Patagonia goes all ‘purpose’ #118

Happy Monday!

In this week’s issue, we click into Patagonia’s purpose trust for Earth as sole shareholder.

While we’re all for Team Earth, the Patagonia keep-private is a case study in how belief capitalism melds with tax structure to push decisions once shared by the government and public stakeholders towards private benevolence.

In fundings this week, EV charging for medium and heavy duty transport raises $1B, NY based indoor farming raises a $310m Series E, and an Indian electric two-wheeler company raises $82m. In capital allocators, Prime Movers raises $500m for an early growth fund, and EIP raises $390m for a European fund.

In the news, PepsiCo and ADM aim to inset 1.4m metric tons of GHG, China’s former ‘rust belt’ has $87b to expand clean energy production, and the EU proposes a 33% windfall tax on energy producers to offset red-hot energy prices.

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‘Earth is now our only shareholder.’

Patagonia is going “purpose” instead of public. Yvon Chouinard - the Philosopher King himself - is transferring his $3B clothing retailer to a pair of trusts dedicated to protecting Patagonia’s values and the planet.

Here’s how the new ownership structure works:

All the voting stock (2% of total) is transferred to Patagonia Purpose Trust, a specially designed trust overseen by the family to protect the company’s values
The remaining nonvoting stock (98% of total) is donated to Holdfast Collective, a nonprofit that will use the company’s ~$100m of annual profit to fight the climate crisis

In Chouinard’s letter, he notes the lack of available options for company exits that align more with everlasting climate goals than short-term shareholder targets. Selling the company and donating the profits might create a nice one-time cash flow benefit for climate, but put Patagonia’s long-term environmental values at risk. Meanwhile, taking the company public drives further pressure to prioritize financial shareholder gain above all else.

Instead, Patagonia’s “purpose” model sets a new precedent that toes the line between climate and capitalism. In a spate of not-so-subtle irony, the retailer best known for VC-friendly vests and jackets is foregoing shareholder profit for environmental gain.

To Patagonia’s credit, this restructuring not only increases their amount of capital to directly impact climate work (vs. re-distributed as taxes), it also cements their market positioning in a way that will likely generate further profit in their service of the planet. Along the way, it portends a new model for ESG where companies eschew public governance (and government tribute) to focus all-in on social beliefs true to their bottom line.

Team Earth true believer customers (like yours truly) will likely be more loyal post-restructure. This new ownership model may actually result in greater profit for environmental causes. "Great companies are loved and respected for their values and commitments to their communities in addition to what they make, not for the creation of shareholder wealth. [Patagonia and Chic-Fil-A alike] stand for something that people understand. Our most loved companies are already purpose-led organizations." - Charles Conn, Fortune
Purpose companies already exist… just look to B-Corps. "For 50 years there has been an impassioned debate about the appropriate aims and responsibilities of companies… The question now is not whether but how far the pendulum has shifted towards responsibility and purpose.” - Charles Conn, Fortune
The question for the future is should “purpose” companies be regulated any differently? Do private business owners get to determine “impact”? “Had Chouinard sold the company, he would have paid taxes on its increase in value, and thus he would have had less to give to the group he now controls” - Timothy Carney, Washington Examiner

The bar has been set for what it means to be a climate-driven company - now we’ll see if other climate founders will follow suit.

Deals of the Week (9/12-9/18)

🚗 TeraWatt Infrastructure, a San Francisco, CA-based EV charging company focusing on medium and heavy-duty transportation, raised $1B in Series A funding from Vision Ridge Capital Partners, Keyframe Capital Partners, and Cyrus Capital Partners.

🌿 Gotham Greens, a Brooklyn, NY-based indoor farming company, raised $310m in Series E funding from BMO Capital Markets, Ares Management, Silverman Group, Rock Creek, Manna Tree, Kimco Realty, and Common Fund.

🛵 Yulu, a India-based platform renting out electric two-wheelers, raised $82m in Series B funding from Magna International and Bajaj Auto Finance.

🌿 Planted, a Switzerland-based alternative protein company, raised $73m in Series B funding from L Catterton, Vorwerk Ventures, TEV Ventures, Movendo Capital, Gullspang Re:food, ETH Zurich Foundation, BE8 Ventures, and Ace & Company.

☀️ PearlX, a Charlottesville, VA-based solar installation rental platform, raised $70m in Series B funding from Lombard Odier.

