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Zip acquisition of Payflex means Africa is ripe for BNPL disruption

By Tage Kene-Okafor

Australian buy now, pay later (BNPL) company Zip this week acquired South Africa-based BNPL player Payflex for an undisclosed amount.

It’s a piece of news that once again highlights the hype around BNPL services and the quest for global dominance among the leading players.

This year we have covered BNPL services from the likes of Afterpay, Klarna and Affirm. And tech and payments giants Apple, Square, PayPal and Visa have joined in the action, too, massively funneling cash to their respective BNPL initiatives (for one, Square acquired Afterpay).

Australia, the U.K. and the U.S. are key markets for BNPL services. The U.S. market is so big that the number of BNPL service users is expected to hit 45 million by year’s end, representing an 81% growth from last year. But despite its Western focus, BNPL is exploding in other markets driven by a collective effort from local and global players.

For instance, in the Middle East, companies like tabby and Tamara have raised millions in debt and equity financing to provide BNPL services. Also, Checkout is a significant shareholder in Tamara; Afterpay is one in PostPay, while Zip acquired Spotii for $26 million after initially investing in the company in December 2020.

Spotii isn’t the only acquisition Zip has made this past year. The Australian company also bought U.S.-based QuadPay and Twisto, a BNPL service in the Czech Republic, to expand footprints in both regions.

Payflex is the latest addition to that list. The company, founded in 2017, claims to be the first and largest BNPL player in South Africa with more than 1,000 merchants and 135,000 customers. Before fully acquiring Payflex, Zip had a 25% stake when it invested in the South African BNPL service six months ago.

Zip’s entry to Africa is important for several reasons. First, the continent is a largely untapped market that has enormous growth potential.

Credit appetite on the continent is very much in its infancy compared to Western markets, but it is growing rapidly. These days, people take loans to finance their needs at ridiculous interest rates while lending companies report low NPL ratios. Think of what happens when these consumers get a taste of low or no-interest alternative financing options that BNPL players like Zip provide: adoption rates will be off the charts.

Second, there’s a lack of infrastructure and BNPL innovation that only new entrants like Zip can execute because it has a large monetary chest.

And with the absence of credit cards and data on the continent, Zip can provide a competitive advantage with its technology, gather alternative data and build creditworthiness for customers in South Africa and other markets it plans to expand “with sizable underbanked, digitally savvy populations.”

Two of those markets are Egypt and Nigeria. If Zip expands to these regions, it will face competition from local players like Carbon, Shahry, M-Kopa, CredPal and CDCare, which are already pulling their weight. African e-commerce giant Jumia is also rumored to be revamping its BNPL service; it started one years ago but was discontinued after gaining little traction.

That said, Africa doesn’t have a concrete market leader yet since most of these products are yet to reach mass scale. On the other hand, Zip has been quite aggressive with its expansion into other markets — evident in some of its numbers.

The company currently serves 51,000 merchants and 7.3 million customers across 12 markets. This fiscal year, June 2021, a period when most of its acquisitions have occurred, Zip hit $5.8 billion in total transaction volume, up 176% year-over-year (YoY).

Zip numbers are impressive, but if there’s anything we’ve learnt from the BNPL business it’s that it isn’t a winner-takes-all market. If Zip makes significant headway and cracks the market, expect more global BNPL players to bring the heat. Also, local players will be encouraged to step up their game because global players have surplus cash to burn if they move into Africa, which is a win-win for the market.

Carbon Robotics secures $27M for its autonomous field weeders

By Brian Heater

Agricultural robotics firm Carbon Robotics (not to be confused with our former Battlefield contestant) announced this week that it has secured $27 million in funding. The round — which features Anthos Capital, Ignition Capital, Fuse Venture Partners and Voyager Capital — follows an $8.4 million Series A raised back in 2019. The company’s total funding is now at around $36 million.

“Weeding is one of the biggest challenges farmers face, especially with the rise of herbicide-resistant weeds and increasing interest in organic and regenerative methods,” founder and CEO Paul Mikesell said in a release. “This round of investment will enable us to scale our operations to meet the increasing demand for this technology. Additionally, this funding will allow our team to continue to innovate new products and identify revolutionary ways to apply technology to agriculture.”

The Seattle-based startup’s primary offering is an autonomous robot that uses lasers to zap weeds. The round follows the April announcement of Carbon’s latest-generation Autonomous Weeder, which it says is capable of eradicating around 100,000 weeds per hour. The pandemic has continued to accelerate interest in many agricultural robotics companies, as labor shortages continue to mount.

Carbon notes some international bans on various pesticides have left many farmers searching for an alternative solution. A system that works without the need for harmful chemicals that also reduces human labor in an industry often suffering from shortages in headcount has clear appeal.

The company says it has already sold out of its 2021 and 2022 stock, so one assumes scaling up production and headcount will be key investments from this round.

Kapacity.io is using AI to drive energy and emissions savings for real estate

By Natasha Lomas

 

Y Combinator-backed Kapacity.io is on a mission to accelerate the decarbonization of buildings by using AI-generated efficiency savings to encourage electrification of commercial real estate — wooing buildings away from reliance on fossil fuels to power their heating and cooling needs.

It does this by providing incentives to buildings owners/occupiers to shift to clean energy usage through a machine learning-powered software automation layer.

The startup’s cloud software integrates with buildings’ HVAC systems and electricity meters — drawing on local energy consumption data to calculate and deploy real-time adjustments to heating/cooling systems which not only yield energy and (CO2) emissions savings but generate actual revenue for building owners/tenants — paying them to reduce consumption such as at times of peak energy demand on the grid.

