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In a YC ‘power’ play, Gridware girds $5.3M to save humanity from weather
You might have thought that with more than 300 companies joining this year’s winter batch of Y Combinator, the investor interest might have thinned. Well, it’s 2021 and investors are hopping around like crazy to invest in ideas that push the boundaries in fields far-flung from enterprise SaaS.
Case in point today: Gridware. It’s a startup I profiled earlier this year when it had just started up in its YC batch. As I wrote, it wants to save our power grids from the ravages of climate change:
Its approach is to use a small, sensor-laden box that can be installed to a power pole with just four screws. Gridware’s package contains microphones and other sensors to sense the ambient environment around a power pole, and it uses on-board AI/ML processing to listen for anomalies and report them to the relevant managers as appropriate.
Hardware, IoT, infrastructure, utilities and government are five keywords you probably most would have wanted to avoid when pitching investors even a few years ago. But with power disappearing in states like California and Texas for stretches of time, investors have perhaps finally realized there is an opportunity to save the planet and make a bit of money here.
Gridware today announced that it has raised $5.3 million in a seed round led by Priscilla Tyler of True Ventures and Seth Bannon and Shuo Yang of Fifty Years. CEO and co-founder Tim Barat said fundraising was quite fierce. “We had 130 investors reach out to us, and I wasn’t even able to get back to some of them yet … [I’m] still going back through the emails,” he said. “Even before Demo Day, we had raised a significant portion of our round.”
Barat and the Gridware team were looking for investors who were mission-driven and really understood the timeline it would take to build the company. “You see a lot of investors say they are mission-driven … but when it comes time to put their money where their mouth is, it often goes to consumer technology where it is safer,” he said. Tyler at True leads climate investing for the firm, and True has made a variety of bets in the space. Fifty Years focuses on startups tackling the UN’s list of 17 Sustainable Development Goals.
Gridware co-founders Abdulrahman Bin Omar, Tim Barat, and Hall Chen. Image Credits: Gridware
You can read more about the company’s product and market in my profile from three months ago, but with the new funding, Gridware wants to double down on building a very intentional team capable of tackling this tough market. “Dealing with this multi-stakeholder business model is very challenging, so bringing on people with the experience, knowledge and wits to deal with this kind of environment is key,” Barat said.
As I explored recently, the disaster response space is probably one of the toughest markets in the world to sell into. Barat acknowledged the intrinsic difficulty, but sees huge potential in the long run. “One of the things that I have observed with the companies being successful — they really spend the time to meet as many stakeholders as possible,” he said. “With consumer, you can stand in front of a shopping mall and talk to 100 customers in a day [but] in govtech, getting 100 meetings even within a year is a huge accomplishment.”
The company will be re-opening its Bay Area office in Walnut Creek on June 1.
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Noya Labs turns cooling towers into direct air capture devices for CO2 emissions
Not every company’s founders find themselves on a first-name basis with the local bomb squad, but then again not every company is Noya Labs, which wants to turn the roughly 2 million cooling towers at industrial sites and buildings across the U.S. into CO2-sucking weapons in the fight against global climate change.
When the company first started developing prototypes of its devices that attach to water coolers, the company’s founders, Josh Santos and Daniel Cavero, did what all good founders do, they started building in their backyard.
The sight of a 55-gallon oil drum and a yellow refrigeration tank in a sous vide bath attached to red and blue cables didn’t sit so well with the neighbors, so Santos and Cavero found themselves playing host to the bomb squad multiple times, according to the company’s chief executive, Santos.
“We proved that it could capture CO2, and we achieved something that no startup should achieve,” Santos said of the dubious bomb squad distinction.
Santos and Cavero were inspired to begin their experiments with direct air capture by an article describing some research into plants’ declining ability to capture carbon dioxide that Santos read on Caltrain on his way to work back in 2019. That article spurred the would-be entrepreneur and his roommate to get to work on experimenting with carbon chemistry.
Their first product was a consumer air purifier that would pull carbon dioxide from the atmosphere in homes and capture it. Homeowners could then sell the captured gases to Santos and Cavero who would then resell it. But the two quickly realized that the business model wasn’t economical, and went back to the drawing board.
They found their eventual application in industrial cooling towers, which the company’s tech can turn into CO2-capturing devices that have the capacity to take in between half a ton and a ton of carbon dioxide per day.
Noya’s tech works by adding a blend of CO2-absorbing chemicals to the water in the cooling towers. They then add an attachment to the cooling tower that activates what Santos called a regeneration process to convert the captured CO2 back into gas. Once they have captured the CO2 the company will look to resell it to industrial CO2 consumers.
It’s not green yet, at least not exactly, because that CO2 is being recirculated instead of sequestered, but Santos said it’s greener than existing sources of the gas, which come from ammonia and ethanol plants.
