HeatTransformers turns up the dial on heat pumps with new funding

In the Netherlands, central heating boilers will be banned by 2026 and its government has incentivized the installation of heat pumps. Meanwhile, the U.K. government estimates that heating buildings accounts for 25% of the U.K.’s greenhouse gas emissions. It passed the Energy Security Bill, and is aiming to install 600,000 heat pumps a year by 2028. All of this opens up opportunities for companies advising on, fitting and maintaining heat pumps, which is what Netherlands-based HeatTransformers, does. It just a raised €15 million Series A to go heavy on the (proverbial) gas.

“Heat pumps have an unbeatable CO₂ reduction ratio per invested dollars for households,” says Stijn Otten, co-founder and director of HeatTransformers, “This ratio is much higher than with solar for instance. This was already the case back in 2018 when we started, but even more today.”

While heat pumps might not be new technology, the tech isn’t evenly distributed. More than 60% of homes in Norway are heated using heat pumps, for example, while the U.S. sees fewer than 6% so equipped. HeatTransformers seeks to address the traditional challenges of heat pump adoption by connecting heat pump producers and installation specialists with consumers. The HeatTransformers platform takes consumers through the process from the beginning, when they might only be thinking about the benefits of a heat pump, through installation and beyond, with maintenance, online monitoring and the optimization of heat pumps.

This is a model that has attracted global energy companies, heat pump producers and installers as committed partners, including Engie, Bosch, BDR Thermea Group and dozens of local and national installers. Its €15 million Series A funding round was led by Energy Impact Partners (“EIP”), a global investment firm supporting the transition to a sustainable future, with participation from existing investors Fair Capital Partners and InnovationQuarter.

Interestingly, HeatTransformers told TechCrunch that it could have done without the investment but felt that it needed to scale faster in order to address the general state of the global energy market: war in Ukraine, energy poverty and carbon emissions’ climate impact.

“In this process we were looking for truly professional investors who could help us scaling up across multiple markets,” says Otten. “But at the same time, we also wanted investors who share the same impact fundamentals we have. This is what we found in Energy Impact Partners — a leading investment firm in this space with experience scaling companies like us across multiple markets.”

With heat pump sales having risen by almost 38% across Europe last year, which replaced roughly 4 billion cubic meters of natural gas and avoided 8 million tons of CO₂ emissions, HeatTransformers has recognized that right now is the time to be expanding, to meet the growing need for heat pumps not just in the Netherlands, but across Europe.

“This investment will cement our market-leading position in the Netherlands, it will enable us to grow into other markets like Germany and the U.K.,” says Otten. “Fundamentally, it will help us grow and increase our impact.”

For Otten himself, the excitement lies in growing his company and, further into the future, having a lasting impact on global residential heating, as well as climate change.

“I am specifically looking forward to building the teams, further developing the tech-platform and building our partnerships with suppliers, energy companies and installation companies across Europe,” says Otten. “In 10 years’ time, heat pumps will be the common way of heating your home across the entire globe. HeatTransformers will have played a pivotal role in speeding up this transition and [will still be] playing a role in the installation of heat pumps and optimizing the energy systems of households across multiple countries.”

HeatTransformers turns up the dial on heat pumps with new funding by Haje Jan Kamps originally published on TechCrunch

Climate tech tapped the brakes in Q1. Will the slowdown continue?

For the last two years, climate tech was on a tear. To be fair, so were a lot of other sectors. But when a slowdown hit tech investing in the middle of last year, climate tech startups bucked the trend and kept racking up the deals.

Now the party might be over, if preliminary data from a new report holds up.

Climate tech deal-making in the first quarter registered $5.7 billion across 279 deals, according to a new PitchBook report. The amount raised was down 36% year over year with 35% fewer deals. That’s certainly suggestive of a correction.

Investors have been keeping a closer eye on their pocketbooks as fears of a recession continue to rumble through the markets. And yet key economic indicators show a striking resilience in the U.S. economy, with strong hiring keeping unemployment low while consumer sentiment remains high. That hasn’t stopped economists and big names on Wall Street from continuing to predict a recession in the coming months. (Certainly not the first time they’ve done that.)

Still, all that noise tends to give investors the jitters. Since no one wants to be left holding the bag, investor sentiment has a way of becoming a self-fulfilling prophecy. If you’re a startup squeezed for cash, you’ve undoubtedly heard from your investors, and it may feel like a recession is already here.

Yet climate tech’s resilience has led some to call it the ultimate “recession proof” investment. Is that still true?

Maybe.

Some theories

Let’s break it down. For one, these are preliminary figures looking at data through March 31. It’s hard to say how many deals closed in the last few days of the quarter that weren’t picked up by this report. It might be billions!

Climate tech tapped the brakes in Q1. Will the slowdown continue? by Tim De Chant originally published on TechCrunch

Equator secures $40M in commitments for fund targeting climate tech startups in Africa

Africa contributes less than 3% of the world’s energy-related carbon dioxide emissions but the continent will be one of the most impacted by the adverse effects of climate change. Some explanations for Africa’s vulnerability include poor diffusion of technologies and information relevant to supporting adaptation, usually provided by clean or climate tech companies.