“We are controlling electricity consumption in buildings, focusing on heating and cooling devices — using AI machine learning to optimize and find the best ways to consume electricity,” explains CEO and co-founder Jaakko Rauhala, a former consultant in energy technology. “The actual method is known as ‘demand response’. Basically that is a way for electricity consumer to get paid for adjusting their energy consumption, based on a utility company’s demand.

“For example if there is a lot of wind power production and suddenly the wind drops or the weather changes and the utility company is running power grids they need to balance that reduction — and the way to do that is either you can fire up natural gas turbine or you can reduce power consumption… Our product estimates how much can we reduce electricity consumption at any given minute. We are [targeting] heating and cooling devices because they consume a lot of electricity.”

“The way we see this is this is a way we can help our customers electrify their building stocks faster because it makes their investments more lucrative and in addition we can then help them use more renewable electricity because we can shift the use from fossil fuels to other areas. And in that we hope to help push for a more greener power grid,” he adds.

Kapcity’s approach is applicable in deregulated energy markets where third parties are able to play a role offering energy saving services and fluctuations in energy demand are managed by an auction process involving the trading of surplus energy — typically overseen by a transmission system operator — to ensure energy producers have the right power balance to meet customer needs.

Demand for energy can fluctuate regardless of the type of energy production feeding the grid but renewable energy sources tend to increase the volatility of energy markets as production can be less predictable vs legacy energy generation (like nuclear or burning fossil fuels) — wind power, for example, depends on when and how strongly the wind is blowing (which both varies and isn’t perfectly predictable). So as economies around the world dial up efforts to tackle climate change and hit critical carbon emissions reduction targets there’s growing pressure to shift away from from fossil fuels-based power generation toward cleaner, renewable alternatives. And the real estate sector specifically remains a major generator of CO2 so is squarely in the frame for ‘greening’.

Simultaneously, decarbonization and the green shift looks likely to drive demand for smart solutions to help energy grids manage increasing complexity and volatility in the energy supply mix.

“Basically more wind power — and solar, to some extent — correlates with demand for balancing power grids and this is why there is a lot of talk usually about electricity storage when it comes to renewables,” says Rauhala. “Demand response, in the way that we do it, is an alternative for electricity storage units. Basically we’re saying that we already have a lot of electricity consuming devices — and we will have more and more with electrification. We need to adjust their consumption before we invest billions of dollars into other systems.”

“We will need a lot of electricity storage units — but we try to push the overall system efficiency to the maximum by utilising what we already have in the grid,” he adds.

There are of course limits to how much ‘adjustment’ (read: switching off) can be done to a heating or cooling system by even the cleverest AI without building occupants becoming uncomfortable.

But Kapacity’s premise is that small adjustments — say turning off the boilers/coolers for five, 15 or 30 minutes — can go essentially unnoticed by building occupants if done right, allowing the startup to tout a range of efficiency services for its customers; such as a peak-shaving offering which automatically reduces energy usage to avoid peaks in consumption and generate significant energy cost savings.

“Our goal — which is a very ambitious goal — is that the customers and occupants in the buildings wouldn’t notice the adjustments. And that they would fall into the normal range of temperature fluctuations in a building,” says Rauhala.

Kapacity’s algorithms are designed to understand how to make dynamic adjustments to buildings’ heating/cooling without compromising “thermal comfort”, as Rauhala puts it — noting that co-founder (and COO) Sonja Salo, has both a Phd in demand response and researched thermal comfort during a stint as a visiting researcher at UC Berkley — making the area a specialist focus for the engineer-led founding team.

At the same time, the carrots it’s dangling at the commercial real estate to sign up for a little algorithmic HVAC tweaking look substantial: Kapacity says its system has been able to achieve a 25% reduction in electricity costs and a 10% reduction in CO2-emissions in early pilots. Although early tests have been limited to its home market for now.

Its other co-founder, Rami El Geneidy, researched smart algorithms for demand response involving heat pumps for his PhD dissertation — and heat pumps are another key focus for the team’s tech, per Rauhala.

Heat pumps are a low carbon technology that’s fairly commonly used in the Nordics for heating buildings but whose use is starting to spread as countries around the world look for greener alternatives to heat buildings.

In the UK, for example, the government announced a plan last year to install hundreds of thousands of heat pumps per year by 2028 as it seeks to move the country away from widespread use of gas boilers to heat homes. And Rauhala names the UK as one of the startup’s early target markets — along with the European Union and the US where they also envisage plenty of demand for their services.

While the initial focus is the commercial real estate sector, he says they are also interested in residential buildings — noting that from a “tech core point of view we can do any type of building”.

“We have been focusing on larger buildings — multi-family buildings, larger office buildings, certain type of industrial or commercial buildings so we don’t do single family detached homes at the moment,” he goes on, adding: “We have been looking at that and it’s an interesting avenue but our current pilots are in larger buildings.”

The Finnish startup was only founded last year — taking in a pre-seed round of funding from Nordic Makers prior to getting backing from YC — where it will be presenting at the accelerator’s demo day next week. (But Rauhala won’t comment on any additional fund raising plans at this stage.)

He says it’s spun up five pilot projects over the last seven months involving commercial landlords, utilities, real estate developers and engineering companies (all in Finland for now), although — again — full customer details are not yet being disclosed. But Rauhala tells us they expect to move to their first full commercial deals with pilot customers this year.

