Climate

A tale of two climate tech SPACs

Comment

Copper wires intertwined on blue background
Image Credits: Getty Images

It was the best of times, it was the worst of times. It was the age of wisdom, it was the age of foolishness. We could go on, but you get the picture. It might be boom times for climate tech, but climate tech SPACs? Not so much. With few exceptions, they’re trading well below their initial price.

Yet there might be reason to think that not all climate-focused SPACs will tank.

SPACs as a whole haven’t had the best track record. The vast majority of companies that have gone public via SPAC since 2021 now trade well below their merger prices, according to SPAC Track. It doesn’t matter the sector — SPACs as a whole haven’t held up.

Who’s to blame for all the SPAC implosions?

It’s hard to see how that would go any differently for a recently announced transaction involving Sam Altman’s AltC Acquisition Corp. and Oklo, a nuclear fission company where Altman is both investor and board chair.

AltC has been searching for an acquisition for more than two years. The shell company gave itself until July 12 to find a target and sign a letter of intent. Since the launch of OpenAI’s ChatGPT, where Altman is CEO, observers speculated that AltC might merge with an AI company of some sort. Following the launch of ChatGPT, AltC’s share price rose from $9.86 to a peak of $10.70 on May 30. It was down as much as 2% the day the merger with Oklo was announced.

Clearly, Oklo was not what some investors had in mind. Its price has held up reasonably well since the announcement, though. Still, there’s reason to doubt that will last.

Hardware companies seem like a particularly poor fit for the SPAC process, especially if they’re a ways out from significant revenue. Hardware is, well, hard. It takes time to design, refine, manufacture, scale up and sell. Those last three are especially capital intensive. There’s a risk that a company will raise capital via a SPAC combination, but not enough to make it to commercial viability, possibly putting them in a position of running out of cash without another fundraising mechanism within reach. (Something that we’ve seen in the EV space.)

In the nuclear space, those problems are magnified. In the U.S. especially, new fission power plants take decades to design, permit and build, and they often come in way over budget. Though fission produces about 18% of the country’s electricity, according to the Energy Information Administration, only two new reactors have been turned on in the last decade.

Oklo is betting that its small modular reactor (SMR) design can help break the logjam that fission finds itself in. Most new reactors produce around a gigawatt of electricity. They’re massive, highly specialized installations. Oklo’s SMR, on the other hand, will produce only 15 megawatts, enough for about 12,000 homes. The startup is hoping that by making smaller reactors using a design it claims is safer than existing fission reactors, it’ll find buyers for more units, allowing them to leverage economies of scale that could bring down the price of future installations.

Oklo has a buyer for its first unit, the Idaho National Laboratory. Problem is, the startup still doesn’t have the required permit from the Nuclear Regulatory Commission. Last year, the commission denied its application, citing “significant information gaps.” Oklo says it’s working on a revised application that it hopes to submit by 2024. The last permit took the NRC nearly two years to review.

In other words, Oklo is still years from material revenue, and as a publicly traded company, it seems hard to imagine that its future will look much different from other hardware companies that have struggled after de-SPACing. The company hopes to raise $500 million through the merger, though the final amount could be much lower if redemption rates are higher than expected. (Given the speculation that AltC would merge with an AI company, that wouldn’t be surprising.)

But that doesn’t mean climate-focused SPACs are inherently bad. ACG Acquisition Company Ltd. is up 10% above its initial offering. The company is also chasing a different sector, though one that’s also challenging and capital intensive: mining.

ACG is perhaps an unusual case in the SPAC world. It’s not merging with a startup looking for a fast-track to the public markets. Instead, it’s going to buy two mines in Brazil — one that produces nickel and another that produces copper and gold.

Already, ACG has raised $100 million each from automaker Stellantis, mining giant Glencore, and investment firm La Mancha Resource Capital, according to The Wall Street Journal. Volkswagen, through its PowerCo subsidiary, has committed another $100 million as a prepayment for nickel that it’ll use in its lithium-ion batteries. The acquisition company is also raising $300 million in debt from big banks like Citigroup, and it hopes to bring in another $300 million from new share sales.

