CTC #78 - Climate swept up in VC slowdown

Hey there,

Welcome to another issue of Climate Tech Canada, your weekly roundup of everything going on at the intersection of tech and climate.

In case you missed it, my conversation with Alex Todorovic, CEO and co-founder of carbon management platform Arbor, is out now. We talk about the challenges companies face in decarbonizing their supply chains, the origins of Arbor at the University of Calgary, and how they’re unlocking data for customers across industries.

🎧 Listen on Apple Podcasts, Spotify or wherever you listen to podcasts.

This week in climate tech:

• A look back at climate VC in Q1

• SmartD closes $14.2 M for smart motor controls

• Cities adapt to heavier rainfall

Let’s go!

💰 A slow Q1 for climate amid VC pullback

What happened: Funding for climate tech slowed in the first quarter, with about 38% fewer deals and 50% less capital deployed than the first quarter of 2023. We tracked:

• $172M raised by climate tech companies across 11 deals

• $6.5M median deal size vs $15M last year

• 40% of rounds were Seed stage and just one Series B+ deal (Poseidon Ocean Systems’ $28M Series B)

The largest funding rounds were strategic corporate investments like Glencore’s $75M investment in Li-Cycle.

In context: Venture funding for all tech slowed across Canada in Q1, with total capital deployed down 2.5x compared to 2023. The pullback follows a surge of investing activity in 2020-21 and a recent resurgence investing in AI.

There’s been a notable gap in Series A+ funding as startups either struggle to hit their milestones or delay raising capital until the market is in better shape.

What’s next: While climate tech fared a bit better than the rest of tech, interest rates remain high and investors have higher bars to entry. It could be several quarters until VC activity picks back up.

💰More funding

⚡ SmartD Technologies raised $14.2M in Series A funding for their energy efficient motor controls. SmartD’s technology controls motor speed and torque to improve energy efficiency, productivity, and equipment lifespan.

🥡 Reusables secured a $100K follow on investment from LOI Venture for its reusable packaging solution. Reusables offers containers and smart return bins for the food industry, replacing single-use packaging.

💨 Bison Low Carbon Ventures secured an investment for an undisclosed amount from Mizuho Bank, Japan’s third-largest bank, to develop carbon capture and storage projects.

📈 Milestones & Growth

🌱 Ecoation won the Deep Space Food Challenge for its modular growing system that integrates Maia Farm’s mushroom-based proteins.

🔋 Li-Metal was named a 2024 BNEF Pioneer for its lithium-metal anodes which can be used in next-gen batteries.

📊 Riskthinking.ai will provide climate risk data to Canadian financial institutions to help level up climate risk preparedness.

🚜 Farmers Edge is tracking the carbon intensity impact of climate-friendly agricultural practices with U.S. renewables company.

🚚 Edison Trucks achieved roadworthy certification in B.C. and is now getting ready to produce its hybrid diesel-electric semi truck

💨 Carbon removal and sequestration company Exterra is teaming up with energy company Énergir Développement to develop joint decarbonization solutions.

🗞️ In the news

🏛️ Conflict of interest: B.C. is investigating concerns about conflict of interests in how some CleanBC programs are administered. MNP, a consulting firm that administers two CleanBC programs, allegedly promoted grant writing services for the program over which it has decision-making power. Program applications will still be reviewed by the province, but there’s a risk the program gets bogged down in the fallout.

🌧️ Runoff retrofits: The City of Ottawa is looking at expanding incentives for homeowners to retrofit their properties to be more resilient to heavy rainfall. Features like asphalt driveways or concrete slabs don’t allow rain to be absorbed by the ground, contributing to flooding and runoff into rivers. Toronto is looking at ways to incentivize similar changes to properties.

🗞️ In other news:

• Canada generated 3.9% less electricity in 2023 as drought and heat impacted hydro capacity.

• Ontario and B.C. are expanding the use of mass timber, updating building codes to allow mass timber buildings as tall as 18 storeys.

• B.C. could limit the energy available for crypto miners, citing competition for energy that could otherwise be used to switch off of fossil fuels.

• Alberta experienced another set of rolling brownouts from high demand and unexpected outages.

• Industry groups are pushing back on the cost of Ontario’s extended producer responsibility program. The proposed solution? Watered-down recycling targets and a monopoly on managing the program.

• Walmart Canada launched a reusable bag recycling & reuse program to deal with the excess number of reusable bags people are accumulating.

• Ontario extended its Grid Innovation Fund with $9.5M for projects focused on thermal storage for home heating and managing grid load from EV charging.

• A new report found Canada could store 389 gigatonnes of CO2 in geological carbon storage, 600 times Canada’s total 2021 emissions.

🌎 Zooming Out

A group of older Swiss women won a landmark lawsuit, arguing their rights were violated by climate inaction. The ruling could open similar lawsuits in 46 countries.

The EU adopted methane limits on oil and gas imports, putting pressure on producers to clean up leaks.

The top verifying body for climate commitments is facing internal turmoil after releasing plans to allow carbon credits for the first time.

All eyes are on climate tech IPOs in 2024 to show there’s a path to investor returns.

📣 What’s going on

🗓️ Alberta Energy Efficiency & Innovation Summit: Join this two day summit to explore the latest trends in energy efficiency deployment and innovative technology for buildings. April 23-24th, Calgary.

🗓️ AWS ClimateTech Fireside Chat and Mixer: Join the Vancouver climate tech community to explore emerging trends and opportunities in the space, featuring local investors and entrepreneurs. April 29th, Vancouver.

💡 Battery Industry Acceleration Call: Natural Resources Canada is seeking projects that accelerate decarbonization, security, and competitiveness in Canada’s battery supply chain. Apply by April 29th.

💡 Sustainable Jobs Training Fund: This federal program is seeking projects to help workers upgrade or add skills for the low-carbon economy. Apply by May 15th.

💡 Circular Innovation Fund Acceleration Program: The accelerator helps pre-seed and seed stage companies with high growth potential that are working on circular solutions and looking for strategic partners and investors. Apply by May 29th.

📌 Jobs

Check out the job board for newly posted roles from Canadian climate tech companies like Mammoth Climate, Peak Power, and Blaise Transit.

➡️ Hiring? List your posting here.

Thanks for reading! If you’re enjoying the newsletter, share it with a friend to help support my work.

Justin