With all the recent local investment around sustainable aviation fuel (SAF), climate tech is a sector ready to take off in Chicago — yielding nine clean-energy startups in this year's Inno Fire Awards.
Climate tech was not immune, however, to the larger venture capital funding decline seen over the past two years, though it fared better than most verticals.
VC investment in climate tech fell 14.5% to $41.1 billion in 2023, according to PitchBook data, down from the 2021 high point of $51 billion. That’s still a significant spike from the $25.2 billion raised for climate tech in 2020. Climate-tech companies have also grown faster and increased their share of patents filed compared with their tech peers, according to PitchBook.
However, the decline in climate-tech VC deal value the past two years was steepest at the early (25%) and venture-growth stages (34.5%). PitchBook defines climate tech as technologies that act to mitigate climate change by reducing greenhouse gas emissions.
For the rest of Chicago Inno's Fire Awards, including our "fire starters," "embers," "burning hot" and "ready to explode" categories, check out the full list.
With Chicago accelerator programs such as Evergreen Climate Innovations, Gener8tor and mHub — all of which have focused programs in climate tech — and local investors including Buoyant Ventures raising new funds focused on the sector, the hope is that all the recent momentum won't be stymied by the general VC decline.
Aether Fuels, a clean-tech startup that’s working to commercialize sustainable fuels with principal offices in Chicago and Singapore, for example, announced a $34 million Series A just days after the Inno Fire list was first released. It has joined LanzaJet in trying to establish Chicago as a key player in the transition to greener fuels, as the Biden administration set a goal in 2021 for the U.S. to produce 3 billion gallons of SAF annually by 2030.
It’s just one of several climate technologies being developed in Chicago right now.
Other climate-tech startups featured on this year’s Inno Fire list are looking to create more durable fuel cells, retrofitting diesel engines and using fungi to consume waste and create renewable bio-based materials.
Here are Chicago Inno's 2024 Fire Awards "clean energy" winners:
The first tenant at Fulton Labs' Science Ready Lab Suites, Celadyne Technologies pulled in $4.5 million in February to accelerate its growth as it aims to be at the center of the hydrogen revolution. CEO Gary Ong told Chicago Inno the company expects to double its customer base with the new funding as it continues to advance its fuel cell technology in the next year.
ClearFlame Engine Technologies
Backed by Bill Gates' Breakthrough Energy Ventures, ClearFlame Engine Technologies sold its first truck in January. ClearFlame expects to make additional sales in the first half of 2024 and is completing lease agreements for limited production trucks, targeting two to three dozen units with select customers. The Chicago startup retrofits diesel engines to run on cleaner fuel and secured $30 million in Series B funding in March 2023.
Founded in 2020, fuel procurement and management platform Fuel Me closed on new financing co-led by Pritzker Group Venture Capital and Tribeca Venture Partners in March after seeing fivefold revenue growth year-over-year. Fuel Me's $18 million Series A round included new investors such as Hyde Park Angels. The startup is focused on expanding its market share in 2024.
Chicago startup HData closed on a $10 million Series A in March that will be used to grow its platform and create the largest library of regulated energy data available. The round was led by Chicago's Buoyant Ventures, the early-stage venture fund focused on climate tech, with participation from Hyde Park Venture Partners, among others.
Named to Time's 100 Most Influential Companies, LanzaJet has been cashing checks all year including $30 million from Southwest Airlines and $20 million from Groupe ADP as it works to make the aviation industry more sustainable. The company recently opened its Freedom Pines Fuels facility, the world's first alcohol-to-jet sustainable aviation fuel production facility. The company was one of 40 to join the Sustainable Aviation Fuel coalition with the goal of rapidly scaling investment in the SAF sector as well as advocate for incentives and policies necessary to build the marketplace.
After pulling in $2.2 million in seed funding in 2023, Chicago clean-tech startup Mycocycle added $3.6 million in a seed extension earlier this year. Founder and CEO Joanne Rodriguez said in May that the startup, which trains fungi to eat trash, has tripled its research and development footprint following the seed extension and would be expanding its commercialization in 2024. The startup recently partnered with Tarkett to leverage the power of mushrooms to manage construction waste.
NanoGraf is another company that keeps collecting checks, including $24 million in total investment from the Department of Defense between 2023 and 2024 as of January's latest $15 million. The battery startup locked up new space in March to help further build out its technology and manufacturing footprint after opening the first large-volume silicon-oxide manufacturing facility in the West Loop three months earlier.
Chicago startup Natural Fiber Welding makes sustainable fashion materials for brands like Ralph Lauren and Alexander McQueen. The startup partnered with Sage Automotive Interiors in October to bring plastic-free, plant-based leather alternatives to automotive interiors as part of Sage owner Asahi Kasei Group's efforts to invest $100 million in early-stage startups that aim to solve environmental issues. Natural Fiber Welding raised $85 million in 2022 and received a $3 million loan from the Peoria County Board to purchase manufacturing equipment.
After signing on for around 62,000 square feet at the Terminal in West Humboldt Park last year, Chicago startup Numat Technologies will add another manufacturing facility in Wisconsin. Serving as the company's second U.S.-based, high-volume metal-organic frameworks manufacturing facility, the site is expected to be operational in the second half of 2024. The Northwestern spinout has raised $23.7 million to date.
Meet these honorees and more at Chicago Inno's first in-person Fire Awards event since 2019, to be held Tuesday, Aug. 27, at TeamWorking by TechNexus. There we will also reveal the Blazer winners, the "clean energy" and other honorees that stood out in each category.
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