💨 Patch, a San Francisco, CA-based provider of a carbon credit API and marketplace, raised $55m in Series B funding from Energize Ventures, B Capital Group, AENU, Blue Impact, GIC, MCJ Collective, Coatue Management, Version One Ventures and Andreessen Horowitz.

🌎 Ethic, a New York, NY-based sustainable investing fintech platform, raised $50m in Series C funding from Jordan Park, Urban Innovation Fund, UBS, SOund Ventures, Oak HC, Nyca Partners, and Kapor capital

🔋 Ascend Elements, a Westborough, MA-based lithium-ion battery recycling company, raised $50m from SK Ecoplant.

🚗 Quantron, a German-based manufacturer of clean battery and hydrogen-fueled vehicles, raised $50m in Series A funding from Neuman & Esser, and Ballard Power Systems.

🥩 Prolific Machines, a San Francisco, CA-based cultivated meat startup, raised $42m in Series A funding from Breakthrough Energy Ventures.

🏭 Kojo, a San Francisco, CA-based materials management platform, raised $39m in Series C funding from Battery Ventures, Schneider Electric, RXR Realty, Bienville Capital, 8VC, Suffolk Construction, Human Capital, AME Cloud Ventures, Nine Four Ventures, and BoxGroup.

🔋 Iontra, a Denver CO-based battery performance and safety company, raised $38m in Series B funding from Volta Energy Technologies, and Flag Group.

💧 ZwitterCo, a Woburn, MA-based company developing membrane technology to treat wastewater, raised $33m in Series A funding from DCVC, R-Cubed Capital Partners, Mott Corporation, MANN + HUMMEL, Heritage Group, Genova Ventures, and Burnt Island Ventures.

🚗 Monta, a Denmark-based EV charging company, raised $30m in Series A funding from Energize Ventures, Pale Blue Dot, Headline, Creandum, AENU, and byFounders.

🌱 Aqua-Yield, a Draper, UT-based sustainable fertilizer company raised $23m in Series A funding from Larry H. Miller Management Corporation, JH Partners, and Penny Newman Grain.

🚗 Applied EV, an Australia-based company developing autonomous driving software for EVs, raised $21m in funding from Suzuki Motor Corporation.

🍔 Next Level Burger, a Bend, OR-based plant-based burger chain, raised $20m in funding from numerous private investors.

⛏️ Ideon Technologies, a Canada-based company developing subsurface imaging solutions for mining, raised $16m in Series A funding from Playground Global.

☀️ SunRoof, a Sweden-based solar energy manufacturer, raised $15m in funding from Alantra, SMOK Ventures, Level2 Ventures, Jon Olsson, Inovo Venture Partners, and Alfabeat.

🧀 Standing Ovation, a France-based developer of animal-free cheese, raised $12m in Series A funding from Astanor Ventures, Peakbridge, Seventure Partners, Big Idea Ventures and Good Startup.

🔋 Leoparda Electric, a Brazil-based electric motorcycles and batteries company, raised $8.5m from Monashees, Construct Capital, Claure Capital, Auteco, K50 Ventures, and Climate Capital.

🌱 BetterSeeds, a Israel-based company utilizing gene editing to create resilient crops, raised $7m in Seed funding from JITO Angel Network.

💨 Transaera, a Somerville, MA-based company manufacturing energy-efficient air conditioning systems, raised $4.5m in Seed funding from Energy Impact Partners, Carrier Ventures, Saint Gobain, and MassCEC.

🍃 Lleaf, an Australia-based developer of luminescent technology for greenhouses, raised $3.5m in funding from Alfa Ventures, 2 degrees, Cicada Innovations, and the University of New South Wales.

🌲 Arbonics, an Estonia-based platform utilizing data to calculate the carbon intake of forests, raised $1.8m in Pre-seed funding from Plural Platform.

💨 NeoCarbon, a Germany-based carbon capture startup developing retrofitting cooling towers, raised $1.25m in Pre-seed funding from PropTech1, Speedinvest, and Antler.

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Exits & New Funds:

Prime Movers Lab raised $500m for an early growth fund focused on companies in the energy, transportation, infrastructure, manufacturing, human augmentation, and agriculture sectors.

Energy Impact Partners launched its $390m European fund, aimed to invest in companies developing tools to achieve a net-zero carbon economy.

Enverus, an Austin, TX-based energy SaaS platform, acquired RatedPower, a Spain-based renewable energy development software platform.

