US Green Steel Startup Raises $129 Million Amid Trump Tariff Uncertainty

(Bloomberg) -- Colorado-based Electra has raised $129 million in a new funding round to continue developing technology that can produce iron needed for steel at temperatures below boiling water and without planet-warming emissions.

The startup, which came out of stealth in 2022, has raised a total of $214 million from investors including Bill Gates-led Breakthrough Energy Ventures, Singapore-based Temasek Holdings, and Capricorn Investment Group. 

The latest round comes at a time when President Donald Trump is upending the clean-tech landscape. Though he has threatened to undo policies for carbon-saving technologies, his tariffs on steel imports are meant to spur US production. But with uncertainty around how long those tariffs will last, startups like Electra aren't seeing increased interest yet.

In January public filings, Electra set an upper limit on the raise at $257 million, but the final sum for this round announced today is $186 million, of which $129 million is new money and the rest is equity converted from a previous round.

Electra is now building a demonstration plant in Colorado that will produce 500 tons of iron starting in early 2026. It will ship test materials to steelmakers, including Nucor Corp., which is also investing in the startup. Those companies can convert the iron into steel using electric-arc furnaces. If powered by renewables, the process would produce emissions-free steel.

If Electra’s iron meets the standards customers are looking for, Chief Executive Officer Sandeep Nijhawan expects to convert those early deals into offtake contracts the company can use to raise loans to build its commercial plant. Electra is scouting for a location and is open to considering sites outside the US. 

“We see the demand,” said Nijhawan. “But we have to temper that with the risk that comes to the table with the first-of-a-kind plant.” Nijhawan wouldn’t reveal the prices for Electra’s iron from such a plant, but said he has an understanding with steelmakers on the range of prices that the startup will need to achieve if it wants to quickly seal deals.

Electra initially planned to build a 50,000-ton plant by 2027 and a million-ton plant by 2029. However, Nijhawan now says that timeline was based on the desire to go as fast as possible and is no longer realistic. With the company working on a detailed plan that includes securing permits for land and green electricity, it now expects to have a 50,000-ton plant fully running by 2029 and a million-ton plant operating by the early 2030s. 

It hasn’t been easy for climate startups to raise funds over the past few years, as venture capitalists have reined in spending after a post-pandemic boom. US funding ticked up to more than $5 billion in the first quarter of 2025, according to data from Pitchbook. But climate tech entrepreneurs remain cautious as Trump threatens to gut many of the government incentives for carbon-cutting technology.

Electra hadn’t secured any US government funding, so policy changes won’t directly impact the startup, said Nijhawan. Trump’s baseline tariffs on China and other countries are likely to make securing equipment and clean power more expensive, while the uncertainty about the level of tariffs and how long they’ll remain in place will lead to a purchasing decision slowdown. 

Trump’s 25% tariffs on steel should incentivize domestic production — in theory. But the tariffs alone wouldn’t be a sufficient reason for Electra to build its commercial-scale facility in the US. The company is looking at other factors such as government incentives and easy access to clean power, both areas where the US scores lower than countries such as Australia. 

“No doubt tariffs and the volatility in the market is not conducive for business, but we are taking a very long-term view and not being reactive,” said Nijhawan. “We have got to build this plant to withstand any political changes because this plant is going to last more than 20 years.”

Steelmaking accounts for about 7% of global carbon dioxide emissions — more than shipping and aviation combined. Converting iron ore to iron is responsible for 90% of that.

Traditionally, the process involves adding iron ore and high-grade coal into a furnace, which extracts the oxygen attached to iron atoms in the ore. Doing so also releases greenhouse gases, though. Electra’s technology performs the same chemical process, but it relies on electricity and does so without producing carbon dioxide if the power comes from clean sources.

Other startups are also attempting to decarbonize ore processing. Boston Metal, which has raised $370 million since it started a decade ago, also relies on electricity, but uses temperatures of up to 1,400C (2,550F). That means the process must run continuously or risk solidifying molten metal, unlike Electra’s, which operates at low temperatures and can be turned off whenever needed. 

Sweden-based Stegra (formerly H2 Green Steel) also promises to produce emissions-free iron by relying on hydrogen derived from splitting water using renewable electricity. The company has raised more than €6.5 billion ($7.4 billion) to build its first commercial plant as soon as 2026. However, because hydrogen is still quite expensive, Stegra will have to rely on high-grade iron ore, which can be processed without too much wasted fuel. Electra says it can use low-grade ore, of which billions of tons are available at mines around the world. 

All these green-steel startups have to rely on access to low-carbon, cheap power. Even though solar and wind power are the cheapest sources of new power to build, in Europe and North America, there’s a long and growing queue of companies trying to access these new renewable plants. Steel startups with thin margins have to compete with capital-rich tech companies building electricity-gobbling data centers that will pay higher power prices to jump the queue 

The main challenges for Electra remain whether it can show its technology can work at commercial scale and produce iron at prices that steel consumers are willing to pay. But before that, it will have to raise more money to build the commercial plant. That round will be hundreds of millions of dollars at least, and the process of seeking funds has already begun.

“We are always raising money,” said Nijhawan. “That’s the truthful answer.”

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