Investment

Bill Gates, clean energy, 22 ventures, and the family offices backing many of them

As climate anxiety grows, amid Australia’s worst bush fires in history, family offices are stepping up plans to back ventures which curb carbon emissions. 

Bill Gates, co-founder of Microsoft, is leading the charge, after creating Breakthrough Energy in 2015 in coalition with some of the world’s wealthiest entrepreneurs and largest corporations.

At the start of 2017, BE’s new venture capital arm started drawing on commitments of $1 billion to invest in clean energy ventures. So far it has backed 22 companies (see below), several of which are perceived as leaders in their field.

BE recognises people are reluctant to sacrifice their lifestyles to cut emissions. It wants to develop a clean approach to electricity, transport, agriculture, manufacturing and property without forcing through a lifestyle change.

Gates also wants BE to tap into state research and subsidies, which can help solar and wind energy compete on price with fossil fuels. 

State subsidies have been widely employed to support US capitalism. They are likely to become more generous in Europe as green issues rattle politicians. Austria became the latest convert to a green coalition in January, with Germany tipped to follow.

In October, BE confirmed it was backing a $115 million clean energy fund for Europe, in partnership with the European Investment Bank.  

The financial community has become deeply concerned over the climate issue amid predictions that stranded assets could total $20 trillion in the longer term. 

Central banks increasingly fear dislocation in insurance and banking. In December, Cambridge Associates urged its family office clients to add climate issues to their asset allocation and manager selection models.

Thirty wealthy entrepreneurs back Breakthrough Energy. The coalition includes Mukesh Ambani (Reliance Industries); Jeff Bezos (Amazon); Michael Bloomberg (US presidential hopeful); Richard Branson (Virgin); Ray Dalio (Bridgewater); John Doerr (Kleiner Perkins Caufield & Byers); Jack Ma (Alibaba); Hasso Plattner (SAP); Nat Simons (son of hedge fund chief Jim Simons); Masayoshi Son (Softbank) George Soros; Ratan Tata, Zhang Xin (Soho China) and Mark Zuckerberg (Facebook). 

Corporate backers include BNP Paribas, GE, Microsoft, Total, the University of California, Wells Fargo and Wheatsheaf, Grosvenor Estate’s sustainable farming business. They occasionally invest in ventures alongside BE.

BE’s venture business advised by a management team comprises a range of senior specialists skilled in corporate, energy, social and political affairs. 

The fund is not in a rush: its team has a considerable reputation to protect. But it has now invested in 22 ventures, as recently as December, seeking breakthroughs in areas like nuclear fusion, biotechnology, heat pumps, waste processing, fertilisers and building materials. 

Companies often publicise BE’s backing in a bid to attract financing from other families keen for guidance in the direction they should travel. 

Initiatives also cover emerging markets, a focus for the Bill & Melinda Gates Foundation, a philanthropic concern whose mission includes backing sustainable farming.

 

The 22 Companies backed by Breakthrough Energy 

1366 Technologies 

Silicon wafers account for 40% of the costs involved in solar photovoltaic manufacture.  The technology produced by 1366 cuts the costs in half and reduces the energy needed to produce it by 60%. The venture raised $18 million from investors including BE in December 2019

75 F

The venture uses simple automated technology to create efficiencies in the use of clean energy in buildings by up 50%. The venture raised $18 million in October from BE and the Oil and Gas Climate Initiative, a climate-focused fund backed by the fossil fuel industry.

Arnergy 

Installs solar solutions to premises owned by companies like KPMG, GE Healthcare and Shell.  Based in Nigeria, the firm secured $9 million from BE in June.

Baseload Capital

Sets out to supply baseload geothermal energy, and other sources of surplus heat in locations such as Iceland and Japan. BE invested $12.5 million in March, representing its second investment in geothermal since Fervo (see below) It raised $50 million from Nordic investors through the issue of green bonds soon after. Sweden’s Gullspång Invest, a family office owned by Christer Brandberg, is a backer.

Boston Metal

Sets out to achieve a greener, cost-efficient, manufacture of metals through Molten Oxide Electronics. BE led a $20 million fund round in January 2019, backed by Prelude Ventures, Nat Simons’ impact-led investment group, and The Engine, an MIT Corporation start-up fund led by Katie Rae.

Carbon Cure

Concrete is a potent emitter of carbon dioxide. Carbon Cure reduce the intensity by supplying an alternative material. BE agreed to invest in September 2018 alongside GreenSoil Investments, a company chaired by Alan Greenberg, previously involved with residential developer Minto Group, a second-generation family business.

Commonwealth Fusion Systems

Fusion power, which keeps the sun shining, does not produce radiation as a by-product. It is often seen as the best hope for clean energy, but many hurdles need surmounting.  CFS is backed by the US Department of Energy and MIT. BE invested in September 2018. CRS raised $115 million in June from the likes of Khosla Ventures, Vin Ryan’s Schooner Capital and Moore Strategic Ventures run by former hedge fund manager Louis Bacon, disclosed in Family Capital on 11 July.