The difference with ACG is that it’s tackling an industry that is hot today. At least one major customer has already committed to significant purchases, and demand is only likely to increase as the switch to electric vehicles quickens. ACG is predicting that its mines will generate $270 million in EBITDA this year.

Oklo doesn’t have that same luxury. Its reactors might be cheaper than existing multi-billion-dollar designs, but an electron is an electron. The startup still has to compete against solar, wind and batteries, all of which continue to get cheaper and don’t face the sort of regulatory hurdles that fission does.

SPACs have gotten a bad rap in the last year, perhaps rightly so. Plenty of promising companies (and their investors) have been lured by the song of quick cash only to crash on the rocks of market expectations regarding publicly traded companies. EV and climate tech firms, many of which are still many quarters or years from meaningful revenue, have been hit particularly hard. But ACG shows that SPACs aren’t necessarily all bad.

With automakers scrambling to secure critical minerals from outside China, ACG saw the market opportunity and leapt at it. The company may still fail — mining is a risky business, and there’s always execution risk — but it won’t be because it rushed a public offering before the market was ready.

More TechCrunch

The European Union has taken the wraps off the structure of the new AI Office, the ecosystem-building and oversight body that’s being established under the bloc’s AI Act. The risk-based…

With the EU AI Act incoming this summer, the bloc lays out its plan for AI governance

Solutions by Text, a company that gives people a way to pay their bills and apply for loans via text messaging, has secured $110 million in new growth funding. Edison…

Bootstrapped for over a decade, this Dallas company just secured $110M to help people pay bills by text

Owners of small- and medium-sized businesses check their bank balances daily to make financial decisions. But it’s enterpreneur Yoseph West’s assertion that there’s typically information and functions missing from bank…

Relay raises $24 million to help smaller businesses manage their cashflow

When other firms were investing and raising eye-popping sums, Clean Energy Ventures took a different approach. It appears to be paying off.

How Clean Energy Ventures avoided the pandemic bubble and raised a $305M fund

PwC, the management consulting giant, will become OpenAI’s biggest customer to date, covering 100,000 users.

OpenAI signs 100K PwC workers to ChatGPT’s enterprise tier as PwC becomes its first resale partner

Tech enthusiasts and entrepreneurs, the clock is ticking! With just 72 hours remaining until the early-bird ticket deadline for TechCrunch Disrupt 2024, now is the time to secure your spot…

72 hours left of the Disrupt early-bird sale

Avendus, the top investment bank for venture deals in India, confirmed on Wednesday it is looking to raise up to $350 million for its new private equity fund.  The new…

Avendus, India’s top venture advisor, confirms it’s looking to raise a $350 million fund

China has closed a third state-backed investment fund to bolster its semiconductor industry and reduce reliance on other nations, both for using and for manufacturing wafers — prioritizing what is…

China’s $47B semiconductor fund puts chip sovereignty front and center

Apple’s annual list of what it considers the best and most innovative software available on its platform is turning its attention to the little guy.

Apple’s Design Awards nominees highlight indies and startups, largely ignore AI (except for Arc)

The spyware maker’s founder, Bryan Fleming, said pcTattletale is “out of business and completely done,” following a data breach.

Spyware maker pcTattletale says it’s ‘out of business’ and shuts down after data breach

AI models are always surprising us, not just in what they can do, but what they can’t, and why. An interesting new behavior is both superficial and revealing about these…

AI models have favorite numbers, because they think they’re people

On Friday, Pal Kovacs was listening to the long-awaited new album from rock and metal giants Bring Me The Horizon when he noticed a strange sound at the end of…

Rock band’s hidden hacking-themed website gets hacked

Jan Leike, a leading AI researcher who earlier this month resigned from OpenAI before publicly criticizing the company’s approach to AI safety, has joined OpenAI rival Anthropic to lead a…

Anthropic hires former OpenAI safety lead to head up new team

Welcome to TechCrunch Fintech! This week, we’re looking at the long-term implications of Synapse’s bankruptcy on the fintech sector, Majority’s impressive ARR milestone, and more!  To get a roundup of…

The demise of BaaS fintech Synapse could derail the funding prospects for other startups in the space

YouTube’s free Playables don’t directly challenge the app store model or break Apple’s rules. However, they do compete with the App Store’s free games.

