It was January 2022, I was standing outside one of the towers in Moscow City, Moscow’s skyscraper-packed business district, thinking about a job offer as the CEO of an electric vehicle charging company. This was my last check on the Greentech sector perspectives in Russia. I was planning to leave the country, as I saw no big-time opportunities for private business growth in Greentech. Having already launched two industries in the country - wind turbine manufacturing and lithium-ion cells, I saw EV charging as the last possible opening. A week later I declined the offer. Two years on, the EV-charging industry has been the third biggest recipient of investors’ cash in all EV-startup ecosystem, right after batteries and EVs. These startups seemed to be solving the biggest roadblock to widespread EV adoption - reducing charge anxiety. But the last two weeks delivered a devastating one-two punch to the industry. First, Tritium, one of the largest private charge networks went into liquidation, and then Elon Musk laid off the whole Supercharger division. This news left the industry in turmoil. Analysts scrambled for answers and from what I’ve seen, blamed anything, from overhead overruns in Tritium, to Mr. Musks’ mercurial personality. What I haven’t seen yet, is an opinion, that made me decline the offer of a corner office two years ago - most EV-charging business models don’t work. Roland Berger Consultancy had an interesting analytical piece lately, describing three main business models for EV-charging: Pure players Automobile OEMs Utilities (non-regulated income, strong balance sheets.) I agree with their classification, but I think that only one model can make it big time and over the long term. Let’s dissect them. Pure-play charge point operators (CPO) Pure-play companies focus on providing charging services, as Tritium did. They do it by installing and operating public charging or private charging points. At public points, the only way to make money is on the difference between the price per kWh sold and the cost of purchase of the same kWh from the grid. At private points, the options are a little more diverse. Charges at private locations like malls and hotels have a marketing value, manifesting in attracting higher-paying customers for longer times. This way a charge point operator could in theory decouple its income risk from the pure kWh per kWh trade. The industry sources I know are telling me that the reality on the ground is that not a single charge point operator is making money today. Several factors work against them. First, the high upfront costs of installing the charges force CPOs to leverage debt, straddling them with interest and principal repayments. Second, the current rate of utilization rate of charge points is low. In the UK, for example, the rate varies between 12% for slow charges and just 4% for ultra-rapid charges. While I couldn’t find the utilization rate for Norway, the country with the most EVs, I did find that more than 60% of the time Norwegian EV owners use home charging. Third, the price fluctuations in the power market make it hard to offer predictable charging prices to EV owners. CPOs thus end up with the constant risk of price spikes just when their customers are charging their cars at the “promo” rate. These three factors erode any chance of a successful business case for pure plays. Fixed-income contracts, like pure service contracts from private charge points in malls, hotels, and restaurants can make for a sustainable pure-play business model but are unlikely to make a unicorn. Automobile OEM’s This is the Supercharger business model of Tesla. EV manufacturers have incentives to make their charging network, as it stimulates EV sales. But how do they make money from charging? The correct answer is that they don’t. Charging points are essentially marketing costs to EV OEMs. They help sell more cars but depress the margin on each car sold. You could, in theory, reach a scale so big, that your marginal costs for the next charger are negligible. It is clear though, that Tesla could not reach that level, and they are one of the biggest EV manufacturers and CPO. Finally, as I have shown above for the pure play CPOs, automotive producers will face (and, as Tesla shows, already facing) the same problems. Elon Musk said that he will focus on getting the utilization rate up for the existing charges. The deal he struck just before firing his Supercharger team with other US automakers confirms this. To me, there is nothing spontaneous or erratic in Mr. Musk’s decision. It’s a cold and calculated strategic gambit to cut costs on a wildly successful marketing campaign of Tesla, that has served its purpose. At the same time, Telsa boosts revenues by locking in other car makers to its charging standard. If I were Mr. Musk (ah), I’d also license them my charging technology, to transfer all the costs of further developing charging infrastructure, while creating a recurring income for myself (maybe that’s exactly what Mr. Musk is doing, I don’t know). The problem with such an approach is that you can only do this once. So, no, there is no sustainable long-term business model for OEMs. Sorry guys, Elon just screwed you. Again. Utilities When thinking about EV charging, only one type of company comes to mind that is actually making money on every extra kWh sold - the grid operator. Grids profit from every kWh whizzed by their network. The more kWh they need to transfer - the better. This uniquely positions them for the EV charging business. First, they have all the necessary infrastructure in place. This infrastructure has been paid for through regulated tariffs, and the bulk of this infrastructure makes for extremely strong balance sheets of utilities. This makes it easier for utilities to attract vast amounts of cheap capital and finance projects like rolling out charging infrastructure. Second, charging stations mean additional demand for grid services, and thus, higher revenues for the core business. Third, the combination of the first two factors means that utilities can take a hit from fluctuating power prices, shrug it off, and carry on. So why are they not yet in the business? Electrical grids are not your typical run-of-the-mill business. They are natural monopolies, tightly regulated, very conservative, and a far cry from the gun-slinging VCs of the Valley. For one, in many jurisdictions, they are legally prohibited from energy trading, like being a CPO. This could be circumvented, by either setting up a separate entity or by offering free charging, while making money