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Teachers pension fund invests in portable battery company aiming to replace gas-powered generators

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Ontario Teachers’ Pension Plan is leading a US$95-million funding round for Instagrid GmbH, a German maker of portable battery systems designed to replace gas-powered generators.

Teachers’ Venture Growth (TVG), the venture capital investing arm of the $250-billion pension fund, is the lead investor in Instagrid’s Series C funding round and gains a seat on the company’s board. Instagrid also attracted an investment from Morgan Stanley Investment Management through its climate-focused private equity fund, 1GT.

Instagrid sells its main product in 29 countries, primarily in Europe. It’s a portable battery system that promises a cleaner alternative to generators that burn fossil fuels, widely used on construction sites and film sets and by emergency services. Crucially, Instagrid claims its portable batteries can rival the power available from electrical grids or gas-powered generators; for example, they can run welding equipment for a full day.

The company plans to use the funding to ramp up production and push into the North American market, which is expected to include launching new products in Canada. To lead that push, it has hired a chief executive officer for its U.S. operations, Rich Romer, who has sales and marketing experience at General Electric Co.’s fuel-cell arm and at the smart-grid division of Siemens AG.

Teachers estimates that more than 50 million small internal-combustion engines are built each year for purposes other than propelling vehicles and that the demand for cleaner alternatives that can reduce companies’ carbon footprints presents an opportunity.

“Almost all of these should be replaced by battery systems which are lower carbon, lower total cost and create a far better work environment for operators,” Avid Larizadeh Duggan, who leads TVG’s investing in Europe, the Middle East and Africa, said in a statement.

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Ms. Larizadeh Duggan said Teachers also sees a chance to put Instagrid in touch with its portfolio companies in real estate, infrastructure and other sectors that might use its products.

Investments in climate-focused technology are a growing priority for TVG, which manages about $7-billion in assets and typically backs tech companies that are moving past their startup stage and looking for funds to help them grow more quickly.

As leading entrepreneurs turn their attention to solving climate problems, “we think that climate-tech offers a fantastic opportunity for venture returns whilst also enabling us to play an important role in driving the energy transition,” Ms. Larizadeh Duggan said in an e-mailed statement.

Teachers was a substantial investor in Stem, Inc., a California-based clean energy storage provider that uses artificial intelligence, providing $200-million in 2018 to finance Stem’s acquisition of projects in Ontario.

And TVG’s investment in Sidewalk Infrastructure Partners, which was spun out of Google parent Alphabet’s Sidewalk Labs project, helped form Resilia, which focuses on upgrading power grids to make them more reliable and efficient.

Instagrid’s existing customers include Swedish-based construction giant Skanska AB, Swiss Federal Railways and the Red Cross. And Instagrid was chosen to join an initiative funded by Disney DISN and Netflix to replace diesel generators on film and television sets. The company is preparing to launch a larger-scale product that it claims could power entire construction sites or film sets, with no emissions.

“We are thrilled to be joined by two leading global investors whose support will enable us to expand our global footprint,” Andreas Sedlmayr, Instagrid’s co-founder and co-chief executive officer, said in a statement.

Existing investors in Instagrid, including Energy Impact Partners, SET Ventures, Blueworld.group and High-Tech Gründerfonds, also contributed to the funding round, as did the chair of the company’s advisory board, Pierre-Pascal Urbon.

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