“The reason why our customers are interested in using our products is that this is a way to make electrification cheaper because they are being paid for adjusting their consumption and that makes their operating cost lower and it makes investments more lucrative if — for example — you need to switch from natural gas boilers to heat pumps so that you can decarbonize your building,” he also tells us. “If you connect the new heat pump running on electricity — if you connect that to our service we can reduce the operating cost and that will make it more lucrative for everybody to electrify their buildings and run their systems.

“We can also then make their electricity consumed more sustainable because we are shifting consumption away from hours with most CO2 emissions on the grid. So we try to avoid the hours when there’s a lot of fossil fuel-based production in the grid and try to divert that into times when we have more renewable electricity.

“So basically the big question we are asking is how do we increase the use of renewables and the way to achieve that is asking when should we consume? Well we should consume electricity when we have more renewable in the grid. And that is the emission reduction method that we are applying here.”

In terms of limitations, Kapacity’s software-focused approach can’t work in every type of building — requiring that real estate customers have some ability to gather energy consumption (and potentially temperature) data from their buildings remotely, such as via IoT devices.

“The typical data that we need is basic information on the heating system — is it running at 100% or 50% or what’s the situation? That gets us pretty far,” says Rauhala. “Then we would like to know indoor temperatures. But that is not mandatory in the sense that we can still do some basic adjustments without that.”

It also of course can’t offer much in the way of savings to buildings that are running 100% on natural gas (or oil) — i.e. with electricity only used for lighting (turning lights off when people are inside buildings obviously wouldn’t fly); there must be some kind of air conditioning, cooling or heat pump systems already installed (or the use of electric hot water boilers).

“An old building that runs on oil or natural gas — that’s a target for decarbonization,” he continues. “That’s a target where you could consider installing heat pumps and that is where we could help some of our customers or potential customers to say ok we need to estimate how much would it cost to install a heat pump system here and that’s where our product can come in and we can say you can reduce the operating cost with demand response. So maybe we should do something together here.”

Rauhala also confirms that Kapacity’s approach does not require invasive levels of building occupant surveillance, telling TechCrunch: “We don’t collect information that is under GDPR [General Data Protection Regulation], I’ll put it that way. We don’t take personal data for this demand response.”

So any guestimates its algorithms are making about building occupants’ tolerance for temperature changes are, therefore, not going to be based on specific individuals — but may, presumably, factor in aggregated information related to specific industry/commercial profiles.

The Helsinki-based startup is not the only one looking at applying AI to drive energy cost and emissions savings in the commercial buildings sector — another we spoke to recently is Düsseldorf-based Dabbel, for example. And plenty more are likely to take an interest in the space as governments start to pump more money into accelerating decarbonization.

Asked about competitive differentiation, Rauhala points to a focus on real-time adjustments and heat pump technologies.

“One of our key things is we’re developing a system so that we can do close to real time control — very very short term control. That is a valuable service to the power grid so we can then quickly adjust,” he says. “And the other one is we are focusing on heat pump technologies to get started — heat pumps here in the Nordics are a very common and extremely good way to decarbonize and understanding how we can combine these to demand response with new heat pumps that is where we see a lot of advantages to our approach.”

“Heat pumps are a bit more technically complex than your basic natural gas boiler so there are certain things that have to be taken it account and that is where we have been focusing our efforts,” he goes on, adding: “We see heat pumps as an excellent way to decarbonize the global building stock and we want to be there and help make that happen.”

Per capita, the Nordics has the most heat pump installations, according to Rauhala — including a lot of ground source heat pump installations which can replace fossil fuel consumption entirely.

“You can run your building with a ground source heat pump system entirely — you don’t need any supporting systems for it. And that is the area where we here in Europe are more far ahead than in the US,” he says on that.

“The UK government is pushing for a lot of heat pump installations and there are incentives in place for people to replace their existing natural gas systems or whatever they have. So that is very interesting from our point of view. The UK also there is a lot of wind power coming online and there have been days when the UK has bee running 100% with renewable electricity which is great. So that actually is a really good thing for us. But then in the longer term in the US — Seattle, for example, has banned the use of fossil fuels in new buildings so I’m very confident that the market in the US will open up more and quickly. There’s a lot of opportunities in that space as well.

“And of course from a cooling perspective air conditioning in general in the US is very wide spread — especially in commercial buildings so that is already an existing opportunity for us.”

“My estimate on how valuable electricity use for heating and cooling is it’s tens of billions of dollars annually in the US and EU,” he adds. “There’s a lot of electricity being used already for this and we expect the market to grow significantly.”

On the business model front, the startup’s cloud software looks set to follow a SaaS model but the plan is also to take a commission of the savings and/or generated income from customers. “We also have the option to provide the service with a fixed fee, which might be easier for some customers, but we expect the majority to be under a commission,” adds Rauhala.

Looking ahead, were the sought for global shift away from fossil fuels to be wildly successful — and all commercial buildings’ gas/oil boilers got replaced with 100% renewable power systems in short order — there would still be a role for Kapacity’s control software to play, generating energy cost savings for its customers, even though our (current) parallel pressing need to shrink carbon emissions would evaporate in this theoretical future.

“We’d be very happy,” says Rauhala. “The way we see emission reductions with demand response now is it’s based on the fact that we do still have fossil fuels power system — so if we were to have a 100% renewable power system then the electricity does nothing to reduce emissions from the electricity consumption because it’s all renewable. So, ironically, in the future we see this as a way to push for a renewable energy system and makes that transition happen even faster. But if we have a 100% renewable system then there’s nothing [in terms of CO2 emissions] we can reduce but that is a great goal to achieve.”

