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MIT-Backed VC Engine Raises $400M to Invest in Startups

Screenshot 2024-06-20 at 4.48.03 AM

MIT-Backed VC Engine Raises $400M to Invest in Startups

Climate Insider Brief:

  • The Engine Ventures, a climate and health-focused venture capital fund spun out of MIT, has raised almost $400 million for its third investment fund, more than double the size of its second fund.
  • The Engine Ventures will continue to focus on investing in early-stage startups developing “tough tech” solutions, such as fusion power generators and decarbonized steel, as well as life sciences and medical startups.
  • The fund has also created over 3,000 jobs in Massachusetts through its investments, with a strong presence in the state through companies like Commonwealth Fusion Systems and Sublime Systems.

PRESS RELEASE – June 18, 2024 – The Engine Ventures, the climate and health-focused venture capital fund spun out of MIT, raised almost $400 million for its third investment fund. The firm mainly backs startups trying to capitalize on research breakthroughs to fight climate change.

The Cambridge firm’s fund, almost double the size of its second fund from 2020, comes amid a sharp downturn in the startup economy. In the first quarter, funding for local startups was the lowest since 2019 and fund-raising by Massachusetts VC firms was on track for the lowest in at least 18 years.

But Katie Rae, chief executive and managing partner of The Engine Ventures, said her firm’s track record and mission helped attract substantial backing.

“Fund-raising is never simple,” she said in an interview. “These things are complex. And but we feel very fortunate for the high quality of [limited partners] that we have, and they’re supportive of us.”

Rae said even with more funding, the fund’s mission remains focused on helping early stage startups develop and commercialize “tough tech,” which can include anything from fusion power generators to cement made without fossil fuels. The fund also backs life sciences and medical startups, such as Cellino Biotech in Cambridge working on personalized stem cell treatments.

The Biden administration’s efforts to promote climate tech in laws such as the 2021 Infrastructure Act and the 2022 CHIPS Act are also helping startups, Rae said. Engine-backed startups like decarbonized steel maker Boston Metal and battery developer Form Energy have won funding under the Inflation Reduction Act to build manufacturing plants, for example.

“You see this dynamism not just for climate, but for all things manufacturing, whether it’s biotech, whether it’s AI chips, it is about as an exciting moment as you could get for what we do,” she said.

Though the firm invests all over the world, it has made more investments in Massachusetts companies, including Commonwealth Fusion Systems in Devens and cement maker Sublime Systems in Somerville, than those from any other state or country. The local companies have created more than 3,000 jobs in the state so far, the firm said.

The Engine split in two earlier this year. The VC unit continued to invest in startups while a new unit called The Engine Accelerator based in Cambridge runs programs and offers office and lab space for local startups. MIT started The Engine as a VC fund in 2016.

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SOURCE: Boston Globe

Featured Image: Credit: Engine