Last summer, marine carbon removal startup Running Tide set out to raise a growth equity round to help it scale.
The company had emerged from stealth mode in 2020, and in early 2022 raised a $54 million Series B led by Lowercarbon Capital, which categorized Running Tide’s approach at the time as “bonkers scale.”
The company’s approach to using the ocean for carbon removal was broad. It conducted extensive research into seaweed sinking, and deployed both biomass sinking and ocean alkalinity projects in the open ocean.
But those are all expensive — and somewhat controversial. And, according to former executive Jordan Breighner, Running Tide knew it needed a lot more than $54 million to get out of the research and development stage, and onto the megaton scale.
“Our internal roadmap was based on a billion dollar investment to get out of R&D…because of how costly this work is,” Breighner told Latitude Media. “We could’ve drained Frontier ourselves — the entire fund, in the next few years — on the kind of growth trajectory we were on.”
To Breighner, who until recently was the company’s senior VP of business development and corporate strategy, it became clear in August 2023 that the company wasn’t going to be able to raise the kind of capital needed. A lack of certainty in the voluntary carbon markets made underwriting that type of risk an impractical choice for most investors, he said.
The company pressed on nonetheless. Over the course of the last year, Running Tide had a literal thousand meetings with potential investors, ranging from sovereign wealth funds to small family offices. But though there seemed to be interest in their tech and approach, there just wasn’t enough cash on the table.
And in mid-June, the company made the decision to shut down operations. They weren’t going bankrupt; they just couldn’t get enough money to take the steps they wanted to.
“We couldn’t see a path from where we were [to] where we wanted to be.” Breighner said.
It’s expensive to be first
In the years before it set out to raise a growth round, Running Tide had notched a series of wins.
The Icelandic government granted permission for the company to conduct biomass and seaweed sinking tests in its waters. Last summer, Running Tide sank thousands of tons of wooden buoys coated in limestone in the Atlantic, 200 miles off Iceland’s coast. The company said the project removed nearly 22,000 tons of carbon dioxide removal, fulfilling orders from voluntary market heavyweights including Microsoft and Shopify.
By the time it shuttered, Breighner said, Running Tide had recently received permission from another international government to expand its operations. And — perhaps most impressively, given the CDR sector’s valiant efforts to bring removal costs down — the company was poised to offer removal for less than $200 a ton.
Plus, Running Tide had plans to sell its tech into other markets. In fact, Breighner stressed that the company never considered itself solely a carbon removal company, and was already developing related technologies with multiple applications.
For example, he said, hardware and software stacks that Running Tide had developed for the oyster industry to track changes in the ocean turned out to be a good fit for offshore wind. (Ultimately, the production delays that hit the offshore wind industry meant that those contracts fell through or were delayed.)
We could’ve drained Frontier ourselves — the entire fund, in the next few years — on the kind of growth trajectory we were on.
But the cost of keeping Running Tide’s research and deployments going was immense. Because the company was such an early player in the CDR market, founded in 2017, Breighner said it essentially had to build the value chain up around itself.
The biggest cost, he added, was labor. The company had a wide-ranging staff: from welders and maritime operators to scientists, software developers, and an entire hardware verification team.
And though Breighner declined to say whether Running Tide will sell or license various elements of its work, he’s optimistic that the millions poured into research weren’t wasted.
“I know there are going to be a lot of companies that are going to spin out of Running Tide,” he said.
An inevitable reckoning?
According to Breighner, the problem of a lack of market demand is one that other CDR companies will eventually have to reckon with as well.
“It’s where we [were] on the growth curve,” he said. “We were just kind of the earliest and the biggest, and we ran into the lack of a real market the soonest.”
As others in the industry grow, the lack of a compliance market, and of a broad base of support at a policy level, will become increasingly challenging, he added. And in his view, getting that support is in part about messaging on carbon removal.
“We often talk about it like it’s a science problem, and how [the] science needs to evolve,” he said. “And it obviously does, but in the grand scheme of things it’s much more of an industrial operations challenge and a logistics challenge.”
That’s a challenge that’s more likely to garner support — and therefore funding, he predicted. But in his view, enhanced rock weathering is the only pathway that is communicating its need for specific types of support sufficiently.
Despite the concerns and skepticism by many in the industry, Running Tide is adamant that it was the market, and not its business model, tech, or science, that brought it down. For Breighner, and a handful of industry observers, the company’s demise is simply a classic tech startup story, reminiscent of the earliest and ultimately failed solar companies: that of a good idea that’s ahead of its time.
