Boston investment firms seek to back climate tech startups

In a year where fewer startups are finding venture capital, one area stands out: climate tech.

So far in 2022, 32 New England-based companies working to tackle climate change have raised funds, up from 30 last year and 24 in 2020, according to PitchBook data. They raised $1.8 billion in total, less than the $3.7 billion raised in 2021, although last year’s total included $1.8 billion for Commonwealth Fusion Systems, biggest venture capital deal ever In the region.

Largest deals so far in 2022 include $450 million raised by Somerville-based battery maker Form Energy, $375 million raised by BETA Technologies, a Vermont startup developing electric aircraft, and $300 million for battery material manufacturer Ascend Elements in Westborough (which also raised $480 million in two US Department of Energy grants).

Local venture capital firms and startup spaces such as The Engine, Greentown Labs and MassVentures have been at the forefront of the climate tech wave. Boston is also the home port of Carmichael Roberts, managing partner of venture capital firm Material Impact and co-head of the investment committee of Bill Gates’s Breakthrough Energy Ventures. (Breakthrough and The Engine participated in last year’s Form Energy deal and Commonwealth Fusion deal.) And HubSpot co-founder Brian Halligan last month announcement a $100 million climate technology investment fund.

Today, more and more companies are getting involved.

Boston-based insurance company MassMutual last week announced a new $100 million fund dedicated to investing in climate technology, the latest addition to its $1 billion venture capital effort.

“Climate change is clearly happening and something you need to address globally,” said Karl Beinkampen, managing director of MassMutual Ventures, which leads the new fund. “And that’s going to take a lot of capital, a lot of innovation and a lot of effort. And I think there are opportunities to generate huge returns on investment, while doing really good things for the environment.

MassMutual’s fund will focus less on capital-intensive areas such as electric vehicles and more on climate technologies for agriculture and industrial applications, he said.

In Cambridge, venture capital firm Matrix Partners is also looking to get more involved in climate investing.

“A lot of the most interesting founders now want to work on climate issues and so it’s a natural extension for us to follow them there,” said Antonio Rodriguez, partner, in a recent interview. The company plans to both hire new investors with climate experience and refocus some of its current team, he said. “It’s just such an important thing to focus on,” he said.

Both VCs expect the Boston area to remain a prime location for building climate tech businesses.

“Look at the amount of capital and the amount of talent in this market,” Beinkampen said. “I’m extremely bullish on the Boston market.”

Aaron Pressman can be contacted at [email protected] Follow him on Twitter @ampressman.