Despite the precise role that technologies such as renewable energy, recycling and green transportation play in improving the world’s environmental footprint, raising venture capital has proved chiefly hard for the companies behind them in years past. However, investor appetite has been enhanced in recent times. In 2021, climate tech startups raised over $60 billion, about 14% of VC dollars raised that year; in Africa, clean tech accounted for 15% to 18% (about $863 million) of the total funding that venture capitalists poured into the region last year in companies such as Sun King, making clean tech second only to fintech.

Development finance institutions (DFIs), including the British International Investment (BII), FMO and Norfund, are active investors in the clean tech space, as are clean tech–focused funds such as All On, Ambo Ventures and Catalyst Fund. In the latest development, Equator, a climate tech venture capital firm focused on sub-Saharan Africa, has reached an initial close of its first fund with $40 million in commitments. Its limited partners include BII, the Global Energy Alliance for People and Planet (GEAPP), the Shell Foundation and impact investor DOEN Participaties, according to the company’s statement.

Equator backs seed and Series A startups across energy, agriculture and mobility sectors. On a call with TechCrunch, managing partner Nijhad Jamal said the firm is interested in these sectors because of numerous untapped market opportunities. He also noted that deploying capital at seed and Series A stages allow Equator to act as a bridge between startups’ earliest checks (at the pre-seed stage) and growth capital, which could come from its limited partners.

“The challenge for many of those larger funds and international investors is that they tend to come in when things have already been de-risked and proven out. At the seed and Series A stage, there is a shortage of capital and institutional investors supporting companies at that stage of their life cycle and journey,” commented Jamal. “The hope is that by investing at these stages, we can mobilize capital at Series B and growth equity stages from large regional funds, global climate tech funds, and corporations excited about the sector and region.”

Jamal, before joining Equator, had several stints with asset manager BlackRock and impact investment Acumen Fund, where he managed the firm’s clean tech group. At Moja Capital, a personal fund he founded, Jamal made seed and Series A investments across several sectors, including those central to Equator’s strategy: clean energy, agriculture and mobility. SunCulture, a Kenya-based off-grid solar tech for smallholder farmers, was one of Jamal’s investments. Equator made a follow-on investment in SunCulture and other startups backed by the firm’s operators, including Morgan DeFoort, partner at Equator and founder of Factor[e] Ventures; Apollo Agriculture; Odyssey Energy Solutions; and Roam.

According to Jamal, Equator wants to back tech-enabled ventures that bring some element of technology, whether hardware or software or business model innovation, to bear in a region where innovation might be lacking. As such, the fund will pay attention to technical founders with domain expertise who are building solutions around clean energy, agriculture and mobility, and who ultimately address the impact of climate change on income inequality in Africa.

“Climate change and income inequality are proven to be directly correlated. Data shows that the gap between the economic output of the world’s richest and poorest countries is 25% larger today than it would have been without global warming,” Jamal remarked. “So climate change has worsened global income inequality and we’re seeing that very acutely in sub-Saharan Africa. And the ventures and innovation that we’re investing in is a material component to addressing some of these challenges.”

Equator, hoping to make up to 15 investments throughout this fund’s life cycle, says it participates in round sizes of $10 million or less, which is typical for pre-Series B clean tech startups in sub-Saharan Africa. For seed stages, the clean tech VC invests between $1 million and $2 million; for Series A stages, it cut checks between $2 million and $4 million. The firm, which has teams in Nairobi, Lagos, London and Colorado, will also leverage support from Factor[e] Ventures, an organization of venture builders and pre-seed investors. While both companies operate independently, Equator and Factor[e] collaborate on sourcing deals and undertaking due diligence, and they share a post-investment support platform to provide value to portfolio companies as they scale.

“The reality is that capital alone is only part of the problem. Ventures also need highly active and engaged investors to help them reach the growth stage of their trajectory,” added DeFoort.

In all, Equator will be expecting to leverage the current shift in the global narrative about climate tech’s importance and its impact on climate change. The investments coming into the sector, despite lagging fintech by a mile, are progressively being funneled into reducing the cost of technologies such as solar systems and batteries while enabling better access for individuals and businesses with pay-as-you-go models. Jamal says these trends could make the sector more investable and, in many ways, more exciting. “We’re optimistic about the role that we have to play in this ecosystem. I hope this is the first of many funds that continue to follow in these footsteps because more capital, talent and innovation are needed to develop more holistic solutions to the challenges in the climate space.”

Equator secures $40M in commitments for fund targeting climate tech startups in Africa by Tage Kene-Okafor originally published on TechCrunch

Gen Phoenix’s upcycled leather woos luxury brand investors

The materials developer formerly known as ELeather has a new name and $18 million in fresh growth funding from some of the world’s fanciest brands.

Now going by Generation Phoenix, the upcycler says its new investors include Coach parent Tapestry, Jaguar Land Rover (via InMotion Ventures) and Dr. Martens, plus lead investor Material Impact and prior investor Hermès.

