The most powerful seed stage climate tech VCs

This article originally appeared in Fortune.

Good morning. Fortune Finance Editor Lee Clifford here.

You may recall Anne Sraders writing recently in Term Sheet about the challenges of investing in climate tech. During the flameout of the clean tech boom in the early 2000s, plenty of investors got burned. Now, VCs are trying to square two ideas that often seem at odds: long throw bets on saving the planet, and the near term pressure to generate returns. As Sraders wrote: It’s a question some VCs like Tess Hatch, a partner focused on deep tech investments at generalist Bessemer Venture Partners, are wrestling with right now. VCs “are feeling good, because we’re investing in impact and good for the world. But as venture investors, we’ve got to make a lot of money really quickly. So is that getting lost in this feeling-good narrative of climate tech?” ‍

As Sraders noted, more than half of the $25 billion invested in the sector between 2006 and 2011 “evaporated.” But as with anything investing-related, where many see peril, there are always those that see huge promise. And a crop of dedicated investors that have doubled down on startups in the sector. Earlier this summer Fortune’s Lucy Brewster dove into the world of seed stage climate tech investing and profiled 13 investors to watch. She worked in partnership with NFX, a seed-stage venture capital firm based in Silicon Valley and the creator of the investor database and network Signal. And she also canvassed investors themselves to see who they are watching and benchmarking themselves against.  

She also found a lot of optimism among this group of investors.

Those who stuck it out say we’re only in the early innings of climate tech innovation—and returns. “I think the whole psyche of particularly the American public really started to shift from being either skeptical or disinterested in any of the climate science to now seeing wildfires, floods, hurricanes becoming more and more personally present, not just in the news, but really affecting many Americans,” said Abe Yokell, investor at Congruent Ventures. “We used to have ‘internet funds’ in the late ’90s, and then everything was an internet fund. I don’t think it’s hyperbolic to say that climate will have a similar impact; everything will have some sort of a climate lens to it,” said Andrew Beebe, investor at Obvious Ventures.

You can read the full story—including all about the 13 investors to watch, their best investments, and how they prefer to be pitched—here.

See you tomorrow,
Joe Abrams curated the deals section of today’s newsletter.

Venture Deals:

• ‍Teamshares, a Brooklyn-based employee ownership platform for small businesses, raised $124 million in Series D funding. QED Investors led the round and was joined by Inspired Capital, Khosla Ventures, Slow Ventures, Spark Capital, and Union Square Ventures. ‍
• Elemental Cognition, a New York City-based generative A.I. company, raised $60 million in Series B funding. Bridgewater Associates, Breyer Capital, AME Cloud Ventures, and Staged Ventures invested in the round, along with others. ‍
• Grip Security, a Tel Aviv, Israel-based SaaS identity risk management provider, raised $41 million in Series B funding. Third Point Ventures led the round and was joined by YL Ventures, Intel Capital, and The Syndicate Group.‍
• Beamer, a San Francisco-based customer engagement platform, raised $20 million in funding. Camber Partners led the round.‍
• Clockworks Analytics, a Boston-based SaaS building analytics provider, raised $16.1 million in funding. Carom Growth Partners led the round and was joined by SE Ventures.
• Lumen Energy, a San Francisco-based clean energy technology provider, raised $11 million in Series A funding. Lowercarbon Capital, Ajax, Designer Fund, Nuveen, and Bridge Investment Group invested in the round.
• Koverly, a Boston-based B2B payments solution provider, raised $7.6 million in seed funding. Accomplice VC, Vinyl Capital, and One Way Ventures invested in the round.‍
• Jellatech, a Raleigh, N.C.-based biotechnology company, raised $3.5 million in seed funding. byFounders led the round and was joined by Milano Investment Partners, Joyful VC, Siddhi Capital, Blustein, and others. ‍
• Wootz.work, an India-based sourcing platform for custom engineering equipment and solutions, raised $3.4 million in seed funding. Matrix Partners India and Nexus Venture Partners led the round and were joined by AdvantEdge and Mars Shot Ventures, along with others.
• ‍Creatively Focused, a Mendota Heights, Minn.-based educator-driven technology company, raised $3 million in seed funding. York IE led the round and was joined by Mairs & Power Venture Capital, Groove Capital, and Gopher Angels.

Private Equity:

• ‍Aretum, a portfolio company of Renovus Capital, acquired Artemis Consulting, a McLean, Va.-based prime contractor. Financial terms were not disclosed. ‍
• Roland Foods, a portfolio company of Vestar Capital Partners, acquired ifiGOURMET, a Gurnee, Ill.-based importer and distributor of high-quality culinary products. Financial terms were not disclosed.
• ‍StenTech, a portfolio company of Align Capital Partners, acquired Photo Etch Technology, a Lowell, Mass.-based SMT stencil and mesh screen manufacturer. Financial terms were not disclosed.
• Watermark Solutions, a portfolio company of Potomac Equity Partners, merged with Synergy Resources, a Central Islip, N.Y.-based software solutions provider. Financial terms were not disclosed.

Other:

• ‍Permian Resources agreed to acquire Earthstone Energy, a Woodlands, Texas-based independent energy company for about $2 billion.
• ‍Intango acquired REIGNN, a Tel Aviv, Israel-based publisher tech and ad tech company, for $10 million.
• ‍Marsh agreed to acquire Honan Insurance Group, a Victoria, Australia-based insurance broker. Financial terms were not disclosed.

IPOs:

• ‍Arm Holdings, a Cambridge, U.K.-based semiconductor manufacturer, filed to go public in the U.S. The company posted $2.7 billion in total revenue for the year ending in March 2023 and reported $524 million in net income. SoftBank owns the company.

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