Houston agriculture robotics co. raises $21.5M series A to grow climatetech solution

freshly funded

The series A funding will support the deployment of its biochar machines across Texas, Oklahoma, Arkansas, and Louisiana. Photo courtesy of Applied Carbon

A Houston energy tech startup has raised a $21.5 million series a round of funding to support the advancement of its automated technology that converts field wastes into stable carbon.

Applied Carbon, previously known as Climate Robotics, announced that its fresh round of funding was led by TO VC, with participation from Congruent Ventures, Grantham Foundation, Microsoft Climate Innovation Fund, S2G Ventures, Overture.vc, Wireframe Ventures, Autodesk Foundation, Anglo American, Susquehanna Foundation, US Endowment for Forestry and Communities, TELUS Pollinator Fund for Good, and Elemental Excelerator.

The series A funding will support the deployment of its biochar machines across Texas, Oklahoma, Arkansas, and Louisiana.

"Multiple independent studies indicate that converting crop waste into biochar has the potential to remove gigatons of CO2 from the atmosphere each year, while creating trillions of dollars in value for the world's farmers," Jason Aramburu, co-founder and CEO of Applied Carbon, says in a news release. "However, there is no commercially available technology to convert these wastes at low cost.

"Applied Carbon's patented in-field biochar production system is the first solution that can convert crop waste into biochar at a scale and a cost that makes sense for broad acre farming," he continues.

Applied Carbon rebranded in June shortly after being named a top 20 finalist in XPRIZE's four-year, $100 million global Carbon Removal Competition. The company also was named a semi-finalist and awarded $50,000 from the Department of Energy's Carbon Dioxide Removal Purchase Pilot Prize program in May.

"Up to one-third of excess CO2 that has accumulated in the atmosphere since the start of human civilization has come from humans disturbing soil through agriculture," Joshua Phitoussi, co-founder and managing partner at TO VC, adds. "To reach our net-zero objectives, we need to put that carbon back where it belongs.

"Biochar is unique in its potential to do so at a permanence and price point that are conducive to mass-scale adoption of carbon dioxide removal solutions, while also leaving farmers and consumers better off thanks to better soil health and nutrition," he continues. "Thanks to its technology and business model, Applied Carbon is the only company that turns that potential into reality."

The company's robotic technology works in field, picking up agricultural crop residue following harvesting and converts it into biochar in a single pass. The benefits included increasing soil health, improving agronomic productivity, and reducing lime and fertilizer requirements, while also providing a carbon removal and storage solution.

"We've been looking at the biochar sector for over a decade and Applied Carbon's in-field proposition is incredibly compelling," adds Joshua Posamentier, co-founder and managing partner of Congruent Ventures. "The two most exciting things about this approach are that it profitably swings the agricultural sector from carbon positive to carbon negative and that it can get to world-scale impact, on a meaningful timeline, while saving farmers money."

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What is it going to take to make Houston a leader in the energy transition? Access to capital, according to a panel from Venture Houston. Photo by Natalie Harms/EnergyCapital

Experts: Houston needs to unlock early-stage capital to lead the energy transition

show me the money

Last week, Tim Latimer sat on a panel that consisted mostly of his company's investors and discussed what he felt the missing piece still was for Houston's energy transition and innovation community.

“There’s no better place in the world than Houston to build and scale a climate tech startup," he says on a Venture Houston panel titled Seeding Sustainability: Unlocking the Power of Early Stage Investments.

“But I don’t know if I’m ready to make the claim that we’re the best place to start a business,” he adds.

Latimer, who co-founded Fervo Energy in the Bay Area in 2017 before relocating the company to Houston, explains that his company raised capital on the West Coast ahead of moving to Texas to grow and scale. This allowed the company, which recently announced the success of a major pilot, to tap into early stage funding and then make the most of every dollar raised by moving to a region where the money would last longer — and where there's talent, customers, and more.

“The dream for us to have a truly unlocked ecosystem is that the whole pattern can happen here in Houston, and the gap I see is that capital formation side,” he says.

Latimer was joined on the panel by some of Fervo's investors: Mark Cupta, managing partner of Prelude Ventures; Andrea Course, venture principal of Shell Ventures; and Joshua Posamentier, co-founder and managing partner of Congruent Ventures.

Each of the panelists weighed in on what it would take for Houston to emerge as a leader within the global energy transition. Cupta says that it's going to take the city time to build out activity, successful outcomes, talent, money, and more.

“The venture capital community is an ecosystem, and that ecosystem consists of multiple stakeholders that all have to work in concert with each other," he says. "It has to be a flywheel that spins up over time.”

Course, the only Houston-based investor on the panel, says that Houston has potential because it's got talent, industry, and money, or TIM, as she describes.

