FTCM - 4th July to 10th July
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Read on for a recap of the #cleantech and #climatetech deals from the past week.
Deal of the week - Zeem Solutions
Zeem Solutions ("Zeem") is an EV Fleet-as-a-Service provider. The company builds and operates zero-emission fleet depots for vans and trucks. Zeem claims it will enable customers to operate a fleet of battery electric vehicles at a lower costs than a traditional fossil-fuelled fleet. Zeem offers vans, shuttle buses and trucks on flat monthly fees, inclusive of vehicle lease, charging, maintenance and insurance costs.
Zeem recently launched their first depot in Los Angeles, with nearly 100 currently available electric vehicles, 77 fast charging ports, and 53 Level 2 chargers. At its planned scale of 8MW charging capacity and 200 vehicles this depot will be one of the largest private commercial EV charging facility in the United States.
What's the deal?
Zeem has announced a $50 million capital commitment from a fund managed by Arclight Capital Partners, an infrastructure and energy investor. Funding under the commitment will enable Zeem to expand its business model.
Zeem has also announced a strategic partnership with LAZ Parking Realty Investors (LPRI), who have taken an equity stake in Zeem. LAZ Parking?has a national network of more than 3,500 managed locations in 39 states and 444 cities. Together, the parties will co-developing new charging and service depot locations.?LPRI will bring site selection, acquisition, and construction capabilities to Zeem's?fleet electrification expertise.
Why is this interesting?
- Easy - whilst many of these customers may only go electric when it is economically rational (like now, given high prices at the pump), the market is clearly heading rapidly in that direction and Zeem offers an easy entry point for fleet operators to start the journey. The only requirement is a long term lease on a vehicle, but use of the Zeem facilities is a month-to-month proposition. Rather than tackling the long lead-time activity of delivering on-site charging infrastructure to each customer (like 7GEN, see below), Zeem builds depots and provides charging, maintenance and parking in a central location. It's a model that offers fleet owners an easier and quicker transitory path to fleet electrification.
- Hub Model - we're already familiar with the hub model and it works well. It's an efficient solution for transport solutions such as taxis, buses, vans and trucks. Parcel delivery services like Fedex, UPS and others are already well down the path of building hubs for electric vans and trucks. As outlined in this case study, centralisation allows a range of technologies to be deployed that may not be economic for a 10-20 bay location, but are essential for managing electricity demand in a 200 bay location.
- High Utilisation - the great challenge facing any form of public charging infrastructure is the asset utilisation rate. The Zeem model removes a large part of the risk, as each vehicle returns to base for charging at the end of the working day. Zeem also provide opportunity charging during the day to non-Zeem vehicles. By selecting a central location (less than 2 miles from LAX), it's easy to see a scenario in which Zeem operates as a high capacity recharging station 24/7.
- Modular - building hubs such as this is a relatively modular activity and one where there will be hundreds of cities on the development roadmap for Zeem. Within 5 miles of the LAX hub, Zeem have qualified 300 companies with an aggregate fleet of 10,000 vehicles within a five-mile radius of the location. That suggests a development path which is modular; pre-sales, capital investment, revenue maximisation. They will learn a lot from the first 10 sites.
Further reading
There is an excellent interview with the CEO, Paul Gioupis, here.
Other notable #cleantech and #climatetech deals
I've selected a handful of other deals that were interesting to me. As is usual, I have more questions than answers. If you have a perspective on any of these deals, please share it in the comments.
- 7GEN - sticking with the theme of electrification of transport, Canadian company 7 Generation Capital (7GEN) raised an $8 million Series A, led by Fonds de solidarite FTQ and Siemens. 7GEN develops ons-site charging infrastructure and vehicle leasing projects that enable commercial fleet managers to transition to electric vehicles. 7GEN is an example of a company using a combination of software, engineering expertise and consultancy to help fleet operators to transition medium and heavy-duty fleets to electric vehicles. Similar venture-backed companies include Synop, Viriciti (acquired by ChargePoint) and eIQ Mobility.
