Bill Gates-led fund raises $1 billion to invest in clean-tech
NEW YORK: Here’s more evidence the clean-tech boom is only getting bigger. Breakthrough Energy Ventures, the clean-tech venture capital fund led by Bill Gates, has raised $1 billion for a second round of investments after backing 45 startups with its first billion.
Created in 2016, BEV began funding startups just as the second wave of clean-tech investments was gaining momentum. Since then, interest in the sector has exploded. VC money flowing into startups that can help cut emissions has soared to $16 billion in 2019 from $400 million in 2013, a 40-times increase, according to a PwC report published last year.
The first clean-tech boom was a disappointment. VCs lost over half the $25 billion invested between 2006 and 2011. The financial crisis compounded the losses, but experts believe there were bigger problems with the underlying investment philosophy. First, VCs were looking to replicate the success they had seen in internet startups, expecting returns from clean-tech investments in less than five years. Second, the types of technologies they invested in were mostly limited to renewable electricity, biofuels and electric vehicles—all of which depended heavily on government regulations to grow.
BEV learned from that failure. It launched a “patient” fund that would run for 20 years, instead of expecting returns in just five years. It also pursued a larger set of technologies, including agriculture, buildings, transportation, and manufacturing. Profit remains the ultimate objective, but BEV set another criteria: companies needed to show a path to scaling up that would cut at least 500 billion tonnes of annual CO₂ emissions—about 1% of global emissions.
BEV relies on a team that consists of academics, entrepreneurs, former government officials, and bankers, along with VC investors. Their mission goes beyond judging an idea and the people behind it to rigorously evaluate the feasibility and potential of new technologies.
“We have built a great technical team and our ability to close a second fund is a testament to their good work,” said Eric Toone, BEV’s technical lead. The first round included investments in complex technologies including energy storage, lithium mining, electric aviation, synthetic palm oil, zero-carbon steel, hydropower turbines and even nuclear fusion.