RC Climate #2 - Summits, Trends & Deal Flow

Photo by Donald Giannatti on Unsplash

Welcome to issue #2 of The Rally Cap Climate Roll-Up — The RCCR. As a refresher, RC has launched a $5m microfund to back exceptional founders building B2B enterprise climate software globally.

Since our last edition, we missed both Africa’s inaugural Climate Summit and what seems to have been the best NY Climate Week yet — we won’t be making that mistake again in 2024 ;)

QUICK LINKS:

• Previous editions of the newsletter.
• Read about our thesis.
• Join our community.

Cool Companies We’re Talking To (We’re Always Happy To Intro!):

LATAM

• Silica is doing enhanced rock weathering atop Lithos (funded by USV, Greylock and BCV, and already the top provider of credits to Frontier) in Mexico, where the soil and farming ecosystem are ripe for this type of innovation.
• Splight leverages AI to power energy management for large corporate customers across the Americas; like many LatAm-centric tech companies, they have their eyes on expanding heavily into the US.

AFRICA

• Circadian is a team of well-seasoned industry experts selling energy management software into the main telco tower operators and alternative energy providers across the continent. We invested.
• Amini’s CEO is an ex-Nvidia exec building first-layer environmental data, via a constellation of satellites, for large corporate customers across insurance, supply/production chains, etc. We also invested ;)
• Pumpkn is selling a white-label lending tool — data collection, underwriting etc — tailored for banks and agribusinesses, beginning in SA.
• Ox — called “one of the best inventions of 2022” by Time Magazine — is bringing electrification and refrigeration, via custom-built EV 4X4 trucks, to commercial transportation chains across Africa. Very cool trucks, running atop their own fleet and supply chain management software.

News, Trends and Our Take

• CTVC reported that there is $33b of accumulative dry powder earmarked for climatetech.
  — No specifics were provided regarding how much of this capital will target emerging markets, so I pinged the author to see if they have any additional information. Either way, it’s great to continue seeing new funds popping up left and right — I have no doubt that this is quickly becoming the Decade of Climatetech.
• At Africa’s inaugural Climate Summit in Nairobi, which drew 25k attendees, Kenya’s president called on participants to “focus on opportunities, vs dwell on grievances.”
  — According to Kenyan president William Ruto, Africa contains 60% of all global renewable energy potential and almost 33% of the minerals that the electrification industry relies upon, so the opportunity certainly exists. For example, in 2021, PwC estimated that African countries have only tapped 0.01% of a potential 59,000 gigawatts in wind power.
  — That said, as evidenced by the existing major shortfall in both equity and debt climate and energy funding — CTVC reports that Africa accounts for only 2% of energy project investments globally — it’s clear that most investors still find the continent to be too risky. As we’ve already seen, even in the hypey carbon markets space, African offsets frequently are discounted to less than 10% of global norms.
  — Similarly, the waters are a bit muddied by the national security elements deeply enmeshed in this particular goldrush, as Russia and China have long been ahead of the US and Europe in building out the relationships and physical resources to win.
  — As the NYT noted, “600m people in Africa have little or no access to electricity,” so, as always, it will be critical that governments find win-wins, leveraging the demand for these natural resources to sustainably empower their own populations. Clearly, far far easier said than done. But, as James Irungu Mwangi, a Kenyan entrepreneur who helped organize the event, commented in a New York Times article, “The cheapest fossil fuel infrastructure to shut down is the one you haven’t built yet…the cheapest agricultural system to clean up is the one that was regenerative from the start.”
• Techcrunch reported on BFA’s Catalyst Fund first close of their $40m Africa climatetech fund; their vision is to bolster solutions that can build a climate-resilient future in Africa.
  — In their words, “we’ll empower 40 pre-seed startups in sectors like agtech, fishery management, food systems, insurtech, climate fintech, cold chain, waste management, and water management, especially those led by local and women founders.”
• The UAE, host of this year’s UN climate summit, pledged $4.5b toward clean energy investments and $450m for carbon credits.
• 7/10 Latin Americans say climate change is affecting their local economy.
• AC Ventures, focused on climatetech in Southeast Asia, reported that Indonesia — a country with ~275m people and ranking 8th in global GHG emissions — and the United Kingdom have partnered to catalyze the launch of Indonesia’s domestic carbon exchange later this year. You can read more about it here.
• Brazil reinstated a more aggressive climate goal, aiming to reduce domestic emissions by as much as 73m metric tons by 2030.
  — Former President Jair Bolsonaro weakened environmental restrictions throughout his administration, driving deforestation rates to new highs and propelling Brazil to 5th in global emissions — so this is welcome news from his successor Lula.

Asks

• Same as last time!
  — I’m still going deep on water VC in the next couple of weeks — if you have any exceptional founders, investors or otherwise that you think I should talk to, please let me know!
  — We’re always looking out for additional venture partners and micro-LPs to help power our Slack community — please reach out here!
  — If you know any larger institutional LPs interested in gaining exposure to global climate companies, our deck is here.

Previous companies highlighted:

LATAM:

• Solfium (Mexico) — C&I solar financing, working with Pepsi, ABB Inbev, Engie, Scotiabank and Santander and on pace to do more than $5m in revenue this year (one of our first investments)
• AInWater (Chile) — AI-powered software for water treatment plants across LatAm, partnered with the likes of Nestlé.

AFRICA:

• Wyre (Nigeria) — Energy management software, already expanding across the footprints of some of the largest banks in West Africa
• Zimi (South Africa) — Venture-built by our friends at Holocene, Zimi is building out the electric fleet infrastructure for Africa.
• Zeno Moto (Kenya) — ex-Tesla team building ground-up electric motorcycles, for individuals and fleets

MENA:

• Graze It (Saudi Arabia) — Low-carbon/-water data-driven cattle feed, currently partnered with some of the largest regional cattle owners and dairy product companies like Danon