In a year when fewer startups are finding venture capital backing, one area stands out as an exception: climate tech.
So far in 2022, 32 companies working to address climate change based in New England have raised money, up from 30 last year and 24 in 2020, according to data from PitchBook. They’ve raised $1.8 billion in total, less than the $3.7 billion raised in 2021, though last year’s total included $1.8 billion for Commonwealth Fusion Systems, the single-largest VC deal ever in the region.
The largest deals so far in 2022 include $450 million raised by Somerville-based battery maker Form Energy, $375 million raised by BETA Technologies, a Vermont startup developing electric-powered aircraft, and $300 million for battery materials maker Ascend Elements in Westborough (which also raised $480 million in two grants from the US Department of Energy).
Local VC firms and startup spaces such as The Engine, Greentown Labs, and MassVentures have been at the forefront of the climate-tech wave. Boston is also home base for Carmichael Roberts, managing partner of venture firm Material Impact and co-lead of the investment committee at Bill Gates’s Breakthrough Energy Ventures. (Breakthrough and The Engine participated in Form Energy’s deal and last year’s Commonwealth Fusion deal.) And HubSpot cofounder Brian Halligan last month announced a $100 million climate-tech investment fund.
Now, more firms are getting involved.
Boston insurance company MassMutual last week announced a new $100 million fund dedicated to investing in climate technology, the latest addition to its $1 billion venture capital effort.
“Climate change clearly is happening and something that you have to address globally,” said Karl Beinkampen, managing director at MassMutual Ventures, who is leading the new fund. “And it’s going to take a lot of capital, and a lot of innovation, and a lot of effort. And I think there are opportunities to generate tremendous returns on capital, while you’re also doing some very good things for the environment.”
MassMutual’s fund will focus less on capital-intensive areas such as electric vehicles and more on climate technologies for agriculture and industrial applications, he said.
In Cambridge, venture firm Matrix Partners is also looking to get more involved in climate investing.
“A lot of the most interesting founders now want to work on climate things and so it’s a natural extension for us to follow them there,” partner Antonio Rodriguez said in a recent interview. The firm plans both to hire new investors with climate experience and refocus some of its current team, he said. “It’s just such an important thing to focus on,” he said.
Both VCs expect the Boston area will remain a top location for creating climate-tech companies.
“Look at the amount of capital and the amount of talent in this market,” Beinkampen said. “I’m extremely bullish on the Boston market.”