The 15-year-old firm is based in Peterborough, U.K., and has worked with brands such as Nike and Delta. The upcycler intends to use the new cash to expand “into the luxury fashion and footwear categories,” Gen Phoenix said in a statement. The company claims it has diverted more than 8,000 tons of leather waste from landfills to date.

“Imagine what can happen when waste is no longer wasted,” Gen Phoenix says in an aspirational message on its new website. The upcycler tells TechCrunch that its “feedstock comes directly from tanneries where about 1/3 of a leather hide is typically discarded.” Turning the leather waste into a usable, leather-like product involves shredding and “entangling” it “around a high-performance core using nothing but high pressure water,” the firm said.

Gen Phoenix’s “recycled leather” is not entirely made of recycled materials. A spokesperson for the company tells TechCrunch that its products feature “up to 86% recycled content,” including recycled leather and recycled plastic. Still, the firm’s final product also contains virgin plastic.

Without sharing a specific deadline, a spokesperson for Gen Phoenix said the company aims to “reduce and eliminate virgin materials from their products completely.”

The upcycler is also “commercialising a bio-based coating system and bio-based substitutions for any synthetic materials used in the process,” the spokesperson added. Hopefully, we’ll soon see Gen Phoenix kick virgin materials altogether.

Zooming out: Gen Phoenix’s inclusion of plastics is hardly unusual, even for “sustainable” brands. Fossil fuel–based materials permeate the fashion business. Polyester? Nylon? Elastane? All plastic.

Even the rise of recycled plastic fabrics warrants deep skepticism; the resulting synthetic clothing is rarely recycled, and the microplastics they shed go basically everywhere, including the ocean, mountaintops, the insides of sea critters and even our own bodies. Addressing the industry’s climate and broader environmental toll demands rethinking everything, from how we dye fabrics to killing “fast fashion” altogether.

Gen Phoenix’s upcycled leather woos luxury brand investors by Harri Weber originally published on TechCrunch

Sustainability at Disrupt

TechCrunch Disrupt 2023 will have a whole new look this fall with one aim in mind: bring together investors, founders and technologists who have specific industry interests — all under one roof at the Moscone Center in San Francisco.

Disrupt has always been big. But this year we’re folding TC Sessions, the standalone industry events that are traditionally held throughout the year, into the big annual tech event.

Disrupt will have six industry tracks, each with its own stage, including AI, fintech, hardware, SaaS, security and sustainability. Yup, sustainability, a category that will combine transportation, climate tech, smart cities and renewables.

What the heck is sustainable tech, anyway? In our experience, it’s a moving target. The term is arguably many things: aspirational, a misnomer, a buzzword and a catch-all for products and services that are less environmentally destructive than doing business as normal.

To us, the goal of sustainable tech is simply to do less harm to the planet (thus sustaining something close to life as we know it). Yet, how to achieve that goal — without resting on piecemeal tweaks and greenwashing — is a rich and messy topic worth probing.

That is what we aim to do on the Sustainability Stage — discuss material ways to mitigate the damage we’re doing, while interrogating bullshit and distractions along the way.

The stakes have never been higher. As the Intergovernmental Panel on Climate Change said with the release of its sixth major assessment, “keeping warming to 1.5°C above pre-industrial levels requires deep, rapid and sustained greenhouse gas emissions reductions in all sectors.” The tech industry must do its part by drawing down scope 1, 2 and 3 emissions, cleaning up its pollutive supply chains and accelerating the transition to renewables.

Disrupt in particular is all about startups. The specific areas we’re eager to dig into this year via panels and fireside chats include: fixing the broken U.S. power grid, examining how cities will adapt to more frequent extreme weather events, mitigating fast fashion’s environmental toll and rethinking some of the world’s most-loved beverages.

Book your early-bird pass today and save $800 to the startup event of the year. Prices go up May 12.

Sustainability at Disrupt by Kirsten Korosec originally published on TechCrunch

Irrigreen’s precision sprinklers prevent water waste and wet legs

Investors just pumped millions into Irrigreen, a startup vying to quench America’s thirsty lawns with “approximately 50% less water.”

Seed investor Ulu led the $15 million funding round. Two tech investors that are focused on water conservation — Burnt Island and Echo River — also chipped in, among a handful of others.

The San Francisco–based sprinkler startup says it maps lawns to drizzle water precisely where lawn-havers want it, without clumsily soaking walkways and passersby.

Irrigreen’s system tasks users with tracing the contours of their yard, and identifying obstacles, such as footpaths and driveways. The tech sounds somewhat like Roomba’s Keep-Out Zones, yet these sprinklers are stationary; instead of wandering the lawn, the startup says its sprinkler heads adjust the stream to send water where you want it.

Americans are thirsty mfs: The typical family uses around 320 gallons per day, “about 30 percent of which is devoted to outdoor uses,” the EPA says. Water is already scarce, and droughts exacerbated by climate change make water conservation all the more critical. There are lots of ways to conserve water, and outdoor options include planting native ground cover and installing custom irrigation systems.

