Climate

At One Ventures’ $375M new fund shows climate tech is still hot

Comment

Wind turbine spins at sunrise.
Image Credits: Witthaya Prasongsin / Getty Images

It’s 7:30 in the morning, and Tom Chi is in a philosophical mood. Maybe it’s because he was once an astrophysicist, a profession prone to thinking expansively. Maybe it’s because his mother is a Buddhist. Or maybe it’s because his three-year-old venture capital firm just raised $375 million.

“Sometimes I say that I typically think in only two time frames: right around now — like now, the next two weeks — and 1,000 years from now. It’s actually not that uncommon for me to wake up and try to understand the dynamics of something. The 1,000-year perspective is interesting because a lot of things are unstable in a way that they couldn’t last 1,000 years,” Chi told me.

“The idea that everything is impermanent is just part of the way I see everything.”

When I mention that most venture capitalists tend to think five to 10 years out, a relative middle ground compared with two weeks and 1,000 years, he counters: “A person that is comfortable with impermanence is actually in a pretty good spot for venture capital.”

He’s certainly not wrong about that. Venture capital has had its ups and downs, and climate tech has had a few, too. It first rose as clean tech in the mid-2000s before collapsing and slogging through a wintery 2010s before. Five years ago, it hit its stride once more.

Chi’s firm, At One Ventures, where he’s co-founder and general partner, is emblematic of climate tech’s most recent incarnation. He filed the firm’s initial paperwork with the SEC on December 23, 2019, mere months before COVID upended the global economy and sent people into lockdown where they rethought their lives and, in some cases, founded climate tech companies. It also didn’t hurt that venture dollars were flowing at record levels up through 2021.

At One rode the two waves, investing in 27 companies, Chi said, and deploying just over half the capital in its $150 million initial fund, according to PitchBook data. Its bets span the gamut of climate tech, from practical startups — like renewable microgrid developer Okra Solar and battery recycler Ascend Elements — to the slightly zany, like de-extinction biotech Colossal Laboratories.

But Chi said that the first fund was just a prelude. The firm’s founding partners felt that $150 million was a reasonable target to get off the ground, he said, but that the team felt more comfortable operating funds in the $250 million to $350 million range. “I have a really good sense of what that portfolio theory is like and how to operate something like that.”

At One had targeted $250 million to $300 million for the second fund but ended up raising $375 million. Chi said investors were attracted to the firm’s focus on startups with strong revenue potential in the first fund. Only 20% of the portfolio companies had any revenue when At One invested, but “now 85% of fund one is in revenue,” Chi said.

A focus on revenue is just one part of At One’s approach. The firm judges startups on three fronts that it calls “the triad”: Does it work on deep tech that’s sufficiently disruptive? Are the unit economics “radically better” than the incumbents? And does it make a significant dent in an environmental problem?

Unit economics are something that clearly captures Chi’s imagination. “If you can find unit economics that are that good, and you’ve hired the kind of team that can get that over the manufacturing journey, then you are able to get into a supply limited state,” he said. “Which sounds terrible because, aren’t you leaving money on the table? No, supply limit is amazing because it means that you can grow the revenue in the business as quickly as you can address the supply side issue. And addressing supply side issues is only a debt level risk.”

Chi said At One also has a ranking system to determine which sectors to focus on. “Nature is air, water, soil and biodiversity. Within each of those four categories, we have stack-ranked the industries that are doing the most damage. So for example, within water pollution, the four biggest water polluters are agriculture, textiles, paper and pulp, and oil and gas. If all you did was deal with those four, you could deal with 93% of global water pollution. If you want to deal with the last 7%, it’s 1,000 more industries.”

The firm also pointed out that 40% of its portfolio company founders are part of groups traditionally underrepresented in the startup world, including women and people of color. That certainly outstrips industry norms — women received less than 2% of funding last year and Black founders just 1% — but it also highlights just how dismal things are when having “only” 60% white male founders is notable. Perhaps this new fund will make even more progress on that front.