DMC 

Uses biotechnology to produce animal feed, fragrances and other compounds.  BE has invested since September 2018 and participated in an $11 million fundraiser in December, alongside funds specialising in bioscience.

ESS

Clean energy needs effective battery systems and ESS of Oregon has set out to supply them through second-generation iron flow battery technology, capable of extending the use of solar and wind farms. BE invested in October in a $30 million fund raising, alongside Softbank Energy’s SB Energy.  BASF is among the corporations supporting the venture. Munich Re is offering a ten-year guarantee.

Fervo Energy

Uses technology to deliver energy from geothermal assets by applying fracking techniques. It is backed by the US Department of Energy and Stanford University. BE invested in September 2018.

Form Energy

A developer of low-cost, long-duration battery systems. Eni, the Italian power company, joined the ranks of subscribers to a $40 million fund raising in August when BE topped up its investment, along with The Engine and Macquarie Capital.

KoBold Metals

Cobalt offers high-capacity, fast-charging and long-lived lithium batteries. KoBold is using AI prospecting to diversify supply away from the Democratic Republic of Congo.  BE agreed to back the venture in March 2019. Andreessen Horowitz is a co-investor. In a surprising move, Norwegian state energy company Equinor has bought nearly 10% of KoBold to use its AI to hunt for oil and gas.

Malta

Offers a technology which uses a heat pump to store energy by using it to warm up molten salt and cool down a liquid. The temperature differential can be used to re-release energy to the grid later on, when solar and wind generation is not functioning. The idea was originally conceived at Google’s moonshot factory. BE led a $26 million fundraising in December 2018, backed by Alfa Laval and Concord New Energy of Hong Kong. Another way round the problem is offered by Quidnet (see below). 

MAX

Pioneering the use of electric bikes in Lagos, Nigeria, by offering a taxi service for back-seat passengers and package deliveries via an app. BE invested as part of a $7.5 million round in June.

Motif Ingredients

Uses biotechnology to make nutritious and tasty food while reducing the strain on natural resources caused by livestock. The top team once worked for large companies like DePont and PepsiCo. They raised $90 million in February 2019 after de-merging from Ginkgo Bioworks, a biotechnology player funded by public and private funds.  The backers included BE and Victory Global Investors which is an investor along with Bill Gates in Impossible Foods a supplier of plant-based meat to Burger King.

Pivot Bio

Nitrogen-based fertiliser is slowly killing the ocean. It deadens microbes. It produces nitrous oxide, responsible for 5% of global warming. Through a mixture of biology, modelling and machine learning Path Bio has found ways to revive microbes and use them to nourish crops, using nitrogen from the atmosphere. BE backed the firm via a $70 million fundraising in October 2018.

Quantumscape

Manufactures solid-state lithium batteries to push their commercial use way beyond current levels. Volkswagen put $100 million in the company in 2018. It plans to compete with Tesla using small, fast-charging batteries with a range of 460 miles. BE invested in September 2018.

Quidnet Energy

Renewable sources of power are causing increasingly large power swings on the grid. Quidnet plans to source energy to make good the loss by compressing water in underground rock which can be reduced to put energy back into the grid as needed.  BE invested in June 2018.

Sierra Energy

With support from the US Department of Defence, Sierra has found a way to use oxygen and steam to heat waste to 2,200 degrees Centigrade without burning. At this temperature the waste breaks down to molecules, converting inorganic waste to a fuel and the rest to stone. BE invested in July through a $33 million fundraising, alongside BNP Paribas, Cox Investment Holdings, an investment group owned by the Cox family in Atlanta, and Formica Ventures, an investment group owned by Sweden-based Bert-Åke Eriksson, a member of the shipowner family Olsson.

Sparkmeter

Offers low-cost metering systems for rural micro-grids and urban central grids through wireless systems. Used in Asia, Africa, Latin America and the Caribbean. BE participated in an $11 million fundraising in May 2019.

Sustainable Bioproducts

In partnership with public sector bodies like NASA, SB has analysed how protein can be created by using less land, water and emissions than traditional agriculture. It has cultivated strains from volcanic stretches of Yellowstone National Park. The team has extensive commercial experience. It raised $33 million in February 2019. BE contributed along with the likes of Danone, Gary Lauder’s family office and the Liebelson family. More details here.

Zero Mass Water

Sources drinking water from sunlight and air through technology which can fill between 12 and 20 empty bottles with water.  The hydropanel technology, called Source, produces water from vapour in the atmosphere using a small battery. It costs around $6,000, or can be funded through monthly payments. Funded by BE in September 2018.

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