Many startups face significant challenges after securing initial funding, particularly those involved in industrial-scale hardware, like numerous climate tech ventures. These companies often require substantial capital, but once they outgrow conventional venture funding, they struggle to attract the necessary investment.
While infrastructure funds have traditionally stepped in to bridge this funding gap, many have been cautious about committing to climate tech initiatives. However, one firm sees potential in this sector. Ara Partners has successfully raised an $800 million infrastructure fund aimed specifically at reducing carbon emissions in hard-to-decarbonise industrial sectors. Initially, Ara aimed for $500 million, but due to strong interest from a diverse group of investors, including pension funds, insurance companies, and sovereign wealth funds, they exceeded their target.
The fund has already made three key investments, including a company in Ireland that recycles household organic waste and a developer of biofuels terminals. Ara’s strategy focuses on transforming existing assets into low-carbon alternatives, enabling a more sustainable approach to development.
This significant fundraising effort comes at a pivotal moment, marked by political uncertainty regarding decarbonisation in the U.S., yet with growing confidence in the economic viability of low-carbon technologies. Over the years, numerous companies have successfully reduced the costs associated with zero and low-carbon solutions, making them competitive with traditional methods.
One notable investment by Ara includes Divert, a company dedicated to minimising food waste by donating edible food and converting what cannot be saved into biogas for energy production. This environmentally friendly solution stands in stark contrast to the conventional practice of sending organic waste to landfills, which contributes to methane pollution. Divert’s model is both economically beneficial and sustainable.
Ara Partners is expected to announce its fourth investment soon, further solidifying its commitment to fostering advancements in climate technology while addressing critical environmental issues.
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