In other words, internet-connected sprinklers like Irrigreen’s are not the only way to save water. Still, founder Shane Dyer tells TechCrunch that the startup’s system is cheaper than traditional options “for larger yards (those with 7 or more zones).”

Dyer added, “Our hardware costs more, but the labor to install is 1/3 of a traditional system since there is 80% less heads and trenching and piping.” Regardless, if tech is what gets you jazzed about saving water, then by all means give it a go.

TechCrunch has not tested Irrigreen’s sprinklers. The startup pointed us to a Fresno State study it commissioned, which found that its sprinkler heads used around 40% less water by avoiding “overwatering, overspray, and application rate inaccuracy.” Dyer told TechCrunch that Irrigreen also factors in weather, soil, plant types, and shade to “calculate the minimum water needed for healthy plants.” The startup says these additional factors deliver around 50% water and cost savings in all.

Dyer declined to share Irrigreen’s valuation but said the new cash will go toward “developing next generation sprinkler software, creating next generation cloud watering intelligence, and smartphone app control and reporting features.”

Among the coming software updates, Dyer said Irrigreen will be able to adjust the amount of water it sends to different sections of plants via a single sprinkler head. This could come in handy if, for example, you plopped some thirsty flowers beside some drought-tolerant shrubs.

Irrigreen’s precision sprinklers prevent water waste and wet legs by Harri Weber originally published on TechCrunch

Rawr? Green Li-ion recharges with $20.5M to scale its recycling tech

Green Li-ion says its battery recycling machines are the “size of a small house,” so it’s no wonder the Singapore-based startup needed to top up on funds. It’d only raised about $15 million ahead of its latest cash infusion.

This week, Green Li-ion announced a $20.5 million “pre-Series B” round led by climate-tech investor TRIREC. The startup said other investors, including SOSV and Equinor Ventures (the VC arm of the Norway-owned fossil fuel giant), also chipped in.

The deal boosts Green Li-ion’s post-money valuation to $187 million after just three years, chief executive Leon Farrant told TechCrunch. The startup’s logo is (you guessed it!) a green lion.

The new cash will help the startup scale production of its recycling tech, which the firm says can process “100% of all used lithium batteries” and pop out precursor cathode active material that’ll eventually go into fresh lithium-ion batteries.

Lithium is in high demand and mining the metal wreaks havoc on the environment, making recycling tech a crucial tool in lowering the footprint of things like electric cars and storage for renewable energy.

Green Li-ion doesn’t recycle batteries itself; it licenses its tech to battery makers and recyclers, including Aleon and TES (which is owned by SK, the South Korea-based fossil fuel giant). Green Li-ion aims to crank out 50 recycling units per year via two factories — one in Houston, Texas and another in Singapore.

As for that “pre-Series B,” Farrant said the startup has split its Series B into two parts, which encompasses the raise announced this week and another in about nine months. “Due to our relatively low levels of fund raising to date,” the founder added, the startup “needed to draw a line in the sand and establish a valuation increase for the larger portion of the raise.”

Rawr? Green Li-ion recharges with $20.5M to scale its recycling tech by Harri Weber originally published on TechCrunch

Elemental aims to pump $43M into climate startups with ‘deep community impact’

Elemental Excelerator, a nonprofit investor in climate-tech startups including BlocPower and ChargerHelp, says it’s “doubling down” in the wake of Silicon Valley Bank‘s collapse.

Elemental intends to pump $43 million more into climate-tech startups — $13 million of which will be set aside for its twelfth accelerator program, beginning in October. The investor hasn’t secured all of the money yet; it is “in the process of raising the funds,” a spokesperson told TechCrunch.

In a nod to both the VC slowdown and the run on SVB, Elemental said it intends for the cash to “fill funding gaps” and “accelerate climate solutions with deep community impact.” Climate tech evaded the funding drought of 2022, but the fall of SVB seems to have rattled the sector, given the bank’s longtime work with climate tech startups. 

Elemental’s interests are about as broad as climate tech itself — spanning electric vehicles, energy storage, recycling tech, cement decarbonization, seaweed cultivation and composting.

The firm’s funding target represents a step up from prior years. In 2022, it put up $8 million for 17 climate startups, offering them between $300,000 and $600,000 apiece. This time around, Elemental wants to pump between $350,000 and $1 million into up to 20 ventures.

As for the remaining $30 million, Elemental chief executive Dawn Lippert told TechCrunch that the nonprofit will “invest an additional $30 million in catalytic project funding for three to six scale-up projects.” The firm said the startup-run projects must show they’ll have “deep impact,” which it defines as “demonstrable” greenhouse gas cuts and “significant positive community impact.” 

Elemental takes equity in exchange for its investments. Lippert told TechCrunch that the nonprofit “invests any upside from these investments into supporting future entrepreneurs.” The non-profit says it has raised $57M to date.

Corrected on March 20 to reflect that Elemental has raised a total of $57M to date.

