S&S #3: Clearing the Air on the Future of Travel

Hey Everyone, 

Happy New Year! 🎉 Whether you celebrated or not, I sincerely hope everyone reading took some time to unplug and spend time with family during the last couple of weeks. I know I did, hence the week-ish break between editions.

(The focus of this article is on the batch of companies from the 11th to the 17th, when I started working on this)

Welcome back. 

Also, a big thanks to the twelve new subscribers receiving their first edition of S&S. That brings our grand total to 60 (6% of the way to our 1000 subscriber goal!!). 

As always, if you know anyone else you think would enjoy these weekly glimpses into the early-stage markets, please do me a favor and share.

This week, we’re covering two early entrants that just might pave the way for the future of aviation and maritime travel. Let’s get into it. 

Our Companies of the Week

Christmas came early for a couple hundred founders two weeks ago, as 104 companies raised funding between December 11th and December 17th. Of the 74 that disclosed round size, we observed an average investment of $3.14M, and a median investment of $2.73M. 

Of the 74, our cash cows are: 

• Distributional: Developers of a software platform built to enhance AI testing and reliability, aiming to ensure that AI systems are safe, robust, and trustworthy for a variety of applications and organizational needs​. They raised $11M from a16z and Operator Stack on December 14th. 

• Tetra: Provider of a platform to connect homeowners with contractors to provide efficient and reliable cooling and heating system replacement. They raised $10.5M from Greycroft and Gutter Capital on December 15th. 

• Chalk.ai: Provider of a data infrastructure platform aimed at solving large-scale machine learning challenges with precision and efficiency. Their platform supplies key building blocks for machine learning while offering developers a user-friendly experience. They raised $10M from General Catalyst and Unusual Ventures on December 13th. 

• Nonco: A digital asset brokerage firm catering to financial institutions and professional investors. Established in 2016, Nonco emphasizes growth in the digital asset industry and is committed to delivering institutional digital asset brokerage services. The company is known for sophisticated electronic trading, including GUI, API, and chat execution, along with white-glove service, setting a high standard in the digital asset brokerage domain. They raised $10M from Hack VC and CMCC Global on December 11th. 

• Spore.Bio: A Paris-based deeptech startup dedicated to revolutionizing pathogen detection in factories with the world's first real-time device, aiming to make consumer goods safer. Their technology uses advanced machine learning to rapidly identify bacterial concentrations in various products, significantly reducing the time and cost associated with quality sampling. By offering almost real-time insights and improving traceability and transparency, Spore.bio's solution mitigates cross-contamination risks and enables proactive contamination management. They raised $8.6M from LocalGlobe and EmergingTech Ventures on December 12th.

This week, I also want to highlight a couple of interesting trends I noticed in the funding data. Four technological areas of focus saw more than one company raise seed funding within days of each other, potentially signifying growing early-market focus in these arenas. 

AI Data Issues

If you read the last edition of Seeds and Speculations, you should know that one of the largest hurdles to building a successful AI model is proper training with high quality data. In this batch, two companies raised funds that are building solutions to common issues that arise when training AI models: Chalk and Delphina. 

We already highlighted Chalk in our cash cow section, but to recap, they’re building an AI training platform powered by real-time data, allowing users to train their AI on fresh data, and only pay for the data they need and use. 

Delphina, on the other hand, allows users to fetch, clean, and build transformations for data on command, integrating with MLOps stacks to deploy said data rapidly across models. 

Space and Propulsion

The final frontier? Helicity Space and HyImpulse may help us continue to explore further, as both are developing technologies to create safer, more reliable propulsion engines built for space. 

Helicity Space has created Helicity Drive, a class of fusion propulsion engines that enable safer, faster, reusable, and fuel-efficient travel into deep space, and HyImpulse is developing a hybrid propulsion rocket engine that is lower in cost, more reliable, and more efficient than current solid propulsion systems. 

Digital Twins

For those that don’t know, digital twins are virtual replicas of physical devices, systems, or processes, used to simulate, analyze, and optimize the real-world counterpart. They integrate IoT, AI, machine learning, and software analytics with spatial network graphs to create living models that update and change as their physical counterparts change. It’s a space ripe for disruption and growth, and both WeStatix and Annea recently raised funds in an effort to drive technology forward. 

