SDTC backs 18 Canadian cleantech startups

Cleantech startups often receive private equity or venture capital investment one by one. But in Canada, the government-backed Sustainable Development Technology Canada is doing things a little differently, funding 18 companies all at once this morning.

SDTC CEO Vicky Sharpe told the Cleantech Group that the nonprofit, arm's length organization is contributing C$54 million ($49.9 million) to 18 cleantech projects out of its SD Tech Fund. She spoke with the Cleantech Group at its Cleantech Forum XXIII, which continues in Boston today.

A concurrent announcement was made this morning in Canada by Minister of Natural Resources Lisa Raitt.

The SDTC funding is being combined with an additional C$160 million from other contributors for a total of about C$250 million to be shared among the 18, Sharpe said. Additional contributors to SDTC funded projects often include the hosts of the technologies, suppliers or manufacturers, private sector investors and sometimes venture capitalists.

The funding is expected to help the companies—which specialize in everything from clean energy to the environmentally friendly transportation of goods—to develop their technologies.

“We have a lengthy process,” Sharpe said. “We look at evaluating emerging technologies for both their environmental benefits and the likelihood they’ll be successful in the marketplace.”

To date, Sharpe said SDTC’s total portfolio value is now at C$1.4 billion, completing 14 funding rounds and committing C$425 million to more than 170 cleantech companies (see Canadians invest another $149M in Cleantech).

The $550 million SD Tech Fund supports projects that look at climate change, air quality, clean water and clean soil, according to SDTC.

SDTC’s second fund, the $500 million NextGen BioFuels Fund, supports establishing demonstration facilities that produce next-generation renewable fuels. The second fund covers up to 40 percent of a project's cost, with the money to be repaid over 10 years after the project's completion. The projects must be located in Canada and use feedstocks available in Canada (see SDTC calls for applications to $500M biofuel fund).

Sharpe highlighted one of the 18 companies being funded today with up to C$2.68 million: Woodbridge, Ontario-based Sunwell Technologies. Sunwell also operates in Osaka, Japan, through its subsidiary Sunwell Japan.

“We put early money into companies that have more risk that most investors are prepared to make,” Sharpe said. “We bridge the valley of death.”

Sunwell says it has developed a solution to the often inefficient and energy intensive process of transporting refrigerated food in truck and rail containers as well as trolleys.

Sunwell is developing a thermal ice storage mechanism that uses rechargeable cooling batteries, where an ice slurry is formed overnight using electricity during off-peak hours. Sharpe said the company’s technology allows for flexible handling of food, where products can be refrigerated in a segregated fashion as opposed to an entire truck needing to maintain a consistent temperature.

The process also eliminates diesel-powered generator sets, dedicated fuel tanks, cooling coils and hazardous gases related to refrigeration methods, Sharpe said.

The funding is expected to be used to help the company develop and demonstrate its Deepchill-Thermo Battery systems for transportation applications, and is being tested by Canadian grocery chain Loblaws.

Sharpe said the intent is that the technology could be widely adopted by grocers and distributors to help reduce energy consumption as well as operating costs. It could also have applications in other markets that use refrigeration.

The pre-commercial demonstration is expected to take place at Loblaws’ central warehouse, where the patented Deepchill technology is expected to be tested to see how much energy is saved and whether quality control standards are met, Sharpe said.

Sharpe said each company that SDTC funds receives an average of about C$2 million. Her company has a proven track record, with 31 of its funded companies attracting more than C$900 million in follow-on funding from private equity and venture capital firms, with about 40 percent of that money coming from U.S. investors (see Canada funds 16 cleantech startups in one day and Cleantech gets a boost in Canada). In 2008, 41 percent of all Canadian cleantech companies were SDTC financed, she said.

For a complete list of all 18 projects being funded, visit SDTC’s Web site.

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