Elemental aims to pump $43M into climate startups with ‘deep community impact’ by Harri Weber originally published on TechCrunch

The Climate Choice wants to make supply chain emissions more visible and more green

The World Economic Forum says that so-called “Scope 3 emissions,” — or CO₂ in supply chains — can make up as much as 90% of a company’s carbon footprint, and worldwide more than half of all emissions can be traced back to only a handful of supply chains. Tracking and reducing these emissions are easier said than done; and if you can’t track it, you can’t improve it. Berlin-based startup The Climate Choice closed a $2 million round to help companies cut a chunk of their carbon out of that part of their emissions, too.

“In 2014 I experienced the problem firsthand when I attempted to reduce the climate impact of my first company, Resmio, by sourcing products from climate-friendly suppliers. The task proved impossible for someone who was not a climate expert,” explains The Climate Choice CEO and co-founder, Yasha Tarani. “Following the sale of Resmio, I took a sabbatical and witnessed the catastrophic effects of climate change firsthand. In Delhi I arrived to 122-degree temperatures with people sleeping on the streets, in Thailand my hut was lost to floods and in New Zealand I saw the glow of bushfires on the horizon. I decided then to dedicate my life’s work to reversing the degradation of our planet.”

Tarani combined forces with co-founder Lara Obst, who had built what she refers to as the EU’s leading climate innovation program. Together, they decided to focus on decarbonizing corporate supply chains, along with a third partner — data scientist Dr. Rey Farhan, who had most recently been working on data-heavy products for the financial industry.

The $2 million equity financing round was led by Gutter Capital.

“We believe the world is at a turning point. Starting in 2024, approximately 49,000 companies will be required to disclose Scope 3 emissions data in compliance with the EU Corporate Sustainability Reporting Directive. We believe that The Climate Choice is positioned to be the partner of choice to help these companies rise to the moment,” explains Tarani. “We have already seen the success of our platform with our customers in simplifying data collection and collaboration with suppliers, and we are excited to empower companies around the world to make climate-relevant procurement decisions.”

The company has built a platform that helps companies understand the emissions of their suppliers, acquire audit-ready data and take actions to decarbonize the supply chain. The product is currently in use by several early customers, including O2 Telefonica and HiPP. The company says it is actively monitoring thousands of suppliers.

“Our mission is to empower every company to be a climate champion. We believe that now more than ever that mission is in reach. Today about half of European companies have a climate transition plan in place, but less than 5% of those companies show the readiness required to achieve those plans. We believe that TCC will fundamentally change this,” says Tarani. “Ten years from now our platform will automate supplier engagement for the world’s largest companies, and all companies will have access to real-time supplier data to empower informed decision making.”

The company is adamant that it isn’t a carbon accounting platform, but something different altogether.

“Traditional carbon accounting practices rely on averages and assumptions to calculate supplier emissions. This approach is helpful to infer a rough carbon footprint and understand hotspots, but because every supplier within a category looks the same, it is useless for actually making choices to decarbonize,” Tarani explains. “TCC starts where the carbon accounting typically ends. Our platform automates supplier outreach and generates real primary data profiles on supplier emissions and practices. Supplier profiles are shared openly within our network, so that work is not duplicated across firms. Armed with comprehensive supplier data, companies can compare suppliers, and make informed procurement decisions to decarbonize their supply chain.”

The Climate Choice wants to make supply chain emissions more visible and more green by Haje Jan Kamps originally published on TechCrunch

Banyan wants to unlock financing for a (more) sustainable future

When it comes to sustainable infrastructure development, technology is making terrific leaps and bounds. The money to make it happen, however? That leaves a thing or two to be desired. For one thing, the processes remain largely manual, with financing in this sector remaining reliant on emails, spreadsheets and documents in a variety of formats. Streamlined, and indeed sustainable, it ain’t. With its $25 million Series B funding — which takes its total funding to over $42 million — Banyan Infrastructure is seeking to align sustainable project finance with the technology it is meant to support and develop.

Old-school systems probably didn’t quite do it for old-school oil and gas investments, but they damn sure don’t cut it for newer, greener, more sustainable technologies. These are usually smaller deals — typical commercial and industrial deals are between $1 million and $5 million —  where financing comes from more distributed sources, which means that the time required to coordinate them and perform due diligence is sizable. 

For Banyan, these inefficiencies in communication and monitoring are pain points it wants to solve with its purpose-built project finance software. With it, banks, financiers and developers should be able to automate and track complex project finance transactions with a unified risk and data management system. It estimates that it can save up to 1,000 hours for every loan processed.

Farewell tedious and time-consuming manual systems, good morning digitized loans and workflows in addition to automating data ingestion, risk monitoring and contractual compliance for each loan. This, Banyan hopes, will enable its customers to rapidly grow their sustainable infrastructure portfolio and help to close the estimated $3.5 trillion per year investment gap in renewable infrastructure that is required in order to meet our net zero targets by 2050.

