Calgary-based Carbon Upcycling has closed a US$26-million Series A round, as investors increase their bets on technologies that promise to sequester CO2 from big greenhouse-gas emitters. 

The nine-year-old carbon-capture company also unveiled two new projects Monday with cement manufacturers—CRH Canada in Mississauga, Ont., and Cemex in Rugby, U.K.—that will use Carbon Upcycling’s technology to remove CO2 from their operations and use it to create new, cement-based building materials. 

The projects—which are expected to be operational in the first half of next year—follow years of Carbon Upcycling piloting its technology for consumer products, including home foundations, city sidewalks and even Adidas sneakers. 

“This is not a science project at this point,” Carbon Upcycling CEO Apoorv Sinha said in an interview with The Logic. “Our motivation now is to show that this is also scalable and can work in all parts of the world.” 

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The syndicate: BDC Capital’s Climate Tech Fund and U.K. firm Climate Investment co-led the round. Other investors included existing backers Toronto-based impact investor Amplify Capital, and Boston-based Clean Energy Ventures and its angel collective CEVG. Strategic investors Oxy Low Carbon Ventures, CRH Ventures and Cemex Ventures—which had also previously backed the company—kicked in funding for “strategically relevant projects,” the company said in a press release.

Closing the deal: Sinha started talking seriously about a raise last fall with Cheri Corbett, a senior partner at BDC’s Climate Tech Fund. While Sinha said there was lots of investor interest in the company, fundraising for a sector that’s so capital intensive—carbon-capture companies often need to build and own expensive physical assets and carry out time-consuming R&D—was challenging in a slow venture capital market. 

Corbett was a tough negotiator, Sinha told The Logic. It took about nine months to close the deal, as Corbett and other investors carried out rigorous due diligence and went back and forth with the company on terms. In the end, the round was oversubscribed. “I’m hoping, as one of our advisers told us recently, that this is the toughest fundraise we ever do,” Sinha said. 

A sweet spot among moonshots: Corbett told The Logic that Carbon Upcycling is just the kind of Goldilocks company BDC’s cleantech fund is looking for: a capital-intensive venture on the cusp of bringing to market a product that promises to help decarbonize industries that produce high levels of CO2. “It’s a ready-to-commercialize technology,” said Corbett, whose investment comes with a seat on the company’s board. “Right in that sweet spot.”

She said the other investors in the round were a draw as well. “For these really capex-heavy opportunities that take a lot of equity to grow and commercialize, and to ensure we kind of get over that commercialization hump, we need really strong partners,” she said, “and this company with this round has that in spades.”  

Not yet a tidal wave: The sizable investment comes amid growing interest in ambitious climate tech, particularly south of the border where the U.S. Inflation Reduction Act is driving investments. At the same time, Sinha said, excitement around cleantech hasn’t translated into easy money for companies in the sector. “It’s changing one by one, but it has definitely not become a tidal wave yet,” he said. “There are very few long-term horizon investors … that can support that long-term vision to become a practical reality.”