Over a decade ago, a cadre of energy companies ascended on the startup scene in Boston and elsewhere, aiming to make cleaner power more practical while heading off the emerging climate crisis. But in their quest to think big, many failed, falling prey to unworkable technology, cheap natural gas, or lower-cost competition from China.
Now, a new generation of innovators in Massachusetts has emerged, aiming their moonshot ideas at a climate crisis that has only gotten worse and made their task all the more urgent.
This growing community of companies focused on energy and materials is sparking a boom in the Commonwealth, with the state accounting for 7 percent of all venture capital funding in climate tech worldwide, a Globe analysis of PitchBook data shows. The mix of firms includes those with big money from the investment world’s most notable names, and many smaller startups still finding their way.
“It’s unbelievable,” said Carmichael Roberts, business lead at the Bill Gates-founded firm Breakthrough Energy Ventures. In the past four years, he said, investments in Boston’s climate-tech companies have poured in from many places, including hedge funds, philanthropies, family foundations, and institutional investors.
“I’ve never seen anything like this,” he added.
Still, no matter how much money flows in, scaling up such innovations globally and seeing them succeed is a challenge. The collapse of high-fliers such as Solyndra and Evergreen Solar in 2011 remains fresh in people’s memories. The local wreckage also included the bankruptcy of Waltham battery maker A123 Systems and the shutdown of Bedford biofuels firm Joule Unlimited.
It leaves climate experts, business leaders, and the city’s technology community wondering: Can Massachusetts companies and investors help solve the climate crisis?
“That’s our purpose,” said Katie Rae, chief executive of The Engine, the venture firm spun out of MIT. “We are here to back those super ambitious companies that are taking a big swing.”
Driving around the Boston area nowadays, the boom in climate tech is evident.
In the heart of MIT, Commonwealth Fusion Systems is trying to make nuclear fusion — a once-panned approach that involves forcing atoms together to release huge amounts of energy — into a viable solution. In early September, the startup took an important step toward that decades-old vision, successfully testing the world’s most powerful superconducting magnet, opening the possibility that fusion energy power centers could be operational by the early 2030s.
It would be a game-changing advance, experts said, that could generate a steady supply of electricity for the world without emitting greenhouse gases or leaving much radioactive waste. The company has raised $264 million in funding, making it one of the biggest bets in the sector.
Two miles north, in Somerville, engineers at Form Energy have built a low-cost, industrial-grade battery — about the size of a washing machine — that can dispense large amounts of power using iron, a common earth element. The multi-day batteries would solve a crucial problem in renewable energy: how to cheaply store and distribute energy over multiple days to power grids when the sun doesn’t shine and the wind doesn’t blow. The efforts have led to $240 million in venture capital funding, giving the company a value of $1.2 billion, according to PitchBook.
And peppered across the region, early-stage companies such as Boston Metal and Sublime are trying to put a dent in global warming with very different approaches. Each is trying to decarbonize the production process of raw materials such as steel and concrete — a notorious source of pollution.
“We’re not afraid of the hard problems,” Emily Reichert, the chief executive of clean-tech incubator Greentown Labs, said at the Globe Summit last month.
That attitude has helped keep promising startups in town.
Nearly five years ago, over burritos at a Chipotle in Kendall Square, Shreya Dave and her cofounder Brent Keller debated where to locate their new company. Via Separations was working on a manufacturing process for chemicals that produces fewer greenhouse gas emissions. The scientists had done their PhDs at MIT but were thinking about leaving town.
Berkeley was at the top of the list. But Dave felt everyone in California “was talking software,” not hard sciences. Chicago was close to much of their potential customer base, but not a place where Dave felt “a fire was going to be lit under our butts — to make us achieve.”
They decided Boston was the right place. The city’s pipeline of technical talent was unmatched. Investors were interested in big solutions to global problems. The ecosystem of professors and startups encouraged — and expected — scientists to dream big.
“I have absolutely no doubt staying in Boston was the right choice,” Dave said. “We found our community.”
And that community is attracting unprecedented amounts of capital. In 2021, roughly $1 billion of the world’s $14.2 billion in venture capital dollars for climate technology has gone to companies headquartered in Massachusetts, PitchBook data shows, up from $864 million in 2020. It represents a 15-fold increase from the $66.7 million that flowed to the state’s climate-tech companies in 2015.
Investors are also getting more creative. Dan Goldman, managing director of Clean Energy Ventures, said his firm uses a new measuring stick for potential investments: Can a company reduce greenhouse gas emissions by at least 2.5 gigatons from now until 2050? (That is equivalent to the emissions from roughly 540 million cars in one year, according to the Environmental Protection Agency.)
“We’ve always looked at technologies that could have an impact on greenhouse gas emissions,” he said, “but only over the last four or five years have we said, ‘Let’s have a specific quantitative analysis of that.’ ”
Climate executives also said the industry has benefited from Boston’s most thriving sector: biotech. Similar to clean energy, biotech companies are solving big problems using science, but often woo investors well before they can prove their ideas will ever work. That has conditioned investors to bet on riskier ventures.
Bob Mumgaard, the chief executive of Commonwealth Fusion Systems, recalled walking into a Boston VC firm’s offices two years ago, warning them his nuclear fusion company would take time and money before it was market ready. The investors were unfazed, he said.
“They said something along the lines of, ‘It takes billions of dollars to take a drug to market, and this is a drug for the climate,’ ” he recalled.
Others point to legislation such as the Green Communities Act passed in 2008, obligating the state to adopt clean energy solutions and helping spur innovation in the sector. The Massachusetts Clean Energy Center, a state-funded economic development agency, has invested $26 million in 53 companies statewide, the agency said. And Greentown Labs and MIT’s The Engine help startups morph their technical concepts into businesses with guidance from top executives.
“These are really hard things to do,” Rae said. “You need the brains, the universities that have the long-term thinking, and then the founders and the capital to make it go.”
And in spite of the innovation boom, much more needs to be done to address the climate crisis.
Massachusetts energy expert Phil Giudice, who served as President Biden’s special assistant for climate policy, cautioned that globally scaling up even successful startups and ideas is difficult.
The climate community must “change this mindset of, ‘Let’s just innovate our way’ ” to a solution by 2050, he said. “That’s not the nature of our energy challenge.” Federal and state lawmakers must require carbon emitters to swap out old, climate-polluting technology and adopt cheaper, cleaner technology, he said.
For its part, Commonwealth Fusion Systems said the hardest part of its technical journey — proving that its magnet works — is over. But building an experimental reactor in Devens will take time.
“Climate is certainly an urgent problem,” Mumgaard said, “but not a problem that you’re going to suddenly solve in three years.”