Chris Sacca’s Lowercarbon Capital has raised $800 million to “keep unf*cking the planet”

By Connie Loizos

Lowercarbon Capital, a climate-tech focused fund founded by longtime investor Chris Sacca and his wife Crystal Sacca, has closed on $800 million in capital, Sacca announced today in a post on the firm’s site.

According to Sacca, the commitments came exceedingly fast — in “just a few days.” Writes Sacca: “It turns out that raising for a climate fund in the context of an unprecedented heatwave and from behind the thick clouds of fire smoke probably didn’t hurt. In fact, all that pollution may have lent a warm, beautifying haze to our Zoom calls. Like an Incendiary Doom Glow Insta filter.”

The interest is far from surprising given the mounting and rather stark evidence that life as humans know it is in peril, owing to rising temperatures. On the heels of a deadly floods in Western Germany and China, wildfires in Greece and California, and in advance of yet another heat wave for which people in the Pacific Northwest are currently bracing, a new report released Monday by the United Nations’ climate science research group was clear about the current state of affairs, declaring a “code red for humanity.”

Certainly, some of Lowercarbon’s backers are interested in tech that’s working to reverse some of these trends. But as Sacca notes, if they’re purely focused on the financial rewards that climate-focused tech can reap, that’s fine, too.

“We are thrilled to see how many investors understand the urgency of the climate crisis and are already dedicating their time, as well as their capital, to real solutions,” he says in his post. “However, to be frank, we were also heartened by those investors who actually don’t care that much about the planet and instead are just chasing financial returns.”

Lowercarbon’s very thesis is that “massive change will happen because these types of investments will pay off for sheer business reasons alone,” he adds.

In addition to the Saccas, Lowercarbon is being run by Clay Dumas, a Brooklyn, N.Y.-based partner who the firm describes as its most active investor. Though the Harvard grad hasn’t been in the venture world long — first joining up with Sacca in 2017 to join his earlier firm Lowercase Capital as a partner — he understands the world of politics in a way that few, more “traditional” VCs, might.

After opening a field office for the campaign to elect Barack Obama in 2008, he went on to serve as an aide in the White House to the-then Deputy Chief of Staff and later worked (again in the White House) for the  Office of Digital Strategy.

Lowercarbon’s many dozens of bets to date include Heart Aerospace, a three-year-old, Göteborg, Sweden-based startup at work on an electric regional airliner to which the firm wrote a seed check (and more recently wrote a follow-on check); Holy Grail, a two-year-old, Mountain View, Ca.-based startup that’s prototyping a direct air carbon capture device that is modular and small (it announced seed funding in June); and Cervest, a six-year-old, London-based climate risk platform that says it provides commercial and government entities access to current, historic, and predictive views about how combined weather risks can impact the assets they own. The last raised $30 million in May.

Sacca, who became well-known for his early and outsize bets on both Twitter and Uber, was somewhat famously a judge on the popular TV show “Shark Tank” for several seasons before quitting the show — and venture capital — in 2017, saying he had always intended to retire at age 40. (At the time, he was 42.)

Sacca’s growing concern regarding climate change — and his lack of faith that politicians can make a dent in reversing it — prompted him to rethink that decision. As he told Forbes in March: “We think that markets might actually hold the key to unf***ing the planet.”

According to an Axios report from June of last year, Lowercarbon was originally structured as a family office with tens of millions of dollars to deploy. As of the middle of last year, the only outside money it had accepted was for a “few special-purpose vehicles with institutional investors from Sacca’s prior funds,” the outlet reported.

Now, with a fresh $800 million to invest — the capital will be divided into four funds — Sacca & Co. appear to be fully back to work. In fact, we’ll be talking with Sacca next month at TechCrunch Disrupt; to hear what’s top of mind for him right now, you won’t want to miss that conversation.

44.01 secures $5M to turn billions of tons of carbon dioxide to stone

By Devin Coldewey

Reducing global greenhouse gas emissions is an important goal, but another challenge awaits: lowering the levels of CO2 and other substances already in the atmosphere. One promising approach turns the gas into an ordinary mineral through entirely natural processes; 44.01 hopes to perform this process at scale using vast deposits of precursor materials and a $5 million seed round to get the ball rolling.

The process of mineralizing CO2 is well known among geologists and climate scientists. A naturally occurring stone called peridotite reacts with the gas and water to produce calcite, another common and harmless mineral. In fact this has occurred at enormous scales throughout history, as witnessed by large streaks of calcite piercing peridotite deposits.

Peridotite is normally found miles below sea level, but on the easternmost tip of the Arabian peninsula, specifically the northern coast of Oman, tectonic action has raised hundreds of square miles of the stuff to the surface.

Talal Hasan was working in Oman’s sovereign investment arm when he read about the country’s coast having the largest “dead zone” in the world, a major contributor to which was CO2 emissions being absorbed by the sea and gathering there. Hasan, born into a family of environmentalists, looked into it and found that, amazingly, the problem and the solution were literally right next to each other: the country’s mountains of peridotite, which theoretically could hold billions of tons of CO2.

Around that time, in fact, The New York Times ran a photo essay about Oman’s potential miracle mineral, highlighting the research of Peter Kelemen and Juerg Matter into its potential. As the Times’ Henry Fountain wrote at the time:

If this natural process, called carbon mineralization, could be harnessed, accelerated and applied inexpensively on a huge scale — admittedly some very big “ifs” — it could help fight climate change.

That’s broadly speaking the plan proposed by Hasan and, actually, both Kelemen and Matter, who make up the startup’s “scientific committee.” 44.01 (the molecular weight of carbon dioxide, if you were wondering) aims to accomplish mineralization economically and safely with a few novel ideas.

