The ocean is a great big sponge in terms of carbon dioxide emissions, soaking up about 30% of the CO2 that is released in the atmosphere. When CO2 is absorbed by seawater it sets off a series of chemical reactions that result in an increased concentration of hydrogen ions. This has far-reaching effects on marine life – including the dissolution of shells and skeletons, according to the National Oceanic and Atmospheric Administration.

As with many climate-related problems, the solution to this one requires research and money. A new $100 million venture capital fund will provide both by partnering with a leading marine research institute to invest in ocean technologies that can address the climate crisis.

The Boston-based fund, called Propeller, will finance ocean-climate startups that develop technology to remove carbon dioxide from the ocean, decarbonize the maritime shipping industry, and improve efficiencies across the marine sector. It also will invest in companies that can convert ocean microbes and other organisms into energy, pharmaceuticals, and other products.

Propeller launched its inaugural fund in October 2022 and also announced a partnership with the Woods Hole Oceanographic Institution (WHOI), aMassachusetts-based nonprofit that provides marine research, engineering, and higher education services. The collaboration will bring together leading innovators and researchers in ocean science, with the goal of attracting enough private-sector capital to scale up ocean-based climate solutions.

“Our ocean holds tremendous potential for scaling up climate and carbon solutions, yet only a fraction of the venture capital dollars that have flooded into climate tech flow to the seascape of ocean-based solutions,” Propeller Founder Brian Halligan said in a press release. “The Propeller team, together with our partners at Woods Hole Oceanographic Institution, launched this fund to change this dynamic.”

Halligan is best known as the co-founder and executive chairperson of HubSpot, the customer relationship management (CRM) platform with a market cap of about $14 billion. Other leaders in the Propellor fund include CRV General Partner Devdutt Yellurkar; climate scientist and oceanographer Dr. Julie Pullen; entrepreneur Reece Pacheco; and investor Steven Fox. 

One of the fund’s missions is to change the way investors look at the commercial potential of ocean climate technologies. Although oceans produce 50% of the planet’s oxygen, only a small percentage of the billions of dollars in climate-tech investment go to solutions that can decarbonize oceans.

“I think in many cases it’s been hard to make the case for enough profit potential to get the VCs interested, that there’s a unicorn out there,” Mark Schrope, director of Schmidt Marine Technology Partners, told Bloomberg in an interview.

Propellor’s strategy is not to pursue unicorns – privately held companies that reach $1 billion in valuation – but to instead target “narwhal” companies that specifically focus on ocean climate technologies.

This is where the WHOI will play a key role. The organization is a 4% partner in Propeller and will also get investments from the fund to develop ocean climate technology. In return, Propeller will get a first look at WHOI’s intellectual property.

“This is a critical time for the ocean,” said Dr. Peter de Menocal, president and director of the WHOI. “There is an urgent need to accelerate ocean discovery, exploration, and technology and sustain precious ocean ecosystems for the benefit of humanity and the health of our planet as a whole.” 

Propellor will make additional investments through its Entrepreneurs In Residence program as well as through a network of entrepreneurs and scientific leaders across the ocean-climate sector. Investments will focus heavily on these three areas:

• Ocean Carbon: The focus here will be on companies that develop technologies to remove carbon from the ocean and engage in blue carbon tools to measure, report, and verify carbon removal.
• Ocean Organics: Investments here will target startups that discover innovative uses of marine organics such as algae and microbes for energy, packaging, and pharmaceutical applications.
• Ocean Industrials: The fund will invest in companies that decarbonize or improve efficiencies in maritime industries such as shipping, wave energy, offshore wind, and desalination.