Recently formed Congruent Ventures has closed a $92 million fund to invest in early-stage startups in the sustainability space.

Prelude Ventures and the University of California investment arm anchored the raise, alongside unnamed family offices, strategics and institutional investors.

In the year since they went public with their intentions, founders Abe Yokell and Joshua Posamentier have already made nine investments. They are targeting four key sectors: clean energy; urbanization and mobility; food and agriculture; and industrial supply-chain innovation.

Now they'll get to prove if they can make money at it.

Congruent's very existence bucks a trend in venture capital, which largely retreated from the cleantech space after the boom times of the late 2000s led to a series of high-profile busts. In those days, trendy plays like algal biofuels or high-tech alternatives tosolarPV drew hundreds of millions of dollars from Silicon Valley, then spent just as much on bespoke factories or other scaling efforts and promptly imploded. 

VCs drew some lessons from that era: Steer clear of early-stage energy plays, especially anything based on hardware or hard science research. Change the world with low-overhead, easily scalable businesses, like apps that let you send images that disappear quickly.

Much has changed since that time to make early cleantech more promising, Posamentier said.

The rise of Amazon Web Services means startups can leverage massive computing power without building it in-house. Similarly, the proliferation of contract manufacturers means a promising materials startup doesn't need to spend $200 million on its own factory.

"The same things that have made it easy to start and grow a traditional tech business apply to a lot of the companies we’re investing in," he noted. "It’s cheaper to start a company in any space."

Those resources allow startups to prove out their product and market with relatively little spend compared to the VC-backed giants of yesteryear.

"We’re not scared of risk. We actually like risk in a lot of ways, but we need to see that risk reduced with a quantifiable amount of money," Yokell said.

The initial investments illuminate the types of risks that Congruent is willing to take.

The firm invested in polySpectra, a materials science startup spun out of Caltech that joined the Berkeley incubator Cyclotron Road. 

This company develops a more durable material for stereolithography, a type of 3-D printing that uses light to form objects out of a vat of optically sensitive material. Improving the typically brittle fabrication material could unlock 3-D printing for a broader range of end uses, reducing waste from manufacturing.

"It takes a lot less energy to do these curing steps with a tiny laser than with a giant injection mold machine," Posamentier said.

They also picked Sense Photonics, a lidar company that built a lower-cost alternative to the high-resolution sensors that represent a major cost driver in the autonomous driving and robotics sector. The company's technology salvages a micro-transfer printing technique developed by Semprius, a concentrated PV startup.

OptimoRoute tackles fuel consumption for transportation with a new routing algorithm. It claims to be able to shrink computing time from a few hours to a few minutes, while producing more optimal last-mile itineraries for local and regional deliveries and service calls. Success in that venture will mean less gasoline burned in the course of regular commercial activity.

Those startups deal with energy use in a broader, systemic sense. As far as more straightforward grid-related investments go, Congruent late last year led a $5.1 million round for Omnidian, a residential solar asset management firm.

The portfolio of investments adds up to an unconventional group, but that's part of the point: Congruent's founders chose to limit themselves to a genre that barely exists among VC firms.

"Time and time again, markets reward early-stage investors who invest before a market trend becomes clear, and we believe we’re at the front end of a new cycle that will not only have a positive environmental impact, but will also produce venture-grade returns," Yokell said.

It's notable that institutional investors are gaining an appetite for this. The University of California system's Office of the Chief Investment Officer of the Regents controls $107.2 billion in assets, combining university endowment money and retirement funds for employees. Unlocking such large pools of capital for early-stage cleantech would go a long way toward financing a more sustainable economy.

Elsewhere, a cohort of leading utilities pooled its money to invest in grid startups via Energy Impact Partners. The massive Carlyle Group is getting into microgrid ownership through the subsidiary Dynamic Energy Networks. Other funds guide sustainably minded companies through their growth stages, like DBL Partners and Obvious Ventures.

Yokell and Posamentier are hoping to see that investor ecosystem grow. Even early-stage investments sometimes need syndication, and larger funds are needed to support later funding rounds. But if Congruent starts finding those venture-grade returns at the early stages, others are sure to follow.