“I think Houston is actually the perfect place for becoming the energy transition capital. If you ask me, I think we already are.” Course explains. “It really just takes people doing what we’re doing now to make it even greater."

Posamentier, who previously shared his outlook on Houston in a Q&A with EnergyCapital, explains that access to funding isn't the only issue. “There’s a lot more money than there are investable opportunities at the moment,” he says.

The panel also weighed in on the difference between venture capital and funding coming out of corporations.

“VCs and CVCs have different timelines,” Course explains, saying VC firms have 5- to 7-year life cycles. After that, they need to see an exit to be able to provide that return. “With a CVC, we don’t really have that. Of course we want to show financial returns, but we are long-duration capital.

CVC is patient capital with value-add investors, but Course admits there's a longer due diligence because she wants to find a strategic stakeholder before an investment is made.

“The worst thing that could happen is that Shell gives you money, but they don’t give you business. We don’t want that,” she says.

Waiting for that right investor can be extremely important to company success, Latimer says from the founder perspective.

“It’s hard to put a hard dollar value on help, but our ability to have advisers and introductions from different types of investors … makes all the difference in the world,” he says on the panel. “A lot of startup founders think about their org design very critically and who they want to bring onto the team, and you should be deliberate on your cap table.”

Josh Posamentier, co-founder and managing partner at Congruent Ventures, will join Venture Houston as a speaker this year. Photo via congruentvc.com

Sustainability investor addresses startup challenges, Houston's capital shortages, and more

Q&A

It's been a challenging year for venture capital, but how are climatetech startups doing specifically? One Bay Area investor shares his point of view on this this topic ahead of Venture Houston next week.

Joshua Posamentier, co-founder and managing partner of Congruent Ventures, a San Francisco-based firm that invests in early-stage sustainable companies, is taking the stage at Venture Houston on September 7. Among others, Posamentier will be in conversation with the founder of one of his firm's portfolio companies, Fervo Energy, discussing seed and early-stage funding for sustainability-focused startups.

Venture Houston is presented by HX Venture Fund, a fund of funds that deploys capital into non-Houston firms to encourage investment in local startups. This year's theme is "Spotlighting the path for decarbonization in a digital world."

Posamentier, who has worked over a decade in this space, shares some of his thoughts on Houston as an energy transition leader, the challenges climate-tech startups face, and more in an interview with EnergyCapital.

EnergyCapital: How do you see Houston and its role in this energy transition, its challenges, its opportunities, etc.?

Josh Posamentier: I actually tend to disagree with the people that say Houston is too far down the oil and gas path. I mean, it's it's capitalism at the end of the day. There's money to be made in in climate mitigation technologies. People are going to go chase it, and I think Houston, of all places, is a pretty capitalistic city. And people are definitely not shy about chasing the next big opportunity. I mean, it was oil and natural gas before, and now it's now it's alternative energy. And so I think from that perspective, it's fine. There's a lot of money.

I think the biggest challenge is honestly, especially on a perception basis, a lot of the policy and social stuff that's endemic to Texas, which is a bummer. I mean, especially for younger talent. Austin had a shine, but I think that's largely gone and Houston never had it. So, I think it's something that needs to be overcome and needs to be thought about at a state level basis, especially if you're going to want to attract young entrepreneurial talent.

EC: What are some of the challenges energy transition startups are facing these days? How is your fund kind of supporting your portfolio companies through these challenges?

JP: There's some normalization that's had to happen over the last 9 to 12 months. As you know, corrections have come down the pipe in the venture ecosystem. By all accounts, it has been really frothy for the last few years, especially so in parts of climate. Some of that's due to the the proliferation of investment from non climate-specific firms. And it's, in many ways, decoupled from the ups and downs of different parts of the venture ecosystem, but it also has different timelines. I think not everyone always appreciates what that means and what that implies for for startups. So there's a lot of frustration and a lot of missed expectations in the early stage part of the ecosystem that are slowly getting fixed. I think getting expectations more in line with reality is going to help immensely.

The other thing is just figuring out how to talk more in a language that venture investors understand. I think that's a little bit of a challenge. There's there's actually a pretty big gap between if you're an oil and gas developer and thinking about how you fund that kind of a business versus how you fund a technology-enabling business. Fervo Energy is an interesting example. It's a tech company, but now it's really a tech enabled developer because they have no choice but to do that full stack. They went to school out here. They understand the ecosystem. They've really taken the effort to really understand all the capital players. And so we're waiting to see how that ultimately plays out.

But there's just different capital. I think it is a little challenging. And this is a good thing. There does need to be a way, I think, to just get people more exposure to to the market there — in the Houston market specifically. If you're spinning at Stanford, there are hundreds of VCs within walking distance. In Houston, the ones I know I can count on one hand.