First is the basic process of accelerating the natural reaction of the materials. It normally occurs over years as CO2 and water vapor interact with the rock — no energy needs to be applied to make the change, since the reaction actually results in a lower energy state.

“We’re speeding it up by injecting a higher CO2 content than you would get in the atmosphere,” said Hasan. “We have to drill an engineered borehole that’s targeted for mineralization and injection.”

Diagram showing how carbon can be sequestered as a mineral.

Image Credits: 44.01

The holes would maximize surface area, and highly carbonated water would be pumped in cyclically until the drilled peridotite is saturated. Importantly, there’s no catalyst or toxic additive, it’s just fizzy water, and if some were to leak or escape, it’s just a puff of CO2, like what you get when you open a bottle of soda.

Second is achieving this without negating the entire endeavor by having giant trucks and heavy machinery pumping out new CO2 as fast as they can pump in the old stuff. To that end Hasan said the company is working hard at the logistics side to create a biodiesel-based supply line (with Wakud) to truck in the raw material and power the machines at night, while solar would offset that fuel cost at night.

It sounds like a lot to build up, but Hasan points out that a lot of this is already done by the oil industry, which as you might guess is fairly ubiquitous in the region. “It’s similar to how they drill and explore, so there’s a lot of existing infrastructure for this,” he said, “but rather than pulling the hydrocarbon out, we’re pumping it back in.” Other mineralization efforts have broken ground on the concept, so to speak, such as a basalt-injection scheme up in Iceland, so it isn’t without precedent.

Third is sourcing the CO2 itself. The atmosphere is full of it, sure, but it’s not trivial to capture and compress enough to mineralize at industrial scales. So 44.01 is partnering with Climeworks and other carbon capture companies to provide an end point for their CO2 sequestration efforts.

Plenty of companies are working on direct capture of emissions, be they at the point of emission or elsewhere, but once they have a couple million tons of CO2, it’s not obvious what to do next. “We want to facilitate carbon capture companies, so we’re building the CO2 sinks here and operating a plug and play model. They come to our site, plug in, and using power on site, we can start taking it,” said Hasan.

How it would be paid for is a bit of an open question in the exact particulars, but what’s clear is a global corporate appetite for carbon offsetting. There’s a large voluntary market for carbon credits beyond the traditional and rather outdated carbon credits. 44.01 can sell large quantities of verified carbon removal, which is a step up from temporary sequestration or capture — though the financial instruments to do so are still being worked out. (DroneSeed is another company offering a service beyond offsets that hopes to take advantage of a new generation of emissions futures and other systems. It’s an evolving and highly complex overlapping area of international regulations, taxes and corporate policy.)

For now, however, the goal is simply to prove that the system works as expected at the scales hoped for. The seed money is nowhere near what would be needed to build the operation necessary, just a step in that direction to get the permits, studies and equipment necessary to properly perform demonstrations.

“We tried to get like-minded investors on board, people genuinely doing this for climate change,” said Hasan. “It makes things a lot easier on us when we’re measured on impact rather than financials.” (No doubt all startups hope for such understanding backers.)

Apollo Projects, a early-stage investment fund from Max and Sam Altman, led the round, and Breakthrough Energy Ventures participated. (Not listed in the press release but important to note, Hasan said, were small investments from families in Oman and environmental organizations in Europe.)

Oman may be the starting point, but Hasan hinted that another location would host the first commercial operations. While he declined to be specific, one glance at a map shows that the peridotite deposits spill over the northern border of Oman and into the eastern tip of the UAE, which no doubt is also interested in this budding industry and, of course, has more than enough money to finance it. We’ll know more once 44.01 completes its pilot work.

Tech leaders can be the secret weapon for supercharging ESG goals

By Ram Iyer
Jeff Sternberg Contributor
Jeff Sternberg is a technical director in the Office of the CTO (OCTO) at Google Cloud, a team of technologists and industry experts that help Google Cloud's customers solve challenging problems and disrupt their industries.

Environmental, social and governance (ESG) factors should be key considerations for CTOs and technology leaders scaling next generation companies from day one. Investors are increasingly prioritizing startups that focus on ESG, with the growth of sustainable investing skyrocketing.

What’s driving this shift in mentality across every industry? It’s simple: Consumers are no longer willing to support companies that don’t prioritize sustainability. According to a survey conducted by IBM, the COVID-19 pandemic has elevated consumers’ focus on sustainability and their willingness to pay out of their own pockets for a sustainable future. In tandem, federal action on climate change is increasing, with the U.S. rejoining the Paris Climate Agreement and a recent executive order on climate commitments.

Over the past few years, we have seen an uptick in organizations setting long-term sustainability goals. However, CEOs and chief sustainability officers typically forecast these goals, and they are often long term and aspirational — leaving the near and midterm implementation of ESG programs to operations and technology teams.

Until recently, choosing cloud regions meant considering factors like cost and latency to end users. But carbon is another factor worth considering.

CTOs are a crucial part of the planning process, and in fact, can be the secret weapon to help their organization supercharge their ESG targets. Below are a few immediate steps that CTOs and technology leaders can take to achieve sustainability and make an ethical impact.

Reducing environmental impact

As more businesses digitize and more consumers use devices and cloud services, the energy needed by data centers continues to rise. In fact, data centers account for an estimated 1% of worldwide electricity usage. However, a forecast from IDC shows that the continued adoption of cloud computing could prevent the emission of more than 1 billion metric tons of carbon dioxide from 2021 through 2024.