on additional kWh transmitted. Another hurdle is the decision-making process. Utilities are like oil tankers - these are hard to change course. Boards and investors are risk-averse. A long time ago, I was representing an investor in an electricity distribution company. It is ok to take 3-5 years to come to an investment decision. And grids are usually regulated on a 5-year basis, so no big decisions are made before explicit regulatory approval and a hundred hours are spent on legal consultations. Grid rules Eventually, utilities will come to own the EV-charging business, one way or another. Only for them, it makes economic sense, as only for utilities kWh are not cost, but profit centers. They have the time horizon and patience to wait while the private CPOs and EV OEMs roll out their networks and go bankrupt, and then scoop them up on the cheap. The market will leave relatively small niches for other models. Charge point service companies can make good money maintaining and repairing charges for private clients. Software companies, mapping free working chargers in real-time have a future. Off-grid charging and mobile charging will find their niches. And, of course, the charging equipment OEMs will make money as usual. All these could be good businesses, but none will be able to beat the scale of the utilities charging business. Moscow rules Two years ago I didn’t have this kind of clarity about EV-charging business models when I was standing in Moscow City. I had a nagging thought that something didn’t add up in the model. But this wasn’t what made me turn down the offer. In Russia, we have this slang word otzhat’ a business, meaning to squeeze someone out of their business without paying them a fair price. I was sure that sooner or later the Russian grid monopoly would do exactly that to all CPOs. If I would get lucky - I would get away with some meager compensation. If not - I would end up in jail on some trumped-up chargers (pun intended). That was the last time I visited the Moscow City district.

Imagine transforming your energy system into a goldmine. That’s the vision behind Virtual Power Plants (VPPs), and it’s not just a pipe dream. As the world leans into the renewable revolution, savvy investors are eyeing VPPs as a promising avenue for substantial returns over the next decade. Events like last month’s battery surge in California will soon become common, thanks to established technologies, new business models, and the power of AI.  So, let’s dive into why VPPs might just be the smartest addition to any Greentech fund portfolio yet. The new (fast) kids on the block VPPs rely on a vast array of new technologies. These technologies have several common factors: they are digitally enabled and have minimum rotating parts. VPPs are ill-suited to a conventional grid, running on bulky combined heat-and-power plants, or nuclear reactors. Key to VPPs is the speed of dispatch of an energy source or energy consumption unit. Rotating turbines of most conventional power-generating technologies take time to power up or down – anything from 20 minutes to a couple of hours. On the other hand, lithium-ion batteries, solar panels, and smart thermostats, managing your electrical heat pump, can respond within microseconds to electronic signals. Yes, in my backyard Another key factor for VPPs is the existence of distributed and largely unmanaged power sources. If you own a gas-fired turbine, you will pay a lot of attention to how and when it’s working. If you own a solar panel, most of the time you don’t think about it. This combination of power sources and power-consuming devices that could be managed every second, but are largely left unattended by their owners makes the existence of VPPs possible. The groundwork is done These enabling technologies are called the “smart grid” technologies. It is widely known that you can only manage what you can measure, so it is no surprise that the core of smart grid technologies are smart meters. These devices continually measure not only energy consumed, but also energy generated. Their readings are wirelessly transmitted. Other smart grid technologies include smart thermostats, batteries, solar panels, and digitally enabled substations. These technologies have been heavily invested in the last decade, laying the groundwork for demand response and VPPs. Demand response So, what is demand response? It is an immediate adjustment of consumption or generation of energy in response to changes in grid loads. The most primitive form would be a system operator issuing a warning of energy deficit and asking large consumers to limit their consumption in certain hours. The advanced version would be electricity tariffs, differentiated by the time of day. The VPPs however, are a whole new game in demand management. VPPs VPPs take advantage of millions of smart grid devices to manage energy generation and consumption. The owners of these devices agree to let VPP control them in exchange for a small fee. The VPP in turn regulates energy generation or consumption through algorithms, leveraging the time differences in energy prices. AI: The Steroids for VPPs Perhaps the most thrilling aspect of VPPs is their use of AI. This isn't just automation—it’s innovation. AI in VPPs handles complex decision-making processes that adapt to market conditions instantaneously, ensuring optimal operation across networks. It’s like having a supercomputer for an investment partner, one that knows exactly when and where to sell energy for the highest return. I believe that VPPs have all the potential to be the largest and most impactful AI applications in energy transition. Asset-light step The VPP model is a new utility model that is not based on owing generation or distribution assets. It is thus much less capital intensive. Thus, it presents a great opportunity for outsized returns in investments. Most of energy transition technologies require high upfront investments and rarely have a clear business model (just look at the EV-charging business). In this case, the required investment resembles your usual VC tech investment, where all you need is a team of geeks who can deliver. Time to place your bets As the energy sector evolves, VPPs stand out as a cutting-edge investment that offers both profitability and a badge of sustainability. They’re a testament to how technology can transform traditional industries and provide investors with exciting new opportunities. If you’re looking to diversify with something that promises to be at the forefront of technological innovation, VPPs deserve your attention.

