Why We Invested: Crux Climate
Ardent Venture Partners is excited to announce our participation in Crux Climate’s funding round in collaboration with Lowercarbon Capital, Overture VC, New System Ventures, Bolt by QED, and a select group of industry-focused strategic investors, who together generate billions annually in renewable energy tax credits.
Crux is an innovative platform and marketplace designed to transform renewable finance by connecting investors, developers, financial institutions, and advisors to optimize the transfer of renewable energy tax credits. Over time, Crux seeks to facilitate the trading of an even wider array of financial products. The company’s goal is to revolutionize the renewable finance landscape and make a profound, tangible impact on our world.
Enabling a Next-Generation Financial Services Market
Banks have played a significant role in the tax equity market to date. Monetizing federal tax credits for renewable energy projects was complex and cumbersome. Direct credit transfers were prohibited, requiring investors to become equity stakeholders in the company to obtain credits. Banks managed this intricate and costly process.
The recent passage of the Inflation Reduction Act (IRA) has made renewable energy tax credits transferable for the first time, presenting banks with a unique opportunity to capitalize on this change by syndicating tax credits to their existing client base. Banks are well-positioned because they serve both renewable energy developers and tax credit purchasers. Moreover, transferability is expected to enhance the economic viability of smaller renewable energy projects and draw in new investors to the market. With projections indicating a potential increase in the market size from $20 billion to a staggering $100 billion, banks leveraging tools like Crux will be instrumental in this rapidly expanding and evolving sector.
Crux will enable banks to operate more efficiently in this evolving market. In the past, the difficulty of coordinating supply and demand made it beneficial to work exclusively with the largest players. The Crux marketplace aims to help banks tackle the issue of connecting developer supply with investor demand by allowing them access to a more extensive network of buyers and sellers, as well as onboarding their client base into a branded portal to transact. The company’s technology also assists new buyers in conducting due diligence on renewable energy projects and supports post-sale compliance. This provides peace of mind for new buyers entering the market.
Crux’s software creates opportunities for banks to leverage underwriting in one division to support diligence in another, further enhancing efficiency. Beyond credit transfers, numerous banking, lending, and M&A possibilities surround these transactions. Facilitating the transfer of credits is also a strategic approach to expanding these lines of business.
Introducing the Team: A History of Successful Collaboration
Crux’s founding team boasts a wealth of experience and a proven track record of success, with CEO Alfred Johnson and COO Allen Kramer having previously collaborated to build Mobilize. Mobilize connects mission-driven organizations and their supporters. Their successful sale of the company to EveryAction, an Insight Partners portfolio company, demonstrates their exceptional ability to create and scale ventures.
Johnson’s extensive background in finance and government uniquely positions him as a key asset to the company. His experience includes working as a member of the senior staff at Treasury, holding roles at a venture-backed mortgage startup and Blackrock, and working for Bill Daley in the Obama White House. During his time in the Treasury, he contributed to the financial crisis response, Dodd-Frank, and the Recovery Act. Complementing Johnson’s expertise, Kramer brings valuable experience in marketplace businesses and technology. He has worked on innovation at a jobs marketplace in Mexico and Brazil and honed his skills at Bain and Co. Together, this dynamic duo forms a powerhouse team poised to drive Crux’s success. They are joined by Rob Parker, as their Chief Commercial Officer, who joins them most recently from REV Renewables, where he was CFO.
To learn more and join the renewable finance revolution, explore Crux’s website. If you’re passionate about sustainable finance, don’t miss this opportunity — they’re hiring!
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