🔒New $100M state fund aims to attract, scale climate technology startups

In July 2020, Connecticut joined 14 other states and the District of Columbia in pledging to combat the climate and health-related impacts of air pollution.

The multistate collaboration was designed to accelerate the market for electric medium- and heavy-duty vehicles.

In Connecticut, the transportation sector accounts for 70% of smog forming air pollution and 38% of greenhouse gas emissions, according to the Environmental Protection Agency.

One of the agreement’s interim goals is to ensure that 30% of medium- and heavy-duty vehicle sales be zero-emission by 2030; it targets 100% zero-emission truck sales by 2050.

The memorandum of understanding reflects Connecticut’s broader attempts to address the environmental, economic and human costs of climate change.

Another example of those efforts is the state’s growing investment in clean technology companies.

Over the past five years, Connecticut Innovations (CI), the state’s quasi-public venture capital arm, has invested $12 million in more than a dozen startups focused on greener, cleaner technology.

In October, CI launched a $100-million ClimateTech Fund, which included federal dollars from the American Rescue Plan that will be invested in early-stage companies to address a broad spectrum of environmental and climate-related issues, including transportation, carbon capture and removal, waste and recycling, and energy efficiency.

Konstantine Drakonakis, managing venture partner of CI’s ClimateTech Fund, said the goal is to invest annually in 15 to 25 companies including early- and late-stage deals with investments ranging from $150,000 to $2 million.

To date, Drakonakis said, the ClimateTech fund has invested $500,000 in Skyview Ventures, a renewable energy investment fund.

CI also provided $250,000 to Stamford-based Roundtrip EV Solutions Inc., a company focused on converting the garbage-hauling industry to electric vehicles.

“Further electrifying our mobility and transportation is going to be a (key) focus of our ClimateTech fund,” Drakonakis said.

Dan Friedberg, founder and CEO of Roundtrip EV Solutions, said the trash-hauling sector is ideal for electric vehicles.

“Garbage trucks run set routes, they’re in neighborhoods and because they drive (slowly) and idle, they burn a ton of fuel and have high maintenance costs,” Friedberg said.

He said electric trucks would reduce annual operating costs for haulers by 15% to 20%, but acknowledges that the upfront cost of converting a fleet can be pricey, with electric trucks running nearly double the cost of traditional diesel trucks.

To address that concern, Roundtrip provides an integrated service model that includes electric trucks, charging stations, energy management and vehicle maintenance services for a monthly fee.

“We provide everything but the driver,” Friedberg said, noting the company is targeting both private and municipal haulers as customers. Much of CI’s investment to date has helped build Roundtrip EV’s sales team.

Electric vehicles, Friedberg said, can also return energy to power grids, an added benefit for haulers to convert to electric.

CI’s eco-focused investments mirror national trends.

According to a 2022 “PwC State of Climate Tech” report, nearly one-quarter of every venture capital dollar invested last year was directed toward climate technology companies.

Planetary resilience

To grow and attract more climate-focused innovation to the state, Connecticut is starting to create climate-centered ecosystems.

In October, UConn announced plans to create a Climate Venture Studio to grow startups at different stages that address decarbonization, alternative energy, planetary resilience and more.

Later this summer, New Haven will be home to a new climate-focused tech startup center, ClimateHaven, which will be located at 770 Chapel St., and operate as a 501(c)3 nonprofit.

Ryan Dings, founding executive director of ClimateHaven, said the facility will initially feature 10,000 square feet of coworking space, conference rooms and research amenities for prototype development.

An additional 20,000 square feet is expected to be completed in 2024. Both Yale University and the Community Foundation for Greater New Haven are helping to fund the space.

Dings most recently served as chief operating officer and general counsel for Somerville, Massachusetts-based Greentown Labs, a climate tech startup incubator.

“Climate change is one of the rare issues that unites moral imperative and economic opportunity,” Dings said. “As our economy commences a journey to decarbonization, we want to ensure we’re working with the highest-quality startups and scaling technologies that are going to have the most impact.”

He said the goal is to find 15 to 25 companies — spun out of Yale or drawn from out of state — whose technologies can be developed and scaled over a period of six to 24 months.

That aligns with Connecticut Innovations’ aspirational targets, too, according to Drakonakis.

While, on average, CI funds less than 10% of applicants, Drakonakis said he expects to provide funding and mentors for Climate Haven’s startup community.

Drakonakis said he also expects to attract private sector support from venture capitalists, corporations and foundations with a vested interest in addressing climate change.

As CI bets tens of millions of dollars on eco-solutions over the next three to five years, Drakonakis said he and his team will have four main criteria for investment: a strong startup leadership team, intellectual property, strong consumer demand and an appetite from investors.