In 2021, I was running a lithium-ion battery manufacturer, when the chips crisis hit us like a freight train. What used to take 1-2 months for chip delivery suddenly stretched to a painful 9-12 months, forcing us to delay our projects. It was a stark reminder of how critical these tiny things are to almost everything we do.   These memories came back last week, as I listened to a podcast featuring Tim Ferriss and Matt Pottinger, the former US Deputy National Security Advisor. The discussion turned to Taiwan, and Pottinger's message was clear and alarming: China is highly likely to attack Taiwan within this decade. This isn’t just a geopolitical issue; it’s a direct threat to the tech industry because Taiwan Semiconductor Manufacturing Company (TSMC) produces 90% of the world’s chips. So, we're all riding the TSMC rollercoaster whether we like it or not.   Then I saw the news, which was just shy of being a year old: TSMC is investing over €10 billion in the EU to build a new factory dedicated to producing chips for the transport and industrial sectors. This is a rational move in future-proofing their (and also your) business. Here’s why:   1. The Reality High Impact Events: The COVID-19 pandemic and the Russian invasion of Ukraine are stark reminders that unexpected, high-impact events are very real. These events disrupt global supply chains and have far-reaching consequences. Now, unlike Black Swans, these are well known in advance, so it is essential to hedge against such risks proactively.   2. Anticipating Future Disruptions: The potential conflict between China and Taiwan is a clear and present danger. The tech industry, heavily reliant on Taiwanese manufacturing, must brace for possible disruptions. Diversifying production and investing in alternative manufacturing hubs are smart strategies to mitigate these risks.   3. TSMC’s Strategic Move: By expanding its manufacturing footprint into the EU, TSMC is not just hedging against geopolitical risks but also ensuring stability and resilience in its supply chain.   As someone working with investors and startups on a 3-5 year timeline, with a keen eye on where the money will flow in the subsequent 5-10 years, I find myself constantly accounting for these high-impact risks. Buying from a Chinese supplier? No problem, if you are just sourcing solar panels for your next project, but if your next 10-year equipment maintenance program or component supply depends on it? Not a good idea.   Risk hedging doesn’t come cheap. It reduces your IRR and complicates supply chain setups. Take TSMC – manufacturing in EU is not the cheapest way to make stuff. Still, some people I talk to seem to think that the COVID-chips-crisis-war-hottest days on record—all within a span of just three years—should not concern their 10-year planning. Well, good luck with that.   Instead of a Conclusion   Currently, I'm reading "Chip War" by Chris Miller. Although I haven’t finished it yet, the ongoing narrative feels very much like the current state of the tech industry—a battlefield. The race to secure chip supply chains, the geopolitical tensions, and the strategic maneuvers by companies like TSMC all point to an industry in the midst of a silent but fierce war. The stakes are incredibly high, and the outcomes will shape the future of global technology and economics. Not taking it into account in your daily life or your business, is akin to burying your head in the sand.

