Melt Ventures launches $10 million climate tech fund, but isn’t interested in software

One of Australia’s newest venture capital funds, Melt Ventures, has secured its first $10 million fund for advanced hardware manufacturing, and it expects that to grow between $20-$30 million by the end of the financial year.

The raise was led by investors such as Camplify’s Justin Hales, Pegasus CEO Adam Boyle and Portt’s Andre Pinkowski.

Launched in 2022, Melt is managed by Slingshot Accelerator founder and Camplify chair, Trent Bagnall, as well as angel investor Steph Hinds. Its focus is on investing in renewable energy hardware due to the lack of dedicated representation in the space.

Melt found in its research that of 106 early-stage funds in Australia, 103 were dedicated to software. That’s where it comes in, with backing from EnergyLab, Robotics Australia and The Melt Accelerator.

“It’s time to double down on investing in advanced manufacturing in Australia,” said Melt Ventures managing director Trent Bagnall in a statement.

“We strongly believe that when it comes to the energy transition, software will only play a minor role. This is the first fund helping to build incredible hardware companies that are doing everything from sustainable and thermal energy storage to using hydrogen to replace the need for diesel generators.

“As a nation, we’re built to support renewable energy like solar and wind. Renewables are now outcompeting coal-fired power, with the Liddell Power station readying to close leaving a 6,000 GWh energy gap. During the day, the transition challenge moves to the night and shoulder periods where the need to store excel renewable energy produced during the day becomes critical to achieving a decarbonised grid.”

This is certainly a great time to be investing in renewables in Australia, with the 2023 federal budget placing further emphasis on the government’s net zero by 2050 plan.

Melt Ventures will also be looking at investments in the automation and robotics, agtech, transport and space sectors.

In addition to raising the $10 million fund, Melt also announced its first three investments: Allegro Energy, Endua, and MGA Thermal.

In a good bit of timing, Endua revealed this morning that it has raised $11.8 million in pre-seed funding to help scale its hydrogen-powered business. The round includes a $7.5 million investment from Melt, as well as the CSIRO’s Main Sequence VC arm, QIC, 77 Partners and Ampol. The extra $4.3 million is from grant programs.

The Brisbane-based startup has developed standalone power markets that can store renewable energy sources, like hydorgen, and transform them back to electricity. It sees this as particularly useful for regional and remote communities that have traditionally used off-grid diesel power.

“Clean hydrogen will play a crucial role in our transition to renewable energy, but only with the right technology and business models to make it cost-effective,” said Paul Sernia, CEO and founder of Endua, in a statement.

“Our solution will allow off-grid industries like agriculture, water and energy utilities and remote infrastructure to run sustainable power any time of day, regional communities to become self-sufficient, and businesses to have more options to source the power they need.”