Startups in the industrial hardware and climate tech sectors often face a critical challenge after initial funding rounds: scaling solutions that require significant capital investment. Infrastructure funds have traditionally bridged this gap, yet many remain cautious about entering the climate technology space. Ara Partners, however, sees this hesitation as an opportunity to drive meaningful change.
The firm recently secured $800 million for its latest infrastructure fund, surpassing its original $500 million target. Backed by global investors—including pension funds, insurance companies, and sovereign wealth funds—the fund focuses on decarbonizing legacy industrial assets. By repurposing existing infrastructure for low-carbon initiatives, Ara aims to tackle emissions in sectors where reducing carbon footprints has historically been difficult.
Three investments have already been made through the fund. These include an Irish company specializing in household organic waste recycling and a developer of biofuel terminals. A fourth investment is expected to be announced soon. Ara’s strategy emphasizes both environmental and financial viability, leveraging technologies that are increasingly cost-competitive with traditional methods.
One notable example is Divert, a previous Ara portfolio company. Divert redirects edible food to communities in need and converts non-edible waste into biogas, which can generate electricity or heat. This approach not only reduces methane emissions from landfills but also creates renewable energy sources, demonstrating how sustainability and profitability can align.
As political landscapes shift, the economic case for decarbonization grows stronger. Companies are now achieving cost parity for low-carbon technologies, enabling industries to adopt cleaner practices without sacrificing competitiveness. Ara’s fund arrives at a pivotal moment, offering a blueprint for modernizing aging infrastructure while accelerating the transition to a sustainable economy.