“Because standardization is lacking for sustainable technology, risk-averse investors are hesitant to move quickly in this relatively new industry,” Will Greene, Banyan Infrastructure’s co-founder and CEO said in an interview with TechCrunch. “Our software focuses on reducing transaction costs and increasing transparency to create previously unseen speed and scale of project finance.” 

Banyan believes that right now is the moment to push forward with its software, following the introduction of the Inflation Reduction Act (IRA) in the USA. This injection of $369 billion of government money is aimed at supporting and developing clean energy technology, manufacturing and innovation. There’s not just more money coming into the sector, but there’s more attention being paid to it, too. Being able to track, monitor and complete deals with greater efficiency means that these funds can go further, faster. The theory is that it will make investment in sustainable infrastructure a more attractive proposition, too.

“The fresh commitment of $369 billion from the IRA is fantastic, but we believe we won’t be able to deploy it without technology to multiply human capacity,” Greene said. “We’re looking forward to building out new features to unlock the IRA and other opportunities that our customers need to act on.” 

The $25 million funding round was led by climate software investor Energize Ventures. It was joined by new investors SE Ventures and Elemental Excelerator, and existing investors VoLo Earth and Ulu Ventures. Furthermore, Banyan announced that Juan Muldoon, partner at Energize, has joined its board of directors.

Banyan has two focal points for its new funds: people and product. When it comes to people, Banyan is looking to double its headcount over the next year, with particular emphasis on its product, success and go-to-market teams. With an eye on international expansion, Banyan is keen to transition from product-led growth to sales-led growth.

“We’re also growing our product to build best practice new regulatory requirements,” says Greene, “including offering a robust product offering that can support our customers in unlocking the benefits of policies like the IRA, as well as support new and emerging technologies, like carbon capture, hydrogen, batteries and more.”

Greene and his co-founder Amanda Li came together to found Banyan Infrastructure recognizing the skills they each brought to better finance infrastructures that can have an impact on climate change.

“Our combined unique backgrounds were exactly what was needed when starting Banyan Infrastructure: with Amanda bringing on-the-ground project finance experience, and myself bringing technical know-how of building enterprise SaaS companies at varying scales,” says Greene. “This company is deeply important to us both as we believe the biggest lever you can pull in changing the trajectory of climate change is investing in renewable infrastructure, and project finance is the underpinning industry and mechanism behind the funnel of investment from financiers to projects.”

For Greene, Banyan is about moving project finance from Web 1.0 to Web 3.0 and speeding up the rate at which capital can be deployed in sustainable industries. It’s about at least meeting, and ideally exceeding, climate goals by using technology to remove funding bottlenecks.

“In 10 years, I would love to look back and know that the world has significantly more deployed renewable energy and other sustainable infrastructure projects because of what Banyan has enabled, Greene concluded.” 

Banyan wants to unlock financing for a (more) sustainable future by Haje Jan Kamps originally published on TechCrunch

Energy X secures $20M at $120M valuation to slash building sector emissions

Countries worldwide have pledged to reduce their energy usage and reach net-zero energy targets by 2050. To get there, they will need to find clever ways to decarbonize especially dirty businesses, including the buildings sector. The push to clean up the built environment has spawned a lot of policy, as well as overlapping acronyms, including net-zero energy buildings (nZEBs) and zero-emission buildings (ZEBs).

In the EU, a ZEB requirement is expected to start in January 2030 for all new buildings. Likewise, the U.S. Department of Energy said it will retrofit new federal buildings that are greater than 5,000 square feet by 2030. South Korea is also taking measures to reduce emissions in the building sector by retrofitting buildings and strengthening ZEB requirements for new buildings through 2030. 

Buildings are a major source of air, water and noise pollution. The built environment’s whole process — including materials manufacturing, construction, heating and electricity, maintenance and demolition, drives an estimated 40% of greenhouse gas emissions globally. The steep environmental cost and looming deadlines inspired Energy X, a Seoul-based startup and marketplace that “enables the construction of zero-energy buildings,” from architectural design to completion of construction.

Energy X was founded in 2019 by co-CEOs Sean Park and Tom Hong. That’s when the duo pivoted from their first startup — a sustainable architecture crowdfunding platform, called Xquare.

The outfit already works with a host of clients, including large conglomerates that want to retrofit their buildings in South Korea, like Hyundai, Naver and Lotte, Park told TechCrunch. Energy X’s users include building owners, construction companies and architects.  

Since its inception in 2019, the startup says it has sealed 573 deals, which it estimates are worth 1.6 trillion won ($1.3 billion) in terms of the construction cost for sustainable architecture — like zero-energy buildings and LEED-certified (Leadership in Energy and Environmental Design) buildings. Some projects are still ongoing, and others have already been completed, Park said. 

There are lots of other construction marketplaces on the scene. Procore, a construction tech unicorn, went public in 2021, and Aconex, an Australia-based construction platform, was acquired by Oracle for $1.2 billion in 2017. In energy-efficiency tech, Energy X’s peers include Enpal, which raised a $174 million Series C at a valuation of $1.1 billion in 2021, and Uplight, which received undisclosed funding at a $1.5 billion valuation in 2021, Park mentioned.   