Noya Labs co-founders Josh Santos and Daniel Cavero. Image Credit: Noya Labs
“Five years from now we fully intend to have vertically integrated carbon capture and sequestration. Our first step is locally produced low-cost atmospherically captured CO2,” said Santos. “If we were to go all-in on a carbon capture, that would require a lot of time for us to develop. What this initial model allows us to do is fine-tune our capture technology while building up long-term to go to market.”
Santos called it the “Tesla roadster approach” so that the company can build up capital and get revenue and prove one piece of it as an MVP so they can prove other steps of it down the line.
Noya Labs already is developing a pilot plant with the Alexandre Family Farm that should capture between the estimated half a ton and one-ton target.
To develop the initial pilot and build out its team, the company has managed to raise $1.2 million from the frontier tech investment firm Fifty Years, founded by Ela Madej and Seth Bannon, and Chris Sacca’s Lowercarbon Capital (whose mission statement to invest in companies that will buy time to “unf*ck the planet” might be one of the greatest). The company’s also in Y Combinator.
“One of the things that makes us excited about this technology is that in the U.S. alone there are 2 million cooling towers. Looking conservatively — if our initial pilot plant can capture 1 ton per day — we’re at right over half a gigaton of CO2 capture.”
And companies are already raising their hands to pick up the CO2 that Noya would sell on the market. There’s a growing collection of startups that are using CO2 to make products. These companies range from the slightly silly, like Aether Diamonds, which uses CO2 to make… diamonds; to companies like Dimensional Energy or Prometheus Fuels, which make synthetic fuels with CO2, or Opus12, which uses CO2 in its replacements for petrochemicals.
Prices for commercial CO2 range between $125 per ton to $5,000 per ton, according to Santos. And Noya would be producing at less than $100 per ton. Current Direct Air Capture companies sell their CO2 from somewhere between $600 to $700 per ton.
Stoya’s first installation could cost around $250,000, Santos said. For Bannon, that means the company passes his “Mr. Burns test.”
Introducing “the Mr Burns test” for sustainability companies.
Build a product that Mr Burns (the prototypic self-absorbed egoistic greedy capitalist) would buy not because it’s sustainable but because it’s the best / cheapest / most convenient.
That’s the
to impact at scale.
— Seth Bannon
(@sethbannon) January 6, 2020
“We’ve been digging into the DAC space but haven’t liked the techno-economics we’ve seen. Previous approaches have had too much capex and opex and not enough revenue potential,” Bannon wrote in an email. “That’s what Noya has solved. By leveraging existing industrial equipment, their model is profitable. And better yet, they make their carbon capture partners money, allowing them to scale this up fast. This creates an opportunity to profitably remove 1 gigaton-plus a year.”
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Austin-based ReturnSafe raises $3.25 million for its employee health management tools
ReturnSafe, a symptom checking and contact tracing employee health management toolkit for businesses, has raised $3.25 million in financing from investors including Fifty Years and Active Capital.
With companies looking to reopen operations and have their employees return to work safely, management toolkits that track employee health are piling into the market offering all sorts of strategies to maintain a safe work environment.
These include offerings from companies like WorkSafe; or the ProtectWell tool from Microsoft and UnitedHealth; or NSpace, which has similar features and a scheduling tool for booking office space safely.
For its part, ReturnSafe is boasting six-figure monthly recurring revenue and is working with 50 organizations since its launch six months ago.
The pitch to investors and customers is that the need to manage employees and ensure that workspaces are free from health risks is only going to grow in a post-COVID-19 world.
Of course, the best way for employers to ensure the safety and security of their employees is to provide adequate leave and time off if employees are sick, and to ensure that everyone has access to adequate testing at regular intervals should they not be able to work remotely.
Like other companies in the market, ReturnSafe offers a symptoms screener, a testing dashboard, a case management dashboard and a new vaccine management service. In addition to those software tools, ReturnSafe pitches a set of wearable devices with built-in social distancing alarms to ensure that employees maintain safe distances.
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Frontier technologies are moving closer to the center of venture investment
As the technologies that were once considered science fiction become the purview of science, the venture capital firms that were once investing at the industry’s fringes are now finding themselves at the heart of the technology industry.
Investing in the commercialization of technologies like genetic engineering, quantum computing, digital avatars, augmented reality, new human-computer interfaces, machine learning, autonomous vehicles, robots, and space travel that were once considered “frontier” investments are now front-and-center priorities for many venture capital firms and the limited partners that back them.
Earlier this month, Lux Capital raised $1.1 billion across two funds that invest in just these kinds of companies. “[Limited partners] are now more interested in frontier tech than ever before,” said Bilal Zuberi, a partner with the firm.
Lux Capital just closed on a whopping $1 billion in capital, doubling the amount of money it manages
He sees a few factors encouraging limited partners (the investors who provide financing for venture capital funds) to invest in the firms that are financing companies developing technologies that were once considered outside of the mainstream.
