Bill Gates-backed $1B climate tech FOAK program - with Mario Fernandez at Breakthrough Energy
On the trillion-dollar funding challenge, partnering with entrepreneurs to de-risk and scale emerging climate technologies, and lessons from 20 years in project finance and infrastructure investing.
Welcome to Down to Zero where we (Florian & Shaneez) speak with climate tech leaders about how to build a successful climate-tech company. Follow along to learn their playbooks and how you can apply them to further your career in climate-tech.
Thank you also to Aktsa Efendy for his help on this piece.
In today’s episode, we sat down with Mario Fernandez from Breakthrough Energy, the Bill Gates-backed firm driving investment in innovation in the race to net zero. Mario leads Breakthrough Energy's Catalyst program, which has over $1 billion dollars to invest in demonstration and first-of-a-kind commercial scale projects.
Read on for highlights from our conversation, including:
What Breakthrough Energy is and how they invest in the climate transition.
Why Catalyst is laser-focused on projects that can prove and de-risk climate technologies at scale to unlock trillion-dollar markets.
Advice for entrepreneurs raising capital on technology de-risking, team and skills.
Key challenges in developing and scaling climate tech.
Which skills and experiences are crucial for a successful career in climate tech.
Defining moments in Mario’s journey to Breakthrough Energy
Mario Fernandez has had an impressive career in the energy transition across the world. Three moments stand out:
Studying economic development sparked his interest in infrastructure, especially after witnessing the lack of it in his home country, Colombia.
Serving as CFO for a billion-dollar project in Colombia taught him the complexities of building infrastructure from scratch.
Partnering with developers to accelerate projects solidified his focus on infrastructure and energy transition.
After his corporate career, Mario started his own Latin America-focused fund, Chicora Energy, but faced external challenges. He then joined Catalyst to shape it into a new business model for investing in emerging climate tech infrastructure, one that is about combining venture and growth capital with infrastructure investments to accelerate and advance climate tech.
Overview of Breakthrough Energy
Breakthrough Energy was founded by Bill Gates to push funds, know-how, and expertise into emerging climate technologies. They have:
Discovery Programs: Breakthrough Fellows and other initiatives for discovering and incubating technologies.
Development Programs: Breakthrough Energy Ventures, a large venture arm for developing tech.
Deployment Programs: Breakthrough Catalyst for deploying and scaling up proven technologies.
Additionally, they have strong policy, partnerships, and communications teams working together to push these initiatives forward. It's not just about funding but also shaping policies and bringing in other partners to support these technologies.
Focus areas for Catalyst:
The focus is on sectors where their capital and expertise can be most impactful. This includes:
Clean Hydrogen
Long Duration Energy Storage
Sustainable Aviation Fuel
Direct Air Capture
Decarbonizing Manufacturing
These sectors have technologies ready to be scaled up and where their involvement can significantly accelerate development. The key is to find technologies that can benefit the most from their support to cut deployment times in half (from 10 to 5 years) and that have the potential to reduce the green premium, making them competitive with fossil fuels.
Long duration energy storage (not lithium-ion based) is a sector Mario is particularly hopeful and excited about due to its potential to tackle transmission challenges, especially in emerging markets.
Catalyst partners closely with companies to strategize, workshop, and brainstorm different aspects of projects to achieve the best results.
What Breakthrough Energy’s Catalyst Program Looks for in Companies
Breakthrough looks for a CEO and management team ready to go from pilot to demonstration to first-of-a-kind projects.
They focus on de-risking the technology and ensuring it's replicable worldwide.
The company must have the right skills and mindset for this journey.
They also deeply analyze the technology to ensure it can scale and operate efficiently across different regions, especially in emerging markets.
A great example is e-fuels company Infinium: They built a great team, focused on creating a significant demonstration project, and commercialized their product effectively. They followed the path Breakthrough advocates: developing, building, and operating the technology before commercialization.
How Catalyst Forges Strategic Partnerships to Unlock Climate Technology at Scale
Public-private partnerships are essential due to the scale of funding needed. Catalyst's partnership with the European Commission and European Investment Bank has been successful due to aligned interests and complementary skills.
Catalyst announced two projects in Europe last year: an e-methanol project with Ørsted and an LDES project with Energy Dome in Sardinia.
The ecosystem needs to pull know-how from sectors like solar, wind, and LNG to fill knowledge gaps at the company, investor, and board levels.
More first-of-a-kind projects need to be created urgently. The ecosystem must sharpen its skills to accelerate deployment.
Catalyst was instrumental in bringing American Airlines to the table with a 10-year offtake agreement for Infinium's project, making it bankable.
Navigating the Trillion-Dollar Funding Challenge for First-of-a-Kind Projects
Deployment isn't happening fast enough, which keeps Mario up at night. Many companies are deep into funding rounds without having de-risked their technology to allow growth, PE, or infrastructure investors to come in.
Increasing deployment urgently and creating more first-of-a-kind projects is crucial. Learnings from Catalyst and other voices in the ecosystem need to be amplified.
During downturns, focus on efficiency, sound unit economics, avoiding over-extension, maintaining a long-term orientation, making smart investments, and remaining customer obsessed.
Advice for Entrepreneurs Raising Capital
Entrepreneurs should build a good-sized scale demo that people see as significant in terms of the risk in their technology and undertake to build it and operate as soon as they can. Investors are increasingly asking companies (at Series B and beyond) for proven operational data from a demo.
In-house development and construction skills are crucial. The licensing model often doesn't work for climate tech. CEOs and management teams are best placed to undertake the painful but necessary process of scaling up and constructing projects themselves.
Advice for Those Starting a Career in Climate Tech
Focus on hard skills like risk assessment, financial modeling, and contract structuring.
Take on diverse assignments, even if they seem mundane, as they build a broad skill set crucial for future success.
Learning through doing is essential for becoming a great principal, partner, or fund founder.