Trellis Climate aims to bridge the 'commercial valley of death' for climate tech

Let’s say you’re a founder who started a company that’s based on a breakthrough technology which can make hydrogen cheaper and faster than anyone else — so much faster and cheaper that you sailed through your first several rounds of fundraising, bringing in tens of millions of dollars to prove it works. And it does, even better than expected.

Now all you have to do is build a commercial scale plant, the so-called first-of-a-kind facility. Some call it the “commercial valley of death,” and it’s the point at which many climate tech startups struggle. Because no one has undertaken a project like that before, the usual financiers tend to balk; there are too many unknowns.

Climate nonprofit Prime Coalition is hoping to bridge the valley with a new program, Trellis Climate.

Prime Coalition has long taken a different tack to climate finance compared to its for-profit brethren. It makes the usual venture-style investments in startups through its Prime Impact Fund and also helps philanthropists direct their money to climate-related projects that it deems high impact. Trellis Climate follows the latter model with a focus on middle stages, where capital has grown scarce.

“There are more and more philanthropists that are really interested in solving the climate problem,” Lara Pierpoint, director of Trellis Climate, told TechCrunch.

“The highest, best use of philanthropy is in trying new ideas, in really swinging for the fences on the things that have a very high impact potential,” she added. “It is the most flexible and potentially risk-forward set of dollars that are out there.”

For founders in climate tech, that sort of funding is likely welcome news. Early stage founders have a wide range of capital to tap, from numerous venture capital funds to federal grants. It might not be enough to keep the planet from warming more than 1.5 degrees Celsius, but so far it has been enough to prime the pump and keep climate tech investors busy.

There has been an assumption that once climate technologies have been proven, “then corporations and industry would scale those technologies,” Pierpoint said. “On the corporate side, a lot of companies are really getting pushed to do the things that create immediate shareholder value.” As a result, there’s a widening gap in the middle.

“We strongly believe that philanthropy is the catalyst, but that the goal is to bring in infrastructure investors that are willing to lean forward a little bit on risk,” she said.

The program’s first investments include Ample Carbon, a startup that converts old coal plants to bioenergy with carbon capture and storage, and Ebb Carbon, a marine-based carbon removal startup.

Source link