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As biological manufacturing moves to the mainstream, Synvitrobio rebrands and raises cash
The pace at which the scientific breakthroughs working to bend the machinery of life to the whims of manufacturing have transformed into real businesses has intensified competition in the biomanufacturing market.
That’s just one reason why Synvitrobio is rebranding as it takes on $2.6 million in new financing to pursue opportunities in biopharmaceutical and biochemical manufacturing. Under its new name, Tierra Biosciences, the company hopes to emphasize its focus on agricultural and biochemical products.
The company is one of several looking to commercialize the field of “cell-free” manufacturing — where biological engineers strip down the cellular building blocks of life to their most basic components to create processes that ideally can be more easily manipulated to produce different kinds of chemicals.
There’s a standard way to create these cell-free processes (described quite nicely in The Economist).
Grab a few quarts of culture with some kind of bacteria, plant or animal cells in it. Then use pressure to force the cells through a valve to break up their membranes and DNA. Give the goo a nice warm environment heated to roughly the average temperature of a human body for about an hour. That activates enzymes that will eat the existing DNA.
Put all of it in a centrifuge to separate out the ribosomes (which are the important bits). Take those ribosomes and give them a mixture of sugars, amino acids, adenosine triphosphate (the molecular compound that breaks down to provide energy for all biological functions) and new DNA with a different set of instructions on what to make and voila! Micro-factories in a test tube.
Along with co-founders Richard Murray of the California Institute of Technology and George Church, one of the living legends of modern genetics, chief executive officer Zachary Sun designed Tierra to be an engine for new biochemical discovery.
“Everything floats in the cytoplasm… We keep that internal stuff and that allows us to run reactions where a cell wall isn’t necessary. I want to reduce the complex system down to its component parts,” says Sun. “We look at this as a data collection problem. We want to use cell-free to tell you what to put either in a cell or in cell-free systems… We can collect more data faster using our cell-free system.”
The startup is already working with the Department of Energy research institution at Oak Ridge National Laboratory to develop processes to create vanillin (vanilla extract) and mevalonate (turpentine) from biomass.
It’s an approach that is already showing the potential for investment returns in life sciences and pharmaceuticals. For inspiration, Tierra can look to the South San Francisco-based Sutro Biopharma.
That company has signed a drug discovery agreement with Merck to develop new immune-modulating therapies (that bring the immune system into check) for cancer and auto-immune disorders, in a deal worth up to $1.6 billion if the company hits certain milestones — in addition to a $60 million upfront payment. Sutro raised more than $85 million in new funding in July (from investors including Merck) and just filed to go public on the Nasdaq.
According to Sun, the newly named Tierra has its own partnerships with global 2,000 companies in the works. “We’re looking to scale those commitments. We see the application space as being this natural products environment,” he says.
There’re multiple avenues to pursue, with the technology widely applicable to everything from pesticides to pharmaceuticals, flavorings and even energy.
Cyclotron Road team photos. 2016. Zachary Sun.
“Synthetic biology at its core is about applying engineering best practices to speed up the ‘design-build-test’ cycles in the reprogramming of existing or construction of new biological systems. By component-izing and modularizing the cell they can radically increase the speed of those cycles,” says Seth Bannon, a co-founder of the venture capital firm Fifty Years, which invests in startups commercializing “frontier” science.
For the investors, entrepreneurs and reporters who witnessed the birth of the cleantech bubble a decade ago and then tracked its implosion in subsequent years, the excitement this kind of technology elicits is another of history’s rhymes.
Technologies like Tierra’s aren’t new. San Diego-based Genomatica has been working on biological manufacturing for the past 18 years. The company is now exploring a cell-free system to grow chemicals that are used in the manufacture of materials like Lycra. Since 2008, Medford, Mass.-based GreenLight Biosciences has been working to bring its own biologically based zero-calorie sugar substitute to market.
What may be different now is the maturity of the technologies that are being commercialized and the perspective of the startups coming to market — who have the benefit of avoiding the missteps made by an earlier generation.
Investors led by Social Capital with participation from Fifty Years, KdT Ventures and angel investors seem to see a difference in these companies. And large research institutions are also marshaling resources to support the vision laid out by Sun, Murray and Church. DARPA, the National Institutes of Health, the Department of Energy, Cyclotron Road and Lawrence Berkeley National Laboratory, the National Science Foundation and the Gates Foundation have all backed the company, as well.
“So many therapeutic molecules come from nature. As the DNA of plants, animals and microbes is read in exponentially increasing volume, we expect to find useful and game-changing chemistry encoded by it. Tierra’s platform will allow us to look for molecules which might otherwise be buried in the complexity of cells’ metabolism,” says Louis Metzger, chief scientific officer of Tierra, who comes from a background of drug discovery.
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