(Bloomberg) -- Battery technology company Sila Nanotechnologies Inc. recently raised a lot of money from investors – the only catch was that its valuation fell by about $1 billion in the funding round, an indication of the still-tough environment for startups.
At the end of June, Sila raised $375 million at a valuation of just under $2 billion, according to a person familiar with the matter who asked not to be identified discussing private information — that’s a one-third discount to its last funding round in 2021, when it raised $590 million at a $3.3 billion valuation.
The company declined to comment on its new valuation, except to say that the figure listed by private market data provider PitchBook of $1.97 billion was incorrect. The startup confirmed that it recently raised money in a down round — meaning a funding round at less than its previous valuation.
“Our team has accomplished an incredible amount since the last round and have a lot to be proud of,” said Chief Executive Officer Gene Berdichevsky. “The journey continues, and a down round doesn’t change the mission or the destination. We’re fortunate to have strong backers that invested for the right reasons and continue to support us.”
Sila, which aims to boost the energy density of lithium-ion batteries, is not in a unique position. Valuations for startups across the board have fallen in recent years, even as a few artificial intelligence companies have boomed.
When it comes to capital-intensive climate businesses, “people keep trying to put a tech lens and valuations on them, and it just doesn’t work,” said Jeff Johnson, general partner and head of climate at B Capital, who is not an investor in Sila. “We’re not building enterprise-software AI businesses. We’re building the next generation of industrial companies. We have to think about how to capitalize them, given that.”
Some investors see signs of hope for the clean tech sector, particularly as a Federal Reserve interest rate cut promises to buoy the venture capital industry. At the same time, some climate startups are adjusting to a new reality — which means raising down rounds or taking other less flashy deals. Startups such as Moxion Power Co. and Universal Hydrogen Co. have filed for bankruptcy or shut down. Some companies have raised down or flat rounds, and others are seeking bridge funding or loans.
It’s not just clean tech. More than 15% of all US funding rounds this year so far were down rounds, according to PitchBook data, and an additional 12.7% were flat, with no increase in valuation. That means almost one-third of funding deals this year did not see the startup increase in value — the highest that number has been in a decade.
“Flat is the new up,” Johnson said. “If you can raise money in this marketplace, even flat or down, you’re doing well.”
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