Katie Ray, CEO of Engine Ventures
Engine Venture
Right now, parts of the U.S. are experiencing heat waves and other areas are experiencing record rainfall and flooding, a stark demonstration of the impacts of climate change. Addressing the problem is a key focus for Katie Ray, CEO and managing partner at Engine Ventures, an early stage investment firm focused on sustainability, health and infrastructure startups. She said the tools we have today won't solve the world's environmental problems.
“No one is realistic enough to believe we can achieve our climate goals without developing new technologies,” she told Forbes.
Today, The Engine Ventures announced its third fund of $398 million, the firm's largest to date and nearly double the $250 million fund it raised in 2020. The raise brings the firm's assets under management to over $1 billion. The Engine has invested in more than 50 companies that have collectively raised over $5 billion in investments and have more than 3,100 employees.
The new fund gives Ray's firm more flexibility in terms of the size of checks it writes in seed and Series A rounds. “It means we can really develop these companies into B and C rounds and start to critically de-risk the technology and scale,” she said.
Enjin was founded in 2016 as a spinout from MIT, with Ray as its founding CEO. The idea was to create a venture firm and accelerator for early-stage startups developing complex technologies in the areas of climate technology, advanced computing and infrastructure systems, and biotechnology. Since then, Enjin has built a 150,000-square-foot facility in Cambridge near the MIT campus, providing the accelerator with lab space, manufacturing technology, and more.
“There is bipartisan agreement that we need a manufacturing base.”
Engine Ventures CEO Katie Ray
In 2023, the company split its accelerator and venture arm into two separate companies. Ray became CEO of The Engine Ventures while remaining on the board of directors of The Engine accelerator. According to a report produced jointly by The Engine and Pitchbook, its investment market segment saw a compound annual growth rate of funding of 21% between 2016 and 2023, compared to an average of 6% in other sectors. However, funding declined in 2023, similar to other venture investment segments.
Ray said a big driver of this growth has been a “major policy shift” from the federal government, with measures like the CHIPS Act and the Contract with Inflation Act bolstering infrastructure and climate technology, putting more government money into those areas and encouraging the private sector to do the same. “There's a bipartisan recognition that we need a manufacturing base,” he said. “The capital structure is much stronger than it was seven years ago.”
When it comes to climate tech, Engine Ventures has a broad portfolio: It's invested in Commonwealth Fusion, which is developing nuclear fusion technology, Form Energy, which makes iron-based batteries for the power grid, and VIR, which makes superconducting wires that can transmit more electricity than copper can.
Lai sees the current AI boom and the power-hungry chips that support it as an opportunity to develop new kinds of chips with lower environmental and financial costs. Take Celestial AI, which is developing chips based on energy-efficient light rather than electricity. The company is also investing in companies that are pushing the boundaries of quantum computing and other new hardware. “Power and climate and computing are all linked together,” Lai says.
Though the range of investments is broad, Ray sees them all as interconnected. For example, her portfolio company Vaxess is developing a vaccine that doesn't require refrigeration, improving both access and sustainability. Ray said the lessons learned from the firm's first two funds are encouraging it to take on even bigger challenges in hard tech with its third fund. “Let's keep going and get bigger, because the potential capital returns and impact returns are huge,” she said.
Read more at Forbes
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