From algae to zinc, Toyota investments get greener

When a first wave of entrepreneurs introduced climate-related technology more than a decade ago, Lisa Coca thought she'd witness swift transformations within her purview and across industries.

But the products were not quite right. The consumer demand was not quite there. The broader market wasn't quite ready.

Now, as Coca vets startups for potential investment as partner at the Toyota Ventures Climate Fund, she's observed the maturation of the burgeoning climate-tech industry.

"The view was the tailwinds of legislation and consumer demand and all that would pull in the capital, and the hope was that the talent would follow," she said. "And it absolutely has. You're seeing a new breed and crop of entrepreneur in climate tech, and it's exciting."

Coca, who joined Toyota Ventures in September, has cultivated that crop. During the past two months, Toyota Ventures, the early-stage venture capital arm of its namesake automaker, has invested in five startups from its $150 million Climate Fund, which launched last June.

Toyota Ventures and Union Square Ventures led a $12 million Series A funding round for Brilliant Planet, a London startup that's utilizing algae in capturing carbon. Toyota's Climate Fund further participated in funding rounds for carbon marketplace Nori, energy storage startup E-Zinc, green hydrogen tech company Ecolectro and ocean agriculture pioneer Alora.

Terms were not disclosed. Collectively, the investments underscore Toyota Ventures' stated intentions of investing in batteries, alternative energy sources, hydrogen, circular economies, blue and green carbon, and food and agriculture.

"We recognize it's really about carbon and how we reduce it," Jim Adler, managing partner of Toyota Ventures, told Automotive News. "There are many solutions out there, and we're pretty humble about what will work."

That humility includes straying from traditional automotive paths and the usual intersections where auto and climate tech meet. Case in point: Toyota Ventures' interest and investment in Brilliant Planet, which grows algae blooms in deserts as a method for capturing carbon.

The company's technology could someday remove gigatons of carbon from the atmosphere, which could then be monetized through carbon markets. At scale, Adler suggests, it could reduce greenhouse gas emissions by 4 percent.

The global nature of climate tech's addressable markets can be alluring for investors, who collectively infused $87.5 billion into the field during the second half of 2020 and first half of 2021. That's a 210 percent increase from the prior 12-month period, according to consulting firm PwC.

But for Silicon Valley venture capitalists, Coca cautions that climate tech brings its own set of challenges.

"The reality is that folks are used to software and valuations driven by software," she said. "This is hard tech, and hardware is hard. It's far more capital-intensive. There's a number of nuances to climate tech that venture investors are having to acclimate themselves to."

She's familiar with those lessons. Coca was managing director and entrepreneur-in-residence with Intel's emerging-growth division before joining Toyota and previously was a founding member of GE Ventures. Before that, she worked as managing director and global sustainability leader of GE Capital Real Estate's $90 billion global property portfolio.

That was a little more than a decade ago, when "sustainability wasn't cool," she said. "That was when you'd mention something about green buildings and people would say, 'What are you talking about?'

"You were dragging people by the hair. Now, it's cool."