WeStatix has developed digital twins for intelligent structural monitoring for infrastructure, with a digital twin simulation technology that can be applied to any structure, from bridges to tunnels, to provide accurate insights into the current and future behavior of the monitored object. 

Annea, on the other hand, is focused on industrial assets and machinery, providing up to a year’s notice of failure, reducing operating expenses by 50%, and increasing energy output by 15%. 

Sustainable Land Usage 

Got a parcel of land you aren’t doing anything with? Probably not. 

But if you do, Wefarm and Arbonics want to help you make money off of it. 

Wefarm is a Turkish startup that has built out a platform for landowners to monetize their empty fields, allowing them to use their open land to create new farms in return for regular rent and food payments. 

Similarly, Arbonics allows landowners to profit off owned land by allowing them to sell portions of it off to house new forest planting projects. On the flip side, they allow credit buyers to invest in said forests for carbon credits. 

Our Featured Companies of the Week

This one was a tough choice. A lot of companies were worth writing about, but something came up during my read-through of the batch that I couldn’t ignore. 

Two days apart, on the 13th and the 15th, two companies raised similar-sized rounds that are creating solutions for the exact same issue: decarbonizing the shipping and long-distance travel industries: aviation and maritime.  

Let’s take a step back to get an idea of why that’s important. 

The Big (C)onundrum 

Who runs the world? 

Girls? 

100%. (My girlfriend is over my shoulder)... But also this guy and all of his dead cousins…

Recent data shows that over 80% of global energy consumption still comes from fossil fuels (oil, natural gas, and coal), and a large percentage of these emissions relate directly back to the transportation, aviation, and maritime industries. 

While EVs may be a viable solution to reduce carbon footprint within transportation, current battery technologies possess significant energy density limitations. Current batteries don't hold enough power for their weight compared to liquid fuels, making them impractical for planes and ships that require a lot of energy without adding significant weight. 

To simplify: the total weight of batteries it would take to power a plane or cargo ship would increase the total weight of the vessel beyond the point of efficiency, which would take more batteries to power, which would add more weight, which would take more batteries, which…….

So EVs won’t work for these industries (yet… plenty of companies are working on it)

BUT 

Direct Aviation and Maritime travel currently account for nearly 5% of all global emissions, and another 10-30% can be attributed to upstream activities necessary for the production of fuels from crude oil. 

Finding an alternative source of fuel may result in drastic improvements to emissions… but where does that solution lie? 

Knowing where to start is based in the understanding that current fuels (kerosene for aviation and diesel for maritime) are created by processing hydrocarbons extracted from crude oil and natural gas. 

Hydrocarbons, as the name suggests, are organic compounds consisting of hydrogen and carbon. These compounds are highly combustible, and the processing and mixing of these compounds is how we get fuel. 

So, a possible solution may rest in finding green, sustainable sources of hydrocarbons, and developing technologies that can turn those alternative hydrocarbons into synthetic fuels that match the performance of kerosene and diesel. 

From Carbon to Fuel - The Sustainable Way 

Actually, though. 

As bad as carbon may be for the environment, it’s chemically required to artificially produce hydrocarbons.  

To make the process sustainable, companies are turning to carbon waste, including captured carbon dioxide, industrial waste gasses, municipal solid waste, agricultural residues, and biomass. 

These waste sources are byproducts of processes that significantly contribute to total global emissions. By repurposing them to be re-used for more fuel, a loop is created that can reduce total emissions, creating a sustainable, circular process. 

Using these waste sources will allow us to drift away from reliance on fossil fuels, and ultimately reduce fuel carbon intensity (a measure of how much CO2 is released to produce a kilowatt hour of electricity) by up to 70%. 

Carbon can be converted to hydrocarbons, and ultimately fuel, using various methodologies. As of now, six have been approved for Sustainable Aviation Fuel (SAF) production by the American Society for Testing and Materials. These six are listed below and illustrated in the following image courtesy of Carbon Direct. 

