Investors have been focusing on bridging the funding gap for climate tech startups moving from promising idea to commercial scale. That often involves building capital intensive first-of-a-kind, or FOAK plants. Much of the early capital behind the FOAK funds has been supplied from philanthropic funders.
Elemental Impact, a Hawaii-based nonprofit that supports FOAK projects, has raised some $210 million in grants and public funding from funders as varied as the US Office of Naval Research, Laurene Powell Jobs’ Emerson Collective, The Rockefeller Foundation, the National Philanthropic Trust, and the Sergey Brin Family Foundation.
Elemental, formerly known as Elemental Excelerator, backs startups working in energy, mobility, food, water and carbon removal and has developed catalytic instruments, such as the “D-SAFE” to carry companies from demonstration to commercial markets.
The Bezos Earth Fund and the Experiment Foundation are early backers of Trellis Climate, Prime Coalition’s program for FOAK financing. The catalytic nonprofit has raised funds from nearly two-dozen private foundations, donor-advised funds, family offices and other donors. Trellis has financed companies like Nitricity, which produces nitrogen fertilizer from renewable energy and almond shells, and Tandem PV, which is scaling high-efficiency perovskite-silicon solar panels in Silicon Valley.
The BlackRock Foundation anchored Breakthrough Energy Catalyst with a $100 million grant, joined by a coalition of strategic partners that included American Airlines, ArcelorMittal, Bank of America, Citi, General Motors, HSBC, Microsoft, Mitsubishi Corporation and State Farm.
Catalyst is accelerating the commercialization of critical technologies like green hydrogen, sustainable aviation fuel, long-duration storage and direct air capture. Catalyst is also partnering with European, US, and UK governments to build demonstration plants for national priority technologies.
Institutional investors
In January, CalSTRS pension fund and Australia’s $91 billion HESTA co-invested with Generate Capital to help Pacific Steel build one of the first green steel plants west of the Mississippi. Transamerica anchored Curvepoint Capital, spun out from Aegon Asset Management to provide bespoke growth capital for climate scale-ups. The Los Angeles- and Boulder-based team is targeting $250 million, building on a $100 million track record across nine deals.
Allstate, BBVA and TotalEnergies are among more than 30 LPs behind Decarbonization Partners, the BlackRock–Temasek joint venture that raised $1.4 billion for late-stage growth equity in companies like Monolith, MycoWorks and Group14.
Climate tech startups can also leverage pre-purchase agreements for their not-yet-constructed facilities to attract investors. Tech companies are using their own balance sheets to create such “offtake” demand. Stripe, Alphabet, Shopify, Meta and McKinsey have committed over $1 billion through Frontier Climate, structuring pre-purchase and offtake agreements to give early carbon removal startups — including Charm Industrial, Heirloom and Lithos Carbon — the long-term contracts they need to scale.