YouTube’s free games catalog ‘Playables’ rolls out to all users

Featured Article

A comprehensive list of 2024 tech layoffs

The tech layoff wave is still going strong in 2024. Following significant workforce reductions in 2022 and 2023, this year has already seen 60,000 job cuts across 254 companies, according to independent layoffs tracker Layoffs.fyi. Companies like Tesla, Amazon, Google, TikTok, Snap and Microsoft have conducted sizable layoffs in the first months of 2024. Smaller-sized…

20 hours ago
A comprehensive list of 2024 tech layoffs

OpenAI has formed a new committee to oversee “critical” safety and security decisions related to the company’s projects and operations. But, in a move that’s sure to raise the ire…

OpenAI’s new safety committee is made up of all insiders

Time is running out for tech enthusiasts and entrepreneurs to secure their early-bird tickets for TechCrunch Disrupt 2024! With only four days left until the May 31 deadline, now is…

Early bird gets the savings — 4 days left for Disrupt sale

AI may not be up to the task of replacing Google Search just yet, but it can be useful in more specific contexts — including handling the drudgery that comes…

Skej’s AI meeting scheduling assistant works like adding an EA to your email

Faircado has built a browser extension that suggests pre-owned alternatives for ecommerce listings.

Faircado raises $3M to nudge people to buy pre-owned goods

Tumblr, the blogging site acquired twice, is launching its “Communities” feature in open beta, the Tumblr Labs division has announced. The feature offers a dedicated space for users to connect…

Tumblr launches its semi-private Communities in open beta

Remittances from workers in the U.S. to their families and friends in Latin America amounted to $155 billion in 2023. With such a huge opportunity, banks, money transfer companies, retailers,…

Félix Pago raises $15.5 million to help Latino workers send money home via WhatsApp

Google said today it’s adding new AI-powered features such as a writing assistant and a wallpaper creator and providing easy access to Gemini chatbot to its Chromebook Plus line of…

Google adds AI-powered features to Chromebook

The dynamic duo behind the Grammy Award–winning music group the Chainsmokers, Alex Pall and Drew Taggart, are set to bring their entrepreneurial expertise to TechCrunch Disrupt 2024. Known for their…

The Chainsmokers light up Disrupt 2024

The deal will give LumApps a big nest egg to make acquisitions and scale its business.

LumApps, the French ‘intranet super app,’ sells majority stake to Bridgepoint in a $650M deal

Featured Article

More neobanks are becoming mobile networks — and Nubank wants a piece of the action

Nubank is taking its first tentative steps into the mobile network realm, as the NYSE-traded Brazilian neobank rolls out an eSIM (embedded SIM) service for travelers. The service will give customers access to 10GB of free roaming internet in more than 40 countries without having to switch out their own existing physical SIM card or…

1 day ago
More neobanks are becoming mobile networks — and Nubank wants a piece of the action

Infra.Market, an Indian startup that helps construction and real estate firms procure materials, has raised $50M from MARS Unicorn Fund.

MARS doubles down on India’s Infra.Market with new $50M investment

Small operations can lose customers by not offering financing, something the Berlin-based startup wants to change.

Cloover wants to speed solar adoption by helping installers finance new sales

India’s Adani Group is in discussions to venture into digital payments and e-commerce, according to a report.

Adani looks to battle Reliance, Walmart in India’s e-commerce, payments race, report says

Ledger, a French startup mostly known for its secure crypto hardware wallets, has started shipping new wallets nearly 18 months after announcing the latest Ledger Stax devices. The updated wallet…

Ledger starts shipping its high-end hardware crypto wallet