It’ll certainly have ample assets to deploy when searching for those founders. The fact that At One Ventures was able to raise a new fund that’s 2.5x larger than its first one doesn’t just suggest that LPs are happy with the firm’s performance to date; they’re also extremely bullish on climate tech in general. Other firms have had similar success this year.

Part of that is due to climate tech’s track record in recent years. After a rocky start in the 2000s and early 2010s, the industry got religion and realized that the green premium wasn’t the lever that would upend the economy. Instead, companies had to work within global markets as they were. Yes, some policy tweaks and subsidies helped along the way, but climate tech’s relentless focus on unit economics — mostly in wind, solar and, more recently, EVs — helped show that climate-friendly technologies could be better and cheaper, too.

At One has found that thread and is working to apply it to venture investing. In the past, the timelines were too long to work for traditional venture capital, with returns extending well past the usual five to 10 years.

But the world has changed since then, and it appears LPs are starting to catch up. Perhaps they’re more patient with their capital. Perhaps they’re worried about the state of the world. Perhaps they’re starting to see the enormous opportunity ahead of them. Probably it’s a mix of all three. Whatever the case, we’ll need more of them if we’re to avoid the worst of the climate crisis, but at least the trends are heading in the right direction.

More TechCrunch

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment copies BeReal and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

5 hours ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

7 hours ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities

For Mark Zuckerberg’s 40th birthday, his wife got him a photoshoot. Zuckerberg gives the camera a sly smile as he sits amid a carefully crafted re-creation of his childhood bedroom.…

Mark Zuckerberg’s makeover: Midlife crisis or carefully crafted rebrand?

Strava announced a slew of features, including AI to weed out leaderboard cheats, a new ‘family’ subscription plan, dark mode and more.

Strava taps AI to weed out leaderboard cheats, unveils ‘family’ plan, dark mode and more

We all fall down sometimes. Astronauts are no exception. You need to be in peak physical condition for space travel, but bulky space suits and lower gravity levels can be…

Astronauts fall over. Robotic limbs can help them back up.

Microsoft will launch its custom Cobalt 100 chips to customers as a public preview at its Build conference next week, TechCrunch has learned. In an analyst briefing ahead of Build,…

Microsoft’s custom Cobalt chips will come to Azure next week

What a wild week for transportation news! It was a smorgasbord of news that seemed to touch every sector and theme in transportation.

Tesla keeps cutting jobs and the feds probe Waymo

Sony Music Group has sent letters to more than 700 tech companies and music streaming services to warn them not to use its music to train AI without explicit permission.…

Sony Music warns tech companies over ‘unauthorized’ use of its content to train AI

Winston Chi, Butter’s founder and CEO, told TechCrunch that “most parties, including our investors and us, are making money” from the exit.

GrubMarket buys Butter to give its food distribution tech an AI boost

The investor lawsuit is related to Bolt securing a $30 million personal loan to Ryan Breslow, which was later defaulted on.

Bolt founder Ryan Breslow wants to settle an investor lawsuit by returning $37 million worth of shares

Meta, the parent company of Facebook, launched an enterprise version of the prominent social network in 2015. It always seemed like a stretch for a company built on a consumer…

With the end of Workplace, it’s fair to wonder if Meta was ever serious about the enterprise

X, formerly Twitter, turned TweetDeck into X Pro and pushed it behind a paywall. But there is a new column-based social media tool in town, and it’s from Instagram Threads.…

Meta Threads is testing pinned columns on the web, similar to the old TweetDeck

As part of 2024’s Accessibility Awareness Day, Google is showing off some updates to Android that should be useful to folks with mobility or vision impairments. Project Gameface allows gamers…

Google expands hands-free and eyes-free interfaces on Android

A hacker listed the data allegedly breached from Samco on a known cybercrime forum.

Hacker claims theft of India’s Samco account data