prices in Europe dropped back to pre-war levels thanks to alternative sourcing, high levels of gas in storage, widespread conservation efforts, and a relatively mild winter. Prices are still high for consumers and industry, given some countries either fixed or capped current prices for the next few months.

The Treasury Department broadened the definition for “free trade agreement” EV tax credit mineral sourcing requirements. This will expand applicability and adoption of the credit, and may represent the Treasury’s intent across other IRA technology areas.

Taking action where the Trump Administration chose not to, the EPA tightened national air quality standards for fine particle pollution (PM 2.5) for the first time since 2012. The guidance will most impact sooty spots like smokestacks and tailpipes.

In a positive reversal of prior policy pussyfooting, the US Postal Service commits ~$10b to deploy over 66,000 electric vehicles by 2028. The investment will make the USPS fleet one of the largest electric truck fleets in the nation, and a very visible signal in local neighborhoods.

Climate change never doles out the porridge right… too dry, now too wet as California gets hit by a bomb cyclone and an anticipated 20 trillion gallons of water over this week and next — enough to cover the entire state in half a foot of water. Meanwhile, thousands of warm January weather records were shattered in Europe.

With Musk occupied elsewhere, Tesla’s stock fell 72% over the 12 months since January 2022, giving Exxon the toehold to shoe back into the pole market cap position - a first since 2020.

Norway’s Blastr Green Steel is planning to build a low-carbon steel factory in Finland worth $4.3b, one of the country’s largest industrial projects yet. The factory is set to produce 2.5m tons of green steel annually starting 2026, and will include integrated hydrogen production.

Pop-up

We love a good 2022 round up! Canary Media and BNEF share their most-read charts. Nicole Kelner shares her top art of the year. Andrew Beebe from Obvious predicts that cows are the new coal and Apoorv from Weavegrid, predicts more EV superbowl commercials.

“Climate Quitters” are anything but quiet quitting in their transition to more impactful work on climate. We’ll be hearing more about the >24m by 2030 green jobs creation and transition this year. Or listening to it on podcasts, like this Zero episode from Akshat Rathi.

New York’s 5th Avenue is getting a facelift with more bikes, buses, and pedestrians and fewer lanes of car traffic. There’s hope the redesign inspires changes across the city.

With strict carbon efficiency fines set to click into effect, vessel charterers like Maersk are refusing to play nice - a good illustration of the principal-agent problems between ship owners and charterers.

A new study shows that 13% of childhood asthma is accounted for by living in a home with a gas stove.

Here is your coffee’s carbon footprint. Drink up.

Grist reports, “The world’s insurance bill from natural disasters [in 2022]: $115 billion”

Ford became the second largest EV automaker, announcing record sales of 61,575 electric vehicles sold in 2022 — up 126% — though still well behind Tesla’s lead of 1.31 million.

A new study published in Science found that 50% of the world’s glaciers will melt this century, even if we flatten the curve to 1.5 degrees.

Opportunities & Events:

🗓️ Out in Climate Los Angeles and Bay Area meetups: Join Out in Climate, a group looking to connect LGBTQ+ people in the broader climate space, on Jan 19 in Los Angeles for a joint event with Los Angeles Cleantech Incubator. In SF instead? Join the Jan 21 meet up for a hang at Ocean Beach.

🗓️ Aspen Institute Cutting Edge ESG panel discussion: Register for this virtual panel discussion focused on ESG tokens & digital assets on Jan 27.

💡 The Climate and Energy Prize: Apply by Jan 13 to this startup competition organized by MIT students which empowers ambitious young entrepreneurs to solve the world’s most difficult climate-related challenges. Teams compete for $100,000+ in prize money and have access to mentoring and other resources.