- EVCS - the rollout of public EV charging infrastructure continues to accelerate. EVCS has 600 DC fast chargers across approximately 150 sites in California, Oregon and Washington. They have raised $50 million debt and $18.8 million Series A equity to expand this network to ~1,500 chargers in the next 12-18 months. The closest comparable to EVCS is EVgo, who will have about 3,000 DC chargers operational by the end of 2022. I note that EVgo has a lot more cash on hand ($440 million) and is still loss making on an EBITDA and cash basis (about $20 million per quarter). In short - to grow at a similar pace to EVgo, EVCS is going to need to raise capital on a regular basis and demonstrate it has a business model that isn't getting too far ahead of demand for DC fast charging services.
- Xpansiv - Xpansiv runs the world's biggest voluntary carbon credit offsets marketplace, transacting 90% of the exchange-traded voluntary carbon credits and around one third of the total carbon offsets market. Demand for voluntary carbon offsets has exploded as corporates sign up to net-zero pledges and demand is expected to grow by 5-10x in the next 10 years. Xpansiv had been investigating an IPO on the Australian Stock Exchange, but instead chose to accept a $400 million investment from Blackstone. The primary use of funds is completion of an acquisition of APX (a provider of registry infrastructure for energy and environmental markets). This newsletter is called Follow The #Climatetech Money; following that principle, I'd suggest that big money is pouring into the standardisation and scaling of financial instruments used to trade carbon offsets. As much as these instruments may be unpalatable to eco-warriors, they will be a core part of every corporations strategy seeking to reduce their carbon footprint. On the plus side, companies that are building capabilities to measure and verify CO2 and greenhouse gas emissions will be able to realize value sooner through accreditation on platforms such as Xpansiv. For example, see the partnership between Xpansiv and Project Canary to create a market for responsible natural gas supply that has lower fugitive methane emissions. In the winner-take-all game of financial marketplaces and exchanges, Xpansiv is well positioned.
- Pina Earth - in a similar vein, but at a much smaller scale, Pina Earth is developing a platform for European forest owners to sell high-quality carbon credits. Carbon sequestration via forestry has appeal, but there is a significant trust deficit associated that needs to be overcome if this mechanism is to achieve scale. Pina Earth has raised a $2.5 million seed round to develop the technology and build a pipeline of thousands of acres of forest in their home market (Germany). Similar venture-backed companies include NCX, Pachama and Reforestum.
- FlexiDAO - I wrote last week about Cleartrace, a very similar company to FlexiDAO. FlexiDAO have raised $6.5 million Series A funding, led by SET Ventures with strategic investment from Google and Microsoft Climate Innovation Fund. Both are developing blockchain-based energy traceability technology to track energy usage back to the source. This will allow a corporation to demonstrate that it's sites are running 24/7 on renewable energy. It seems like a pretty small problem to me, because the results are predictable - there will be certain hours of the day (typically early morning and early evening) when renewable energy is in short supply and therefore expensive to procure. That said, plenty of smart people seem to be building and investing in these types of companies. This may just be a good example of where the goals of venture capital investors and entrepreneurs overlap nicely - software that is scalable, meets an expressed need in the market and can be quickly built and sold for a 10x return. Not that there's anything wrong with that...
- Traace - a next-generation carbon footprint platform, that combines measurement of carbon emissions with a bespoke action plan to reduce carbon emissions at a corporate, country or business unit level. Traace have received $2.8 million in seed funding. I'm a fan of platforms that offer simplified data capture and a solutions platform. The partnership with South Pole is promising. This is a crowded space though, and I was immediately reminded of similar companies such as Watershed, PlanA, Normative and Emitwise. Traace will need to get traction with a segment of the market not already served by one of these competing platforms.
Thanks for reading
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