Make compute workloads more efficient: First, it’s important to understand the links between computing, power consumption and greenhouse gas emissions from fossil fuels. Making your app and compute workloads more efficient will reduce costs and energy requirements, thus reducing the carbon footprint of those workloads. In the cloud, tools like compute instance auto scaling and sizing recommendations make sure you’re not running too many or overprovisioned cloud VMs based on demand. You can also move to serverless computing, which does much of this scaling work automatically.

Deploy compute workloads in regions with lower carbon intensity: Until recently, choosing cloud regions meant considering factors like cost and latency to end users. But carbon is another factor worth considering. While the compute capabilities of regions are similar, their carbon intensities typically vary. Some regions have access to more carbon-free energy production than others, and consequently the carbon intensity for each region is different.

So, choosing a cloud region with lower carbon intensity is often the simplest and most impactful step you can take. Alistair Scott, co-founder and CTO of cloud infrastructure startup Infracost, underscores this sentiment: “Engineers want to do the right thing and reduce waste, and I think cloud providers can help with that. The key is to provide information in workflow, so the people who are responsible for infraprovisioning can weigh the CO2 impact versus other factors such as cost and data residency before they deploy.”

Another step is to estimate your specific workload’s carbon footprint using open-source software like Cloud Carbon Footprint, a project sponsored by ThoughtWorks. Etsy has open-sourced a similar tool called Cloud Jewels that estimates energy consumption based on cloud usage information. This is helping them track progress toward their target of reducing their energy intensity by 25% by 2025.

Make social impact

Beyond reducing environmental impact, CTOs and technology leaders can have significant, direct and meaningful social impact.

Include societal benefits in the design of your products: As a CTO or technology founder, you can help ensure that societal benefits are prioritized in your product roadmaps. For example, if you’re a fintech CTO, you can add product features to expand access to credit in underserved populations. Startups like LoanWell are on a mission to increase access to capital for those typically left out of the financial system and make the loan origination process more efficient and equitable.

When thinking about product design, a product needs to be as useful and effective as it is sustainable. By thinking about sustainability and societal impact as a core element of product innovation, there is an opportunity to differentiate yourself in socially beneficial ways. For example, Lush has been a pioneer of package-free solutions, and launched Lush Lens — a virtual package app leveraging cameras on mobile phones and AI to overlay product information. The company hit 2 million scans in its efforts to tackle the beauty industry’s excessive use of (plastic) packaging.

Responsible AI practices should be ingrained in the culture to avoid social harms: Machine learning and artificial intelligence have become central to the advanced, personalized digital experiences everyone is accustomed to — from product and content recommendations to spam filtering, trend forecasting and other “smart” behaviors.

It is therefore critical to incorporate responsible AI practices, so benefits from AI and ML can be realized by your entire user base and that inadvertent harm can be avoided. Start by establishing clear principles for working with AI responsibly, and translate those principles into processes and procedures. Think about AI responsibility reviews the same way you think about code reviews, automated testing and UX design. As a technical leader or founder, you get to establish what the process is.

Impact governance

Promoting governance does not stop with the board and CEO; CTOs play an important role, too.

Create a diverse and inclusive technology team: Compared to individual decision-makers, diverse teams make better decisions 87% of the time. Additionally, Gartner research found that in a diverse workforce, performance improves by 12% and intent to stay by 20%.

It is important to reinforce and demonstrate why diversity, equity and inclusion is important within a technology team. One way you can do this is by using data to inform your DEI efforts. You can establish a voluntary internal program to collect demographics, including gender, race and ethnicity, and this data will provide a baseline for identifying diversity gaps and measuring improvements. Consider going further by baking these improvements into your employee performance process, such as objectives and key results (OKRs). Make everyone accountable from the start, not just HR.

These are just a few of the ways CTOs and technology leaders can contribute to ESG progress in their companies. The first step, however, is to recognize the many ways you as a technology leader can make an impact from day one.

Vaayu’s carbon tracking for retailers raises $1.6M, claims it could cut CO2 in half by 2030

By Mike Butcher

Carbon tracking is very much the new hot thing in tech, and we’ve previously covered more generalist startups doing this at scale for companies, such as Plan A Earth out of Berlin.

But there’s clearly an opportunity to get deep into a vertical sector and tailor solutions to it.

That’s the plan of Vaayu, a carbon tracking platform aimed specifically at retailers. It has now raised $1.57 million in pre-seed funding in a round led by CapitalT. Several Angels also took part, including Atomico’s Angel Program, Planet Positive LP, Saarbrücker 21, Expedite Ventures, and NP-Hard Ventures.

Carbon tracking for the retail fashion industry, in particular, is urgently needed. Unfortunately, the fashion industry remains responsible for 10% of annual global carbon emissions, which ads up to more than all international flights and maritime shipping combined.

Vaayu says it integrates with various point-of-sale systems, such as Shopify and Webflow. It then pulls in data on logistics, operations, and packaging to monitor, measure, and reduce their carbon emissions. Normally, retailers calculate emissions once a year, which is obviously far less accurate.

Vaayu was founded in 2020 by Namrata Sandhu (CEO) former head of Sustainability at fashion retailer Zalando, as well as Anita Daminov (CPO) and Luca Schmid (CTO). Vaayu currently has 25 global brand customers, including Missoma, Armed Angels, and Organic Basics.

Commenting on the fundraise, Namrata Sandhu, CEO, Vaayu, said: “We have only nine short years left to achieve the UN’s goal of reducing carbon emissions by 50% by 2030 and as the third-largest contributor to global emissions, retailers need to take action — and fast. Vaayu is here to help retailers measure, monitor, and reduce their carbon footprint at scale across the entire supply chain — something that I know from my own experience can be complex and expensive.