Beyond hosting a marketplace to develop energy-efficient buildings, Energy X says it’s working on solar and energy-saving tech, including BIPV (building integrated photovoltaics) for energy production, HVAC (heating, ventilation and air conditioning) for energy conservation and BEMS (building energy management systems) for energy management, Park explained. More than half of Energy X’s employees focus on energy technologies for the R&D team, Park added. 

“Most building owners are not experts in building management, and they don’t know how to use it because building energy management systems (BEMS) are software-based,” Park said. In addition to the marketplace, “Energy X provides cloud-based BEMS where our AI manages, maintains and optimizes the system at all times without always having to monitor, manage or control directly,” said Park.

The Seoul-headquartered startup secured $20.3 million in Series B financing at a valuation of $120 million, Park told TechCrunch. 

The new round, led by Shinhan Financial Group, brings the startup’s total funding to approximately $31.5 million. The funds will help Energy X expand its marketplace and energy efficiency tech, grow its team from 86 to 200 employees this year and launch in Japan, Park said. The startup will open an office in Japan in February, Park added.

Note: We’ve updated the story to reflect that Energy X plans to grow its team to 200 employees this year.

Energy X secures $20M at $120M valuation to slash building sector emissions by Kate Park originally published on TechCrunch

Fifth Wall, focused on real estate tech and managing $3.2B, looks to eat up even more of its market

Brendan Wallace’s ambition is beginning to seem almost limitless. The LA-based venture firm that Wallace and co-founder Brad Greiwe launched less than seven years ago already has $3.2 billion in assets under management. But that firm, Fifth Wall, which argues there are massive financial returns at the intersection of real estate and tech, isn’t worried about digesting that capital. Its heavy-hitting investors — CBRE, Starwood and Arbor Realty Trust among them — don’t seem concerned, either.

Never mind that just last month, Fifth Wall closed the largest-ever venture fund focused on real estate tech startups with $866 million in capital, or that it closed a $500 million fund earlier in 2022 that aims to decarbonize the property industry. Never mind that on top of these two efforts, Fifth Wall also expanded into Europe last February with a London office and a €140 million fund. (It also has a large New York office, an office in Singapore and a presence in Madrid.) As for the fact that office buildings in particular have been shocked by a combination of layoffs, work-from-home policies and higher interest rates, Wallace says he considers it an opportunity.

Never mind because Wallace already sees many more opportunities he wants to pursue, including in Asia, as well as around infrastructure, such as the buying and building of “utility-scale solar and micro grids and wind farms” that Fifth Wall wants to both invest in and help finance with debt.

It’s a lot to take on, particularly for a now 80-person outfit whose biggest exits today include the home-flipping outfit OpenDoor, the property insurance company Hippo Insurance, and SmartRent, which sells smart home technology to apartment building owners and developers.

None have been spared by public market shareholders. Still, talking to Wallace and the picture he paints of the world, it’s easy to see why investors keep throwing money at his team to invest on their behalf.

We spoke with him earlier today in a chat that has been edited for length.

TC: How is it that your many real estate investing partners are investing so much capital with you when it’s such a challenging time for real estate, particularly office buildings?

BW: It’s the same thesis we were founded on, which is you have the two largest industries in the U.S., which is real estate, which is 13% of U.S. GDP, and tech, and they’re colliding, and it represents a huge explosion of economic value [as] we’ve seen in this kind of super cycle of proptech companies that has grown up.

Now this additional layer has been unearthed around climate tech. The biggest opportunity in climate tech is actually the built environment. Real estate accounts for 40% of CO₂ emissions, and yet the venture climate tech venture capital ecosystem only has historically put about 6% of climate VC dollars toward tech for the real estate industry.

How do you designate which vehicle — your flagship proptech fund or your climate fund — funds a particular startup?

How we define proptech is tech that is usable by the real estate construction or hospitality industry, so it needs to be tech that’s immediately usable by them — which can be a lot of different things. It can be leasing, asset management software, fintech, mortgages, operating systems, keyless entry — but it doesn’t necessarily have the effect of decarbonizing the real estate industry. It can be a derivative benefit, but it’s not the core focus. The core focus is simply that you have this industry that has been so slow and late to adopt technology that’s now starting to do so, and as it does, it’s creating all this value. We’ve already had six portfolio companies go public and we’re a six-year-old firm.

[As just one example], do you know how many multifamily units today have a smart device inside them? One percent of all multifamily units in the United States have a single smart device — any smart device: a light switch, shade, access control. There is a massive transition going on right now, where every single thing inside a building is going to become smart. And we’re at the dawn of that right now.

I do believe, though, that the opportunity in climate tech is a multiple of that simply because the cost required to decarbonize the real estate industry is so vast. The cost to decarbonize the U.S. commercial real estate industry is estimated to be $18 trillion. That is just the U.S. commercial real estate industry. To put that in perspective, the U.S. GDP is like $22 trillion to $23 trillion, and we have to decarbonize the real estate industry over the next 20 years, so one way to think about that is that we have to roughly spend one year of U.S. GDP over the next 20 just on decarbonizing our physical assets.