In the News

In a prime example of insetting, PepsiCo and agriculture giant Archer Daniels Midland will implement regenerative ag practices on 2M acres by 2030, at up to 1.4m metric tons of GHG reduction potential. (Quick refresh on the importance of insetting here).

Meanwhile indoors, Plenty is investing $300m to build the world’s largest indoor vertical farm on 120 acres in Virginia.

One of the largest electrolyzer purchases to date, Topsoe and First Ammonia signed an agreement for 500 MW of solid oxide electrolyzer cells (SOEC) to produce green ammonia at scale, with the potential to expand up to 5 GW over the agreement.

China’s former “rust belt” is investing a whopping $87B to construct 60 GW of nuclear, offshore wind, pumped hydro, and virtual power plants - enough combined generation to power all of Thailand. Also hitting the EV gas, the Chinese Zeekr EV brand will be the first to reach 600 miles of range, ~2x that of US competitors.

Meta, REsurety, Broad Reach Power and others launched the Energy Storage Solutions Consortium, complete with an open-source, Verra-verifiable methodology to quantify the emissions benefits of grid-connected energy storage projects.
A new climate cop is in town. The U.S. Office of the Comptroller of Currency hired Yue Chen as Chief Climate Risk Officer to assess climate-driven risks to banks.

As part of Europe’s ongoing energy crisis, the EU expects to raise €140B from a 33% windfall tax on energy firms’ surplus profits to help households and industries cope with red-hot energy bills. European lawmakers also voted to phase out wood-energy subsidies, recognizing their contribution to deforestation.

Pop-up

A pot of gold at the end of the rainbow? Wind might just be “Ireland’s oil.”

Is it ok to take a law-firm job defending climate villains? The NYT’s asked, and Robinson Meyer gives a definitive no.

Karl the Fog may be in trouble if temperatures continue to rise.

Space-based solar could be the answer to Europe’s energy woes.

Microsoft’s former sustainability officer Lucas Joppa on his new gig - cleaning up private equity.

The Merge is a success, but the stranded mining rigs are not. (Missed our headline last week?)

Heat Pumps, Hooray! Finally, an easy-to-understand guide for how to install heat pumps in your home.

Running on CO2. On partners with Lanzatech to make running shoes from carbon emissions.

♫ Chestnuts…growing in an old coal mine ♫. The American favorite is being grown in closed coal mines across the country, restoring damaged land.

The NYT daily breaks down the promise and peril of deep sea mining for metals (written form here).

Opportunities & Events:

Need help navigating Climate Week this week? Come join us in NYC!

📜 CDR & Hardtech during NY Climate Week: An additional helpful list of CDR gatherings and events during Climate Week.

🗓️ The Health + Wealth of Our Planet: Join Sophie and Kim at City Winery on Sept 20 for this event in the midst of UN Week and Climate Week in New York. The event will be joined by leaders from businesses in a wide range of industries, the nonprofit sector, investing and government. CTVC community members can use this link to register for $100 off tickets.

🗓️ Unlocking Carbon Removal & VCM Entrepreneurs: Join a panel event on Sept 20 focused on the findings from a new voluntary carbon markets policy paper published by the Carbon Business Council and co-authored by leadership at Nori, Project Vesta, and others.

🗓️ HolonIQ’s Global Impact Summit: Join Sophie and Kim on Sept 22 for HolonIQ’s climate track featuring CTVC favorites like Carbon Direct, Aether Diamonds, BlocPower, among many more. CTVC readers can use the promo code “CTVCVIP” for complimentary tickets - but hurry, free tickets are reserved for the first 100 registrants!

🗓️ Watershed's Climate Week Forum: Join this free virtual event on Sept 22 focused on climate action in the private sector. Speakers include: Lisa Jackson, Apple's powerhouse climate leader, climate policy expert Leah Stokes, sustainability leaders from Stripe, Okta, Doordash, Everlane, and more.

🗓️ Sustainability in Travel Tech Summit: Register for this event taking place in San Francisco on Sept 28 for a day full of panels and fireside chats discussing sustainability in travel.

💡 AirMiners Launchpad: Apply by Sept 30 to the AirMiners Launchpad six week program for early stage carbon removal startups.

💡 Elemental Excelerator's Innovation Challenges: Apply by Oct 4 to one (or more!) of three challenges with up to $2.5M in total funding available for pilot projects.