Speaking to me over a call, Sandhu told me: “Putting the focus on retail basically allows us to automate the calculation, which means in three clicks you can get your carbon footprint right away. That then allows us to really accurate data, and with that, we can basically do reductions specific to the business but using software, rather than any kind of manual intervention or a kind of ‘intermediate’ state where you need to put together an Excel sheet. Because we focus on retail we can automate the entire process and also automate the reductions.”

“We are delighted to be backed by female-led CapitalT who understood us and our vision right from the start. We look forward to developing Vaayu further in the coming months so we can reach as many retailers as possible and help put the brakes on the impending climate crisis,” she added.

Janneke Niessen, founding partner, CapitalT commented: “We are very excited to join Vaayu on their mission to reduce carbon emission for retailers worldwide. The Vaayu product is very scalable and its quick and easy implementation allows for fast adoption. We are confident that with this experienced team, Vaayu will soon be one of the fastest-growing climate tech companies in Europe and the world.”

Cutting out carbon emitters with bioengineering at XTC Global Finals on July 22

By Devin Coldewey

Bioengineering may soon provide compelling, low-carbon alternatives in industries where even the best methods produce significant emissions. Utilizing natural and engineered biological process has led to low-carbon textiles from AlgiKnit, cell-cultured premium meats from Orbillion and fuels captured from waste emissions via LanzaTech — and leaders from those companies will be joining us onstage for the Extreme Tech Challenge Global Finals on July 22.

We’re co-hosting the event, with panels like this one all day and a pitch-off that will feature a number of innovative startups with a sustainability angle.

I’ll be moderating a panel on using bioengineering to create change directly in industries with large carbon footprints: textiles, meat production and manufacturing.

AlgiKnit is a startup that is sourcing raw material for fabric from kelp, which is an eco-friendly alternative to textile crop monocultures and artificial materials like acrylic. CEO Aaron Nesser will speak to the challenge of breaking into this established industry and overcoming preconceived notions of what an algae-derived fabric might be like (spoiler: it’s like any other fabric).

Orbillion Bio is one of the new crop of alternative protein companies offering cell-cultured meats (just don’t call them “lab” or “vat” grown) to offset the incredibly wasteful livestock industry. But it’s more than just growing a steak — there are regulatory and market barriers aplenty that CEO Patricia Bubner can speak to, as well as the technical challenge.

LanzaTech works with factories to capture emissions as they’re emitted, collecting the useful particles that would otherwise clutter the atmosphere and repurposing them in the form of premium fuels. This is a delicate and complex process that needs to be a partnership, not just a retrofitting operation, so CEO Jennifer Holmgren will speak to their approach convincing the industry to work with them at the ground floor.

It should be a very interesting conversation, so tune in on July 22 to hear these and other industry leaders focused on sustainability discuss how innovation at the startup level can contribute to the fight against climate change. Plus it’s free!

After raising $10M, Ryte launches ‘Carbon KPI’ to measure the CO2 footprint of web sites

By Mike Butcher

As we become more and more aware of the kind of impact we are having on this planet we call our home, just about everything is having its CO2 impact measured. Who knew, until recently, that streaming Netflix might have a measurable impact on the environment, for instance. But given vast swathes of the Internet are populated by Web sites, as well as streaming services, then they too must have some sort of impact.

It transpires that a new service has identified how to gauge that, and now it’s raised Venture capital to scale.

Ryte raised €8.5 million ($10M) in a previously undisclosed round led by Bayern Kapital out of Munich and Octopus Investments out of London earlier this year for its Website User Experience Platform.

It has now launched the ‘Ryte Website Carbon KPI’, which claims to be able to help make 5% of all websites carbon neutral by 2023.

Ryte says it worked with data scientists and environmental experts to develop the ability to accurately measure the carbon impact of client’s websites. According to carbon transition thinktank, the Shift Project, the carbon footprint of our gadgets, the internet, and the systems supporting them accounts for about 3.7% of global greenhouse emissions. And this trend is rising rapidly as the world digitizes itself, especially post-pandemic.

Ryte has now engaged its Data Scientist, Katharina Meraner, who has a PhD in climate science and global warming, and input from Climate Partner, to launch this new service.

Andy Bruckschloegl, CEO of Ryte said: “There are currently 189 million active websites. Our goal is to make 5% of all active websites, or 9.5 million websites, climate neutral by the end of 2023 with the help of our platform, strong partners, social media activities, and much more. Time is ticking and making websites carbon neutral is really easy compared to other industries and processes.”

Ryte says it is also collaborating with a reforestation project in San Jose, Nicaragua, to allow its customers to offset their remaining emissions through the purchase of climate certificates.

Using a proprietary algorithm, Ryte says it measures the code of the entire website, average page size, as well as monthly traffic by channel then produces a calculation of the amount of CO2 it uses up.

Admittedly there are similar services but these are ad-hoc and not connected to a platform. A simple Google search will bring us sites like Websitecarbon, Ecosistant, and academic papers. But as far as I can tell, a startup like this hasn’t put this kind of service into their platform yet.

“Teaming up with Ryte will help raise awareness on how information technology contributes to climate change – while at the same time providing tools to make a difference. Ryte’s industry-leading carbon calculator enables thousands of website owners to understand their carbon footprint, to offset unavoidable carbon emissions and thus lay a basis for a comprehensive climate action strategy,” commented Tristan A. Foerster, Co-CEO ClimatePartner.

Holy Grail raises $2.7M seed fund to create modular carbon capture devices

By Aria Alamalhodaei

The founders of Holy Grail, a two-year old startup based in Mountain View, California, are taking a micro approach to solving the outsized problem of capturing carbon.

