Deal Dive: Not all climate startups are focused on carbon

When Josh Silverman started thinking about the idea for his methane-consuming microbe startup, Windfall Bio, eight years ago, the market just wasn’t ready. Nobody cares about methane, he says. Companies have instead focused on reducing their carbon emissions. But a few years later, the market began to recover.

Menlo Park-based Windfall Bio raised a $28 million Series A round to expand its commercialization efforts. The round was led by Prelude Ventures with participation from Amazon’s Climate Pledge Fund, Incite Ventures and Positive Ventures, among others, as well as existing investors including Mayfield.

Windfall works with industries that produce large amounts of methane, such as agriculture, oil and gas, and landfills. The startup provides methane-eating microbes that absorb methane emissions and turn them into fertilizer. Companies can either use the fertilizers themselves, if they operate in the agricultural sector, or sell them as a source of income.

“We think there’s a big opportunity to leverage this natural ecosystem that gives us a low-cost solution without the need for massive capital investments like we’re seeing with these other carbon capture technologies,” Silverman said. .

Although it took a few years to really get investors and businesses on board, Silverman said that since Windfall launched its seed round last year and came out of stealth in March 2023, demand has been high.

“We had a massive influx from all continents and verticals; tremendous enthusiasm,” Silverman said. “It’s profitable for everyone, whatever the sector. Everyone wants to reduce their carbon footprint, and they want to do it in a way that makes money, but there aren’t many solutions.

Silverman says carbon capture has been the only concern for so long because once carbon is in the atmosphere, it lasts forever, compared to the 10 to 12 year lifespan of methane. A few decades ago, when people thought about climate change, they looked for longer-term solutions. But now that the impacts of climate change are both clearer and worsening, people are waking up to the need for both short- and long-term solutions.

“We literally missed every climate goal we had in place,” Silverman said. For example, no G20 country has the policies in place to meet the Paris Agreement emissions reduction targets. “If all you do is look to the future and not do the day-to-day, you’re missing those goals and you’re missing what’s right in front of you. We have to manage climate factors in the short term, otherwise we won’t be there to manage the long term.”

The lack of attention given to methane is also surprising, because methane can actually generate a better return on investment for companies than their efforts to reduce carbon emissions.

Carbon is a waste, which means that when companies capture it, they do so largely simply to get rid of it, rather than transform it into something else. In comparison, methane is energy, which means it can be captured and put to use much more easily than carbon. Essentially, companies can reduce their carbon emissions for potential savings down the road, or get a super legit carbon credit, while focusing on methane can actually make them money if they work with a company like Windfall.

This deal also stood out to me because Windfall is part of a growing category of startups focused on mitigating today’s climate problems, not just those of the future. While it is good for businesses to focus on mitigating the long-term impacts of climate change or trying to prevent future climate-induced events, we need solutions now.

This reminded me of Convective Capital, a venture fund I’ve written about before that’s dedicated to wildfire technology. It is not dedicated to the technology that helps prevent them, but rather to the technology that helps society adapt now to the impact of increased wildfires. Company founder Bill Clerico told TechCrunch in 2022 that while it’s great to create long-term solutions, they mean nothing if your home is threatened by wildfires this summer.

Silverman said the market is still in its early stages of realizing the potential benefits of investing in methane reduction technology. But progress is good, and while he may be biased, Silverman is happy to see funding going to a climate company that isn’t another carbon credit startup. I agree with him there.

“It was a long road to get here, many years without traction,” Silverman said. “Now that the attraction is there and there aren’t many people working in this field, there aren’t many competitors anymore. We are the best of very few options. As I said, “in my land of the blind, the one-eyed man is king.”