• HEFA: Conversion of vegetable oils and other oil-based feedstocks (triglycerides, such as algae), to SAF through a series of hydrogenation, cracking, isomerization, deoxygenation, and distillation processes.

• Alcohol-to-Jet: Alcohols, such as ethanol, undergo dehydration, oligomerization, hydrogenation, and fractionation to produce SAF. The upstream production of ethanol can proceed via commercially available sugar fermentation technology, and syngas fermentation as an alternative ethanol production technology is under development.

• Fischer Tropsch: A catalytic chemical process that yields liquid hydrocarbon fuels, including SAF, from a mixture of carbon monoxide (CO) and hydrogen (H2) called synthesis gas or syngas.

• HDCJ: A pyrolysis-based process whereby feedstocks, such as lignocellulose, are heated in the absence of oxygen to produce biochar, biogas and bioliquids. The bio-liquids are upgraded to liquid fuels via hydroprocessing to remove the significant oxygen content of biocrude and hydrogenate the hydrocarbons.

• Sugar-to-Jet: Aerobic fermentation, hydrogenation, and distillation processes convert sugars, such as from sugar beets, sugar cane, or lignocellulose, into liquid hydrocarbon fuel. Genetically engineered microorganisms produce farnesene in the fermentation step. Farnesene is then hydrogenated to produce farnesane, which is an iso-paraffin.

• Air-to-Fuels: Syngas is produced through a combination of: electrolysis of air-captured CO2 to CO, electrolysis of water to H2, and/or a reverse water gas shift reaction between CO2 and H2. Renewable electricity is used to generate H2, making the H2 green, and minimize electrolysis emissions. Syngas is then converted into hydrocarbons such as jet fuel via Fischer-Tropsch synthesis.

So, we’ve got a sustainable source for hydrocarbons, and we’ve created a framework for the circular process (carbon waste —> hydrocarbon production —> SAF —> carbon waste). 

What remains is the technology that turns those artificial hydrocarbons into viable fuel. 

Enter: 

Aether Fuels 

Aether Fuels is taking on both the maritime and aviation industries, aiming to drive them towards zero net emissions by producing viable fuel from low-cost, abundant waste carbon streams. 

Let’s key in on that. Aether is addressing a massive issue within sustainable fuel production: feedstock availability. To scale, companies producing sustainable fuel must have a consistent and adequate supply of materials needed for production (feedstock). Aether Fuels’ technology is feedstock flexible, allowing them to produce the same fuel from different carbon waste streams, effectively eliminating any issues they might encounter concerning the supply of inputs.

On top of this, carbon waste is generally less expensive and more abundant than extracting and processing new fossil fuels, making it a fantastic alternative as long as the technology employed to process it into fuel holds up. 

Through this process, Aether Fuels is not only removing carbon from the ecosystem, but redeploying it in a manner that produces less net emissions and may result in a byproduct that can be reused once more (by recapturing and repurposing the released CO2).

While the exact details and mechanics of Aether Fuel’s technology are not public information, we know that much of the differentiation of their solution rests on both technology development and plant and process design. They’ve cited several times in press releases that “Aether’s solution combines novel process flows and plant configurations, proprietary catalysts, and breakthrough facilities and equipment to dramatically reduce capital costs and the cost of input materials.”

Much of this is being driven by their engineering team, headed up by Sanjiv Dabee and Steve Liang, VPs of Engineering, who bring 60+ years of combined experience in biomass conversion, gasification, syngas production, and liquids synthesis to Aether’s team. Both were brought on in March of 2023 to drive the engineering development of gasification-to-fuel plants, from initial design to full-fledged production in both the US and Singapore. 

Around the same time, Aether Fuels also acquired Sustainable Syngas LLC, a US-based company committed to developing carbon-neutral sustainable aviation and marine fuels. This combined Aether’s proprietary fuel production technology and engineering capabilities with SSG’s experience in developing large energy projects, setting them up to scale and develop their first plants. 

At the top of this is Conor Madigan, an experienced entrepreneur with an MIT Ph.D in Electrical Engineering.

The $8.5M seed round (in the form of a convertible note) will be used to accelerate the development of their proprietary production tech, expand their demo facility in Chicago, and grow both the US and Singapore teams. 