The startup is prototyping a direct air carbon capture device that it is modular and small — a departure from the dozens of projects in the U.S. and abroad that aim to capture CO2 from large, centralized emitters, like power plants or industrial facilities. Holy Grail co-founder Nuno Pereira told TechCrunch that this approach will reduce costs and eliminate the need for permits or project financing.

While Holy Grail has a long development and testing phase ahead, the idea has captured the attention and capital from well-known investors and Silicon Valley founders. Holy Grail recently raised raised $2.7 million in seed funding from LowerCarbon Capital, Goat Capital, Stripe founder Patrick Collison, Charlie Songhurst, Cruise co-founder Kyle Vogt, Songkick co-founder Ian Hogarth, Starlight Ventures and 35 Ventures. Existing investors Deep Science Ventures, Y Combinator and Oliver Cameron, who co-founded Voyage, the autonomous vehicle acquired by Cruise, also participated.

The carbon capture device is still in the prototype stage, Pereira said, with many specifics – such as the anticipated size of the end product and how long it will likely function – still to be worked out. Cost-effectively separating CO2 from the air is an extremely difficult problem to solve. The company is in the process of filing patents for the technology, so he declined to be too specific about many characteristics of the device, including what it will be made out of. But he did stress that the company is taking a fundamentally different technical approach to carbon capture.

“The current technologies, they are very complex. They are basically either [using] temperature or pressure [to capture carbon],” he said. “There is a lot of things that go into it, compressors, calciners and all these things,” referring to additional parts like mechanical pumps, cryogenic air separators, and large quantities of water and energy. Pereira said the company will instead use electricity to control a chemical reaction that bind to the CO2. He added that Holy Grail’s devices are not dependent on scale to achieve cost reductions, either. And they will be modular, so they can be stacked or configured depending on a customer’s requirements.

The scrubbers, as Pereira calls them, will focus on raw capture of CO2 rather than conversion (converting the CO2 into fuels, for example). Pereira instead explained – with a heavy caveat that much about the end product still needs to be figured out – that once a Holy Grail unit is full, it could be collected by the company, though where the carbon will end up is still an open question.

The company will start by selling carbon credits, using its devices as the carbon reducing project. The end goal is selling the scrubbers to commercial customers and eventually even individual consumers. That’s right: Holy Grail wants you to have your own carbon capture device, possibly even right in your backyard. But the company still likely has a long road ahead of it.

“We’re essentially shifting the scaling factor from building a very large mega-ton plant and having the project management and all that stuff to building scrubbers in an assembly line, like a consumer product to be manufactured.”

Pereira said many approaches will be needed to tackle the mammoth problem of reducing the amount of CO2 in the atmosphere. “The problem is just too big,” he said.

The story has been updated to reflect that Holy Grail is based in Mountain View, not Cupertino.

Volvo Cars wants to make a concept car using “fossil-free” steel

By Aria Alamalhodaei

Volvo Cars wants to be climate-neutral by 2040, and it has set its sights on a major vehicle component that’s notoriously difficult to decarbonize: steel. The automaker has partnered with Swedish company SSAB, which manufactures “fossil-free” steel, for a limited amount of the material to be used in a concept car as early as 2025.

A climate-neutral car is considered by many to be a moonshot goal, not least because of the challenge in decarbonizing components like steel. The steel industry, which sits at the heart of industrialized economies, accounts for around 8% of worldwide carbon emissions. In vehicles, steel and iron production amount to around 35% of emissions in an internal combustion engine vehicle and 20% in a battery electric car.

“It’s steel, it’s aluminum and it’s factories,” Volvo’s head of procurement Kerstin Enochsson explained to TechCrunch. “If we are solving the supply chains and making those supply chains much more sustainable, we are solving the absolute vast majority of the CO2 issues with cars.”

Recent innovations in green hydrogen production mean that fossil-free steel may soon become a reality. SSAB has developed a process to make steel using hydrogen, rather than coal. The hydrogen is produced via electrolysis, a process that uses renewable energy to split water into hydrogen and oxygen.

The steel will be produced at a pilot plant in Luleå, Sweden. The plant was started by SSAB under its HYBRIT initiative, a joint venture with Swedish utility Vattenfall and mining company LKAB. SSAB said it hopes to become a commercial-scale supplier of decarbonized steel by 2026.

Once it receives the material, Volvo will perform tests on its characteristics, such as its durability and heat resistance, Enochsson said. While Volvo declined to specify the exact amount of steel it will be receiving from SSAB, Enochsson specified it was a “project size,” rather than an amount for mass manufacture. But Volvo is also thinking long-term.

“From, say, 2025 and onwards, we can talk about, how do we industrialize? Because obviously, we want not only to have fossil-free steel and a concept car, but we want to use it very broadly. But we can’t take decisions today for industrialization, because we first need to see how this steel behaves,” she explained.

Enochsson said it was too early to say whether moving to decarbonized steel would raise the cost of a vehicle, but she expressed confidence that sustainability was an important factor to consumers. She also alluded to conversations Volvo was having with other sustainable steel manufacturers, but she declined to provide any details as to whether those conversations would yield future partnerships.

Volvo is not the only automaker that has expressed interest in sustainable supply chains. Polestar, the electric vehicle brand spun out of Volvo Car Group, said it wanted to create a climate-neutral car by 2030. EV startup Fisker has set a similar goal, for 2027.

“This is definitely a movement,” Enochsson said. “There are more and more OEMs expecting higher sustainability targets and it’s moving in the right direction. But it is a tremendous job to simply secure it all across.”

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