Where are the major spending areas on which you’re focused?

I’ll give you one very concrete example, which is literally concrete. If concrete were a country, it would be the third largest CO₂ emitter on planet Earth after the U.S. and China. Fully 7.5% of global CO₂ emissions come from making concrete. It’s the most used material on planet Earth after water. So you have this raw material that’s an input for all of our infrastructure — all of our cities, all the homes we inhabit, all the buildings where we do business — and that is generating 7.5% of global CO₂ emissions. And so the race is on right now to identify an opportunity to make carbon neutral or carbon negative cement. We actually invested in a company called Brimstone alongside Bill Gates and Jeff Bezos because they also see this opportunity that this is one of the major spend categories where that $18 trillion that’s required to decarbonize real estate is going to go. Then you can go further down [list], from glass, steel, cross-laminated timber — just all of the materials that are used in making buildings.

More immediately, and this is more a question about repurposing space, but what do you think becomes of underused office space in this country over the next 18 to 24 months? It’s particularly extreme in San Francisco, I realize, given its population of tech workers who haven’t returned to the office.

I wouldn’t draw too much of a conclusion from San Francisco alone. I think San Francisco has probably been the hardest hit city. I don’t think San Francisco is the canary in the coal mine for the rest of the U.S. office industry. But with that said, I think we’re now in a moment where the pendulum has swung obviously very far in the direction of hybrid work and companies downsizing their physical footprints, but you’re already starting to see that these things are circular and cyclical and that some employees actually want to go back to the office, while CEOs are saying, ‘It’s hard to mentor and build culture and drive the kind of operational efficiencies we once had in an office in an entirely remote environment.’ So my sense is that we’re probably two to three years out from another pendulum swing back toward companies retrenching themselves in a physical office. I think we’re in an artificially low ebb in sentiment and demand for office.

How are you helping your LPs to get through this ebb?

The major change in the last two years has been the focus of the real estate industry on decarbonizing. It is a seismic shift in the industry. Owners are looking for anything and everything that can reduce the operational and embodied carbon footprint of a building. So this is, of course, smart building technology and industrial IoT, battery storage on premise and EV charging and micro grids, where every owner is effectively looking to turn their asset into a miniaturized power plant. It’s the electrification of the physical infrastructure of buildings themselves. But then right alongside that, it’s renewable energies, it’s battery technologies, it’s materials technology, it’s construction workflow and process efficiency technology, it’s modular construction. The demand for tech that can reduce the carbon footprint of buildings — is it’s like night and day versus when we spoke last.

Fifth Wall, focused on real estate tech and managing $3.2B, looks to eat up even more of its market by Connie Loizos originally published on TechCrunch

Energy transition investments hit $1.1 trillion — with a T — last year

Here comes the hockey stick.

After years of bumbling along, investment in the energy transition appears to be taking off. Businesses, financial institutions, governments and end users around the world sunk $1.11 trillion into low-carbon technologies, according to a new report from BloombergNEF. It was just over 30% more than 2021 and the second year in a row in which the growth rate exceeded that figure.

Perhaps more notable is the fact that for the first time ever, money put into the energy transition matched funds spent on fossil fuel investments. If you count the $274 billion spent on improving the electrical grid, then energy transition investments shot well past the fossil fuel fossils, hitting $1.38 trillion.

Over the last two decades, most low-carbon investments were targeted at renewables, including wind, solar and biofuels. They hit another record last year with $495 billion invested, up 17% from 2021. But in recent years, money has also been flowing into more diversified sectors, including energy storage, space heating, sustainable materials and electrified transport.

Last year was no exception. Investments into electrified transport — think EVs and charging networks — grew a whopping 54% in 2022 to $466 billion. Hydrogen, which is often uttered in the same breath as battery-electric vehicles, contributed $1.1 billion toward the trillion-dollar total. While that figure may seem small, it’s triple the amount the sector received in 2021. Overall, investment was balanced between supply (energy production and storage) and demand (energy users like transportation, heat and sustainable materials).

Most of the money has come from China. The country accounted for about half the total, $546 billion. The U.S. was second with $141 billion, and Germany was third with $55 billion. If the entire EU is lumped together, the bloc would have taken second place with $180 billion.

In particular, China dominates in areas like manufacturing capacity and supply chain development. Last year it spent heavily on electrified transportation and renewables like solar and wind. Given that combination, it’s possible that we’ll see Chinese solar panels flood the market once more, though this time they’ll be accompanied by cheap batteries. Inexpensive solar paired with cheap batteries is what’ll be needed to kick significant amounts of fossil energy from the grid.

If there was a dim spot, it was global equity and private investment in climate tech. Those numbers were down 29% to $119 billion. That should come as no surprise; 2021 was a crazy year for venture capital and private equity.

Energy transition investments hit $1.1 trillion — with a T — last year by Tim De Chant originally published on TechCrunch