Climate Tech Venture Updates for March 30, 2025
Funga is growing trees 30% faster using mycorrhizal fungi, LanzaTech is forming a new R&D spinout to cut costs and focus on global implementations
Funga is growing like mushrooms after a rain
Long-time readers may recall Funga from my previous article, This Start-Up Taps Into A Hidden World To Restore Biodiversity And Capture CO2, in which I discussed its work leveraging mycorrhizal networks to enhance carbon sequestration in commercial forests in the southeastern U.S. I caught up with Funga’s founder, Colin Averill, who caught me up on how the company has grown over the past few years.
Funga has grown from a handful of people when I first spoke with Averill to over 20 full-time employees, including data scientists, foresters, and businesspeople. What began with about 100 acres under management in Funga’s first year grew nineteenfold the next year and has now surpassed 6,000 acres of treated forest land.
Funga’s rapid growth has received a tailwind from its partnership with PRT Growing Services, a nursery that specializes in growing tree seedlings for institutional landowners. This partnership allows Funga to conduct mycorrhizal inoculations at the nursery stage, using PRT's infrastructure and salesforce to market its unique approach.
Funga’s business model is interesting. Averill’s prior academic research showed that trees whose roots were growing in soil inoculated with mycorrhizae grow quicker than non-inoculated ones. Landowners—about one-third of which are institutional and the remainder private families—get more wood more quickly; Funga then sells carbon credits on the additional carbon dioxide sequestered by the quickly growing trees under Verra’s new VM0045 protocol.
Funga is focusing on the U.S. market, and especially on the pine forests of the southeast; Averill tells me that around one-third of privately-owned U.S. forests are owned by institutions with the remainder in private hands.
When I spoke with Averill before, he had performed tests in controlled environments but did not yet have data from commercial operations. I asked him how the new actual data compared to his theoretical results. He told me that forests treated with Funga's microbial inoculation demonstrate 30% greater carbon sequestration than untreated forests, exceeding the initial target of 20% improvement.
Funga’s carbon credits sell in the $30-$100 per ton range, depending on delivery schedules and credit terms. This is a much higher price than other forestry credits because of the clear additionality associated with Funga’s credits and their direct quantifiability from research in the growing field of mycorrhizae.
In addition to stimulating tree growth Funga’s approach benefits the environment in many ways. Inoculated forests exhibit better water retention and are more resistant to extreme climate events and pathogens—conditions increasingly prevalent in monoculture forestry during this post-Climate age.
While Averill believes there is ample opportunity for expansion is on the horizon, Funga’s current efforts are concentrated on proving outcomes within initial treatment zones. The team believes that environmental markets, combined with robust datasets and machine learning tools, will redefine how land is valued and managed. This approach aligns with Colin's broader vision of building a "Timber 3.0" regenerative forestry movement that combines ecological restoration with scalable market incentives.
Averill assured me that despite the anti-science bias of the present U.S. administration, corporate climate commitments remain strong, offering market stability for Funga’s emerging conservation model.
LanzaTech is realigning its operations to reduce costs
I have written about LanzaTech’s carbon capture and transformation technology in my 2021 series including "LanzaTech's Paradigm-Shifting Plan To Create Carbon-Negative Industrial Chemicals," "SynBio: The Science Behind LanzaTech's Success," "LanzaTech: Engineering The Future," and "LanzaTech: Radically Rethinking Industrial Business Models," followed by my 2022 update "Phenomenal News From ClimateTech Unicorn, LanzaTech."
The company, whose stock price has taken a dive over the past few months, announces full-year earnings tomorrow morning (March 31, 2025) before market hours, and I will be on the call.
I will have more comments about the company after listening to and digesting the contents of the call, but I do know that LanzaTech’s chairperson and CEO, Dr. Jennifer Holmgren, has announced various strategic developments to sharpen the firm’s operational focus, expand the commercial reach of its sustainable fuel technology, and deepen partnerships with global players in clean energy and bio-manufacturing.
The company announced its intent to spin out LanzaX, its synthetic biology platform, as a joint venture with Tharsis Capital to accelerate financing for synthetic biology (synbio) development. The formation of LanzaX separates the company's proprietary synthetic biology and strain engineering platform to accelerate project development while focusing on core biorefining operations, including Sustainable Aviation Fuels (SAF) projects. Tharsis Capital, a New York-based impact venture capital firm specializing in sustainability and bioenergy, will assist with the spin-out and explore investment opportunities.
This move will enable LanzaX to access the capital needed to advance its pipeline of existing projects, including acetone, isopropanol, and specialty products, with global customers. LanzaTech will contribute existing synbio contracts and a portfolio of over 100 demonstrated molecules, leveraging its commercial expertise in scaling ethanol production to scale new molecules.
LanzaTech expects to reduce costs by approximately $8 million annually through transferring over 30 full-time employees to LanzaX. With completion expected during 2025, partial benefits will be realized this year, with full benefits in 2026 and beyond.
In a related development, Haffner Energy, LanzaTech, and its spin-out, LanzaJet, announced they are working together to explore joint biomass-to-SAF projects covering the entire production value chain. The collaboration includes exploring SAF production opportunities, developing commercial plants, joint technology licenses, offtake opportunities, and funding support for specific projects.
LanzaJet CEO Jimmy Samartzis notes that CirculAir, the joint product between LanzaJet and LanzaTech, combines the companies’ proprietary technologies to create low-carbon SAF from various feedstocks. Haffner Energy's biomass-agnostic technology opens additional SAF production opportunities.
France-based Haffner Energy designs, manufactures, supplies, licenses, and operates clean fuels solutions using all biomass residues. U.S.-based LanzaJet has a leading alcohol-to-jet technology backed by Aéroports de Paris, British Airways, Airbus, Southwest Airlines, and Microsoft. In 2024, LanzaJet opened the world's first commercial-scale alcohol-to-jet (ATJ) plant in the U.S.
Haffner Energy CEO Philippe Haffner expresses excitement about developing their first SAF projects together, viewing CirculAir as a promising pathway. LanzaTech Chair and CEO Dr. Jennifer Holmgren notes that combining CirculAir and Haffner Energy's technologies expands the range of waste-based feedstocks for SAF production, creating jobs in rural areas, generating value from agricultural and forestry waste, and building refineries that support local economies.
As part of its ongoing strategic shift, LanzaTech is transitioning from research and development to global deployment of its proven technology. The company is exploring partnership opportunities for technologies ready for independent growth and focusing on high-impact commercial projects while refining its cost structure to achieve significant annual savings.
The company prioritizes projects like the 30-million gallon per year SAF facilities in the UK and EU, leveraging its CirculAir solution. LanzaTech is assessing operations to further scale globally, with anticipated workforce reductions expected to save up to $30 million annually.