Much of the interesting climate technology that crosses our desks is theoretical or has just reached the market — think: technology that sucks carbon out of the sky, emerging alternatives to lithium-ion batteries, and bioplastics that have yet to be scaled in earnest. These aren’t the kinds of things ArcTern wants to fund, managing partner Murray McCaig told TechCrunch.
The Toronto-based venture firm has just announced the closing of a $335 million (USD) fund – its third and largest fund to date. ArcTern plans to pump this capital into climate-focused startups that can deliver very quick returns.
“If you’re not making money, you’re not making an impact,” McCaig told TechCrunch. “It might happen in the future at some point,” the venture capitalist admitted, referring to companies like Bill Gates’ Breakthrough Ventures, which are betting on the emerging technology for the long term. but, McCaig said ArcTern aims to “The impact that will happen over the next 10 years, because the next decade is the most important time to reduce global carbon emissions.”
The investor appears to be referring to the Intergovernmental Panel on Climate Change here. Countries must halve greenhouse gas emissions by the end of the decade to limit temperature rise to a global average of 1.5 degrees Celsius, the UN environmental group said. Commitment to this goal may help humanity avoid more catastrophic climate scenarios, but in reality… This warming number should be as low as possible and as quickly as possible.
However, the proverbial Arc Tern drew a line in the sand. The investment firm focuses on startups that use proven technology in new ways, while researchers and investors with a long-term appetite focus on things that may take some time to succeed. Of course, there are many ways to reduce emissions that typically have nothing to do with startup profits, such as reducing air travel and improving public transportation.
On the material side, one of the areas ArcTern is focusing on is decarbonisation Mobility. Although electric car sales have slowed recently, McCaig sees this as just a “small blip.” The VC firm believes North America is on the cusp of reaching a tipping point where EV adoption is taking off like a rocket, As happened in Norway.
ArcTern’s recent transportation bets include Seattle-based battery analysis company Recurrent. Another company is a Los Angeles-based manufacturer of battery-electric commercial vehicles Harbinger Motors. (Of course, not everyone will recognize the same tipping point in a given sector. Take hydrogen passenger cars, for example; are they just a pipe dream, or will we soon see hydrogen fuel stations popping up soon?)
Besides Toronto, ArcTern has teams in San Francisco and Oslo. “Climate technology tends to spread more evenly around the world than artificial intelligence and software, which tend to be concentrated in California,” McCaig added.
Investors in ArcTern’s latest fund include TD Bank and Credit Suisse. The value of the investment company’s second fund amounted to 150 million US dollars, while the total value of its first fund – a seed fund – amounted to 30 million US dollars.