The round was led by JetBlue Technology Ventures, signifying Aether Fuel’s technology is, at least preliminarily, validated enough for a major airline’s Venture Capital division to be interested, and suggesting JetBlue could become a major partner and customer of Aether as they continue to scale up.

Metafuels 

Metafuels, on the other hand, is taking a different approach, by focusing entirely on the production of sustainable aviation fuel made using renewable electricity and green methanol. 

In this case, green methanol is a byproduct of captured CO2 and “green hydrogen”, or hydrogen generated from water electrolysis powered by renewable energy (usually wind). 

Both of these inputs are produced using sustainable methods and are processed into methanol using methanol synthesis.

While the focus on green methanol for fuel has mainly been for the maritime industry, Metafuels claims to have developed an innovative catalytic system — “the missing piece for the jigsaw” — that converts green methanol into sustainable aviation fuel. 

The fuel can directly replace normal kerosene, regardless of size or type of aircraft, offering up to a 90% decrease in life cycle carbon emissions without requiring reconfiguring of aircraft engine design or additional manufacturing.

This technology was built by Meta Fuels in tandem with the Paul Scherrer Institute, a multi-disciplinary research institute for natural and engineering sciences in Switzerland, where the team successfully synthesized, tested, and validated their patent-pending catalytic system driven by advances in nanotechnology. 

They claim to have achieved the lowest cost of production in the market for sustainable aviation fuel, and have set a target of making Metafuel’s eSAF a viable 100% synthetic jet fuel substitute by 2030. 

The technology is in its earliest stages of development, with a patent still pending and the newly acquired $8M in funding going towards building and deploying a pilot facility in Switzerland to validate the technology in full production capacity. 

If that pilot facility proves out the technology, it could be a massive step towards major adoption, but there are challenges facing the green methanol industry as a whole that may come into play here. 

According to BloombergNEF’s database of upcoming green methanol projects, forecasts show an annual capacity of 5.5 million metric tons of green methanol being produced by 2027 – roughly 11 times the capacity today. 

While that might seem like significant growth, green methanol production will need to reach much higher levels (it would have taken 327M metric tons in 2023) to fully replace jet fuel. 

As such, feedstock availability and cost are massive challenges that MetaFuels must overcome. 

With that said, the green methanol industry is growing rapidly, and there may be paths to circumnavigate these issues as the market develops and MetaFuels becomes ready to scale.

Competitive Landscape and Outlook 

The market for sustainable fuel is truly in its earliest stages of development, but both public and private interest in reducing emissions and creating a more sustainable world are significant. 

Both the International Air Transport Association and the International Maritime Organization have committed to reaching net-zero carbon emissions from operations by 2050, so demand will continue to increase for sustainable practices like fuel generation, production, and use. 

As such, the landscape is far from wide-open, and both Aether Fuels and MetaFuels will be met with stiff competition from other startups and major corporations hoping to benefit from the increased demand for sustainable fuel. 

Twelve, who have raised $187M to date, have developed a patented carbon transformation technology, CO2Made, that transforms CO2 into useful products (including fuel) with just water and renewable energy as inputs. Recently, they released plans to scale the production of their E-Jet fuel, sustainable aviation fuel made from carbon dioxide. 

LanzaJet, who have raised $50M, have received permission to blend up to 50% of their LanzaJet SAF fuel created by converting sustainable ethanol to synthetic kerosene with conventional Jet fuel, and work is underway to gain approval for 100% replacement. 

Synhelion, who have raised $41M, uses solar energy to convert CO2 into syngas, which is processed into fuels. 

OXCCU, who have raised $23M, have developed OXEFUEL, a patented one-step process that produces e-hydrocarbons from CO2 using renewable energy. 

Air Company, who have raised $40M, turns CO2 from the atmosphere into sustainable aviation fuel, and have already tested their 100% unblended jet fuel on a fighter jet flown by the US Air Force. 

So, Aether Fuels and MetaFuels have their work cut out for them, but this is a space ripe for disruption, and both offer unique value propositions that could translate into success. 

Looking forward to seeing how this industry shakes out, and who the winners are. 

See you next week!