EC: Has that pace of commercialization changed over the years or have founders found ways to survive that valley of death?

JP: I don't think anything's really changed fundamentally. I think people have gotten a little more clever about understanding how the adoption occurs, and figuring out how to phase into those processes that that comes with experience. But there's only so much acceleration you can do when you're dealing with critical infrastructure. You know, people are not going to want to just jump right in, rip out, and replace things that keep the lights on. And so you just have to figure out how to how to capitalize a business in such a way that you can you can live with those kinds of timelines. Venture capital is a fantastic tool, and it is far from the right tool for every problem. And so there are plenty of opportunities to deploy other tools that are more appropriate to different kinds of different kinds of challenges.

EC: What attracted you to investing in Fervo Energy?

JP: So, it's how we think about portfolio construction. Fervo has an amazing team, which we will bend a lot of rules for, and we saw this opportunity as something they could build a ton of value by validating the tech, establishing a huge land position, and then raising different kinds of capital for the out years and for the project development. A bunch of our companies took venture capital to develop a technology, and then they know that venture is not the right class of capital to then scale that throughout the world and whatever. So they would basically raise other forms of capital in the out years to deploy the technologies.

EC: And one of those options is government funding. How do your portfolio companies utilize that?

JP: A big chunk of our portfolio has some government money, even if it's very early stage research grants or something like that. I see government money being the most effective in a couple of ways. One way obviously is to get the core research out of it versus just spin it into something more commercial that we can all then look at.

The other place that is really exciting is in is getting technologies to scale where they're then cost effective without further subsidies. When we underwrite companies, we are very explicitly underwriting them in the absence of subsidies at scale. The assumption is those are just there to basically bridge the gap between "this is totally uneconomic because it's a tiny, tiny little factory or something" versus "it would be plenty economic if it were a big factory." So, if they can just bridge that gap with a little bit of government money.

We've been through this this cycle a couple of times, and we can't in good faith underwrite anything assuming that government subsidies are going to continue. We very much believe it's a bridge — it's got to be a bridge to something. It can't be a bridge to nowhere. And I think there are a lot of companies out there today that are almost designed to just pump the government incentives, and that's not a recipe for a business that can grow on its own over time.

------

This conversation has been edited for brevity and clarity.

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CenterPoint's resiliency plan, Chevron starts up new site, and more trending Houston energy transition news

what's trending

Editor'snote: From Chevron's new deepwater project going online to two Texas companies collaborating on energy storage, these are the top headlines that resonated with EnergyCapital readers on social media and daily newsletter this week.

CenterPoint Energy releases details of resiliency plan

To improve resiliency and reduce the risk of outages from storms or hurricanes, CenterPoint Energy announced its Greater Houston Resiliency Initiative.

The initiative will include an “accelerated timeline to execute specific actions to strengthen electric infrastructure across Houston, and more than 40 critical actions in total to strengthen the electric grid, and improve the company's customer communications and emergency coordination before the next hurricane,” according to a news release.

As part of the “Taking Action Now” section, more than 2,500 CenterPoint frontline workers and contractors will be taking a series of targeted actions to strengthen the grid and reduce the risk of outages before the next major storm that includes installing stronger and more storm-resilient poles, trimming or removal of vegetation from lines, and installing 300 automated devices, which CenterPoint says can help reenergize certain lines and lead to less without power. Continue reading.

Chevron launches production at deepwater project that aims to lower carbon intensity off offshore activity

Chevron's newest deepwater oil and natural gas production project, called the Anchor, is an all-electric facility. Photo courtesy of Chevron

Chevron's new massive deepwater oil and natural gas project in the Gulf of Mexico is officially up and running.

Chevron Corp., which recently announced its relocating its global headquarters to Houston, has officially started oil and natural gas production from its Anchor project in the U.S. Gulf of Mexico.

The semi-submersible floating production unit features a high-pressure technology that operates at up to 20,000 psi with reservoir depths reaching 34,000 feet below sea level, Chevron reports, and has a capacity of 75,000 gross barrels of oil per day and 28 million gross cubic feet of natural gas per day. Continue reading.

Two Texas companies combine to enhance hydrogen fueling, storage infrastructure

Celly offers logistics, storage, and dispensing to innovative modular refueling station services. Photo via cellyh2.com

A provider of hydrogen infrastructure solutions Celly H2 has announced its acquisition of ChemTech Energy (CNE) to continue Celly's mission of leading hydrogen fueling and storage infrastructure.

The Willis, Texas-based company offers logistics, storage, and dispensing to innovative modular refueling station services. Montgomery’s Chemtec Energy has a 25-year legacy in the oil and gas market and specializes in modular hydrogen fueling and storage infrastructure solutions.

