MIT Spinout VC Raised $400 Million Fund Tackling AI And Climate
Katie Rae, CEO of The Engine Ventures
The Engine Ventures
Heat waves are presently battering elements of the USA whereas others are grappling with file quantities of rainfall and flooding–stark reminders of the implications of local weather change. Tackling this drawback is a key focus for Katie Rae, CEO and managing companion of The Engine Ventures, which makes early-stage investments in startups centered on sustainability, well being and infrastructure. The instruments we now have as we speak, she mentioned, can’t repair the world’s environmental issues.
“Whenever you get proper right down to brass tacks, nobody believes that we are going to attain our local weather objective with out creating new expertise,” she informed Forbes.
Right this moment, The Engine Ventures introduced a 3rd fund of $398 million, its largest up to now and almost twice the $250 million fund it raised in 2020. This increase brings the agency to over $1 billion in property below administration. The Engine has invested in over 50 corporations up to now, which have collectively raised over $5 billion in funding and have over 3,100 workers.
The brand new fund will give Rae’s agency extra flexibility within the dimension of the checks it writes for seed and collection A rounds. “It means which you can actually develop these corporations into the B and C rounds the place you definitively de-risk the expertise and start to scale,” she mentioned.
The Engine was first created in 2016 as a spinout from MIT, with Rae because the founding CEO. The concept was to create a enterprise agency and accelerator for early-stage startups creating complicated expertise in local weather tech, superior computing and infrastructure techniques in addition to biotechnology. It has since constructed a 150,000 square-foot facility in Cambridge close to the MIT campus that gives laboratory house, manufacturing expertise and extra for the accelerator.
“There’s a bipartisan understanding that we now have to have a producing base.”
In 2023, the agency cut up the accelerator and enterprise agency into two completely different corporations. Rae, turned CEO of The Engine Ventures, whereas nonetheless remaining on the board of The Engine accelerator. A report co-produced by The Engine and Pitchbook discovered that its funding market areas noticed 21% compounded annual development in financing between 2016 and 2023, in comparison with a 6% common for different sectors, although in 2023 they noticed the identical funding drop-off that different enterprise funding areas did.
A giant driver of this development, Rae mentioned, has been a “main coverage shift” by the federal authorities to bolster infrastructure and local weather expertise with measures just like the CHIPS Act and the Inflation Discount Act, which put extra authorities funds behind these sectors and incentivize the personal sector to do the identical. “There’s a bipartisan understanding that we now have to have a producing base,” she mentioned. “The capital stack is far stronger than it was 7 years in the past.”
In the case of local weather tech, The Engine Ventures has a broad portfolio. It’s invested in Commonwealth Fusion, which is creating nuclear fusion expertise. It’s additionally backed Type Vitality, which is constructing iron-based batteries for {the electrical} grid, and VEIR, which is making superconducting wires that may transmit extra electrical energy than copper.
The present AI growth–and the energy-hungry chips it will depend on–is an space the place Rae sees a chance to develop new courses of chipswith decrease environmental and monetary prices. There’s Celestial AI, for instance, which is constructing chips primarily based on energy-efficient gentle reasonably than electrical energy. It’s additionally invested in corporations pushing the boundaries of quantum computing and different new {hardware}. “Energy and local weather and compute all go collectively,” she mentioned.
Regardless of the breadth of its investments, Rae sees all of them as being interconnected. Her portfolio firm Vaxess, for instance, is creating vaccines that don’t require refrigeration, enhancing each accessibility and sustainability. The teachings from the agency’s first two funds, Rae mentioned, encourage taking even greater swings at laborious tech issues with its third. “Let’s maintain going and let’s go even greater as a result of the potential capital returns and the impression returns are monumental,” she mentioned.
