Montréal-based carbon-capture startup Deep Sky has closed $57.5 million CAD in Series A financing as it looks to make Canada the “carbon removal capital of the world.”
The round was co-led by Brightspark Ventures and Whitecap Venture Partners, and included a $25-million investment from Investissement Québec, as well as investments from BDC Capital’s Climate Tech Fund and OMERS Ventures. This new capital, plus a $17.7-million seed note that Deep Sky secured earlier this year, which converted as part of this round, brings the young company’s total funding to $75 million CAD.
“Our capital raise is about advancing the multi-trillion-dollar carbon removal industry and providing a platform everyone can benefit from.”
Deep Sky hopes to be the world’s first “gigaton-scale” carbon removal company that removes billions of tons of carbon from the atmosphere and stores it underground permanently. Launched in 2022 by Montréal-based travel tech giant Hopper co-founders Frederic Lalonde and Joost Ouwerkerk, the startup aims to take advantage of Eastern Canada’s rich hydroelectric energy sector to draw carbon dioxide molecules from the air and the ocean using renewable energy.
In addition to removing carbon, Deep Sky is also building storage sites in ultramafic rock and saline aquifers where it claims carbon can be stored for thousands of years. Deep Sky hopes to monetize its technology with a marketplace that issues carbon removal credits. Earlier this year, the company inked its first direct air capture partnership with United Kingdom-based Mission Zero Technologies.
While Deep Sky is only a year old, it has quickly attracted attention from investors and the wider Canadian tech community. Damien Steel, previously a managing partner at OMERS Ventures (an investor in Deep Sky’s seed and Series A financings), currently leads the startup as CEO. His move to Deep Sky over the summer coincided with the company announcing its seed round.
The web of connections for Deep Sky also extends within the OMERS Ventures portfolio, given Lalonde and Ouwerkerk also founded Hopper, where Steel represents OMERS Ventures on the board.
Steel’s move from OMERS Ventures to Deep Sky earlier this year sparked concerns about potential conflicts of interest, given the existing relationships between OMERS Ventures, Deep Sky, and Hopper. One individual that spoke to BetaKit in August pointed to a potentially tricky reporting structure, whereby Lalonde would report to Steel at Hopper and Steel would report to Lalonde at Deep Sky.
However, Steel told BetaKit his role at Deep Sky is strictly operational and not connected with OMERS’ investment, while his work with Hopper is non-operational, adding if “there’s ever a situation where there’s any chance of perceived conflicts, I’ll recuse myself from those votes.”
In addition to the financing, Deep Sky has also added two new members to its board: Annesley Wallace, executive vice president at TC Energy, and Sam Duboc, president and CEO of Elkland Capital, who both have previous connections to Steel. Wallace is also the former global head of infrastructure at OMERS, and according to a report from The Globe and Mail, Duboc was Steel’s boss at private equity firm EdgeStone Capital Partners.
Carbon capture is a fast-emerging field within cleantech that aims to turn back the clock on climate change by removing planet-warming carbon dioxide from the atmosphere. Some experts have raised doubts about the tech’s feasibility, but the sector’s promise to combat climate change head-on has wooed a number of high-profile investors in recent years.
Canada has spawned several carbon capture startups, with the largest so far being Carbon Engineering, which reached a deal to be acquired earlier this year by a US oil and gas company for $1.1 billion.
“Never before have I seen an industry in its infancy with so many tailwinds, capital infusions, and Fortune 500 and government buy-in,” Steel said in a statement. “Our capital raise is about advancing the multi-trillion-dollar carbon removal industry and providing a platform everyone can benefit from. We’re committed to making Canada the carbon removal capital of the world and offering the highest quality carbon emission offsets.”
Deep Sky plans to use the new funds to begin the planning and construction of its first commercial facility and to build software for selling carbon credits. The startup also plans to put the capital towards hiring as well as Alpha Lab, its carbon-removal research centre.
Feature image source Deep Sky.