"This acquisition marks a significant milestone for Celly as we continue to expand our portfolio in the renewable energy market," Founder and CEO of Celly Austin Terry says in a news release. Continue reading.

Houston clean energy provider raises $10.8M series A

Branch Energy aims to provide customers with clean energy at a lower cost than competitors. Photo via Getty Images

A tech-driven retail energy provider based in Houston has secured an oversubscribed series A round of funding.

Branch Energy raised a $10.8 million round led by climate-focused venture capital firm Prelude Ventures with co-investor Zero Infinity Partners, an infrastructure tech-focused firm. The fresh funding will go toward accelerating the company's battery management tech and build out the infrastructure of its field services.

A vertically integrated power provider, Branch Energy aims to provide customers with demand management software and battery storage systems to ensure long-term, stable, and clean energy at a lower cost than competitors. Continue reading.

Woodside to acquire clean ammonia project outside of Houston in $2.4B deal

OCI broke ground on the project in 2022. Photo via oci-global.com

Woodside Energy has announced its acquiring a Beaumont, Texas, clean ammonia project that's slated to deliver its first ammonia by 2025 and lower carbon ammonia by 2026.

The agreement is for Woodside to acquire 100 percent of OCI Clean Ammonia Holding and its lower carbon ammonia project in Beaumont in an all-cash deal of approximately $2.35 billion. According to Woodside CEO Meg O’Neill, the acquisition positions Woodside as an early mover in clean ammonia within the energy transition.

“This transaction positions Woodside in the growing lower carbon ammonia market," O’Neill says in a news release. "The potential applications for lower carbon ammonia are in power generation, marine fuels and as an industrial feedstock, as it displaces higher-emitting fuels. Continue reading.

New report maps Houston workforce development strategies as companies transition to cleaner energy

to-do list

The University of Houston’s Energy University latest study with UH’s Division of Energy and Innovation with stakeholders from the energy industry, academia have released findings from a collaborative white paper, titled "Workforce Development for the Future of Energy.”

UH Energy’s workforce analysis found that the greatest workforce gains occur with an “all-of-the-above” strategy to address the global shift towards low-carbon energy solutions. This would balance electrification and increased attention to renewables with liquid fuels, biomass, hydrogen, carbon capture, utilization and storage commonly known as CCUS, and carbon dioxide removal, according to a news release.

The authors of the paper believe this would support economic and employment growth, which would leverage workers from traditional energy sectors that may lose jobs during the transition.

The emerging hydrogen ecosystem is expected to create about 180,000 new jobs in the greater Houston area, which will offer an average annual income of approximately $75,000. Currently, 40 percent of Houston’s employment is tied to the energy sector.

“To sustain the Houston region’s growth, it’s important that we broaden workforce participation and opportunities,” Ramanan Krishnamoorti, vice president of energy and innovation at UH, says in a news release. “Ensuring workforce readiness for new energy jobs and making sure we include disadvantaged communities is crucial.”

Some of the key takeaways include strategies that include partnering for success, hands-on training programs, flexible education pathways, comprehensive support services, and early and ongoing outreach initiatives.

“The greater Houston area’s journey towards a low-carbon future is both a challenge and an opportunity,” Krishnamoorti continues. “The region’s ability to adapt and lead in this new era will depend on its commitment to collaboration, innovation, and inclusivity. By preparing its workforce, engaging its communities, and leveraging its industrial heritage, we can redefine our region and continue to thrive as a global energy leader.”

The study was backed by federal funding from the Department of the Treasury through the State of Texas under the Resources and Ecosystems Sustainability, Tourist Opportunities, and Revived Economies of the Gulf Coast States Act of 2012.

Houston geothermal startup selects Texas location for first energy storage facility

major milestone

Houston-based geothermal energy startup Sage Geosystems has teamed up with a utility provider for an energy storage facility in the San Antonio metro area.

The three-megawatt EarthStore facility will be on land controlled by the San Miguel Electric Cooperative, which produces electricity for customers in 47 South Texas counties. The facility will be located in the town of Christine, near the cooperative’s coal-fired power plant.

Sage says its energy storage system will be paired with solar energy to supply power for the grid operated by the Electric Reliability Council of Texas (ERCOT). The facility is set to open later this year.

“Once operational, our EarthStore facility in Christine will be the first geothermal energy storage system to store potential energy deep in the earth and supply electrons to a power grid,” Cindy Taff, CEO of Sage Geosystems, says in a news release.

The facility is being designed to store geothermal energy during six- to 10-hour periods.

“Long-duration energy storage is crucial for the ERCOT utility grid, especially with the increasing integration of intermittent wind and solar power generation,” says Craig Courter, CEO of the San Miguel Electric Cooperative.

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