Each year Bloomberg New Energy Finance (BNEF) drops New Energy Outlook - an overview of where we are on the energy transition path and what should happen until 2050 to reach the Net-Zero Scenario (NZS). While no battle plan ever survived first contact with the enemy, it pays to have a battle plan and understand where you are now and what forces are at play. This article is a collection of the posts I've been writing this week, bringing together various themes from the New Energy Outlook 2024, such as the breakneck speed of the fourth energy transition, the emerging business of heat pumps, slow fizzling out of hydrogen and a huge question mark about carbon capture technology. The report itself has much more details about these and other aspects of energy transition. I’ve highlighted in this text the ones that I see most relevant to supercharging energy transition right now, rather than in a couple of decades. The Fourth Energy Transition: A Global Shift by 2030 I've been raving a lot recently about the rapid pace of energy transition, spotlighting countries like Turkey and trailblazing companies like Ørsted. These examples show that if you are tough and don't take any nonsense from oil and gas execs, you can quickly stage a renewable energy takeover. Now, fasten your seatbelts, because according to BNEF by 2030,  half of the world's electricity will come from solar and wind power.  That’s right, we're talking about a global shift happening in this decade. And the best part? This revolution will happen without any additional policies. Solar and wind are already competitive enough to lead the charge. But don't break out the champagne just yet. The BNEF report also lays out the Herculean task ahead. To hit net-zero goals, the power sector must slash emissions by 93% by 2035 and triple its capacity to 11 TW by 2030. That's a lot of ground to cover, and there's no room for complacency. Pumping Up the Heat One of the standout highlights from the BNEF New Energy Outlook 2024 is the rising prominence of heat pumps. These devices are set to be the unsung heroes of the energy transition. Alongside their flashier cousins, electric vehicles (EVs), heat pumps are set to abate 15% of all CO2 emissions by 2050. That’s right, these (literally) quiet achievers will help save the planet while you stay cozy indoors. Only wind and solar will avoid more CO2 emissions this decade, but let’s not get into a sibling rivalry here. BNEF’s classification of heat pumps as an “electrification” technology is intriguing, as simultaneously they also identify "energy efficiency" as a separate source of emissions reduction. Any experienced heat pump installer will tell you that the energy efficiency of a building is crucial when determining the appropriate heat pump system. It's like installing a state-of-the-art security system but leaving the front door wide open. Addressing potential heat leaks, fixing windows, and other efficiency improvements are necessary steps before installation. Thus, each heat pump installation inherently includes an energy efficiency upgrade. It's like getting a bonus feature without the cheesy sales pitch. The forecast is ambitious: over 500 million heat pumps by 2050, a tenfold increase from today’s numbers. That’s a lot of pumps! Despite this anticipated growth, BNEF currently doesn’t consider heat pump technology as mature as wind or solar. They remain expensive to install, and gas boilers continue to be the budget-friendly choice. Hydrogen: The Slow Burn Now it is the hydrogens’ turn. The report makes it clear that there will be a negligible amount of clean hydrogen in this decade, whatever the hydrogen boosters say. It starts growing from 2031 onwards, and only after 2040 will it contribute to a sizable 11% reduction in CO2. The total demand for hydrogen is expected to quadruple by 2050. However, this growth will take off later in the next decade as other technologies scale up more quickly. It's important to note that this forecast has been reduced by almost a quarter from the last BNEF forecast. As for hydrogen use cases, BNEF still holds out hope for hydrogen use in heavy transport, but in my opinion, this will never happen at any meaningful scale. This leaves replacing ammonia with green ammonia, energy storage, and some heavy industry decarbonization. The BNEF report confirmed my position on hydrogen - the hype is slowly fizzing out. CCS: A Long Way To Go CCS will remove 35% and 34% of CO2 emissions in the steel and cement sectors, respectively. However, cement sector emissions are still expected to rise by 27%, which is puzzling because cement made with CCS is already price-competitive with traditional cement. The power sector, however, will be the biggest contributor in volume, with about three-quarters of all CO2 reductions coming from CCS in power generation. That’s the message on CCS for 2050 from the BNEF New Energy Outlook 2024, estimating the total amount of CO2 captured by CCS at about 8 gigatons per year. Considering that current CCS volumes in power generation are essentially zero, it has a long way to go, but plenty of time to get there. However, there’s a catch. For CCS to be truly effective, it needs credible demonstrations of reliable point capture and significant cost reductions. The technology is still seen as costly and unproven at scale. Without a carbon price in some form, introduced fast, this will be almost impossible to pull off. Still, there exists an industry where CCS could establish a foothold now and “cement” its role as another commercialized green technology. Yes, you guessed it - it’s cement. Today, cement made with CCS technology is already price-competitive with traditional cement. Instead of Conclusion The BNEF New Energy Outlook 2024 paints a dynamic picture of the future energy landscape, highlighting significant shifts and emerging technologies that will drive the next phase of the energy transition. From the dominance of solar and wind to the rise of heat pumps and the potential of CCS, the report underscores both the challenges and opportunities ahead. If you’re involved in greentech as a startup or an investor, let’s connect and explore how we can drive these innovations forward together. Also, I am currently in the process of raising our pre-seed round for ETR - the heat-by-susbcription startup, and if you're passionate about driving the energy transition forward—or just enjoy investing in the future—I’d love to connect. Drop me a line, and I’d be more than happy to share our pitch deck with you. Who knows? You might just find yourself at the forefront of the next big thing in energy. And hey, you’ll have a great story to tell at dinner parties.

We now have two newly made hockey sticks - one for stationary storage (ESS) and one for the EV batteries. The ESS one was made with two parts. Find out what they are below. In 2021 the company I was running completed our first lithium-ion battery installation. It was just 300 kWh of batteries, stuffed in a 20Ft container. We’ve built it for an energy supply company, that in turn used it to provide load management services to a manufacturing plant. When the energy supplier announced another call for proposals the same year, we were able to drop the price by 30%. Mind you, at that time we just had around 200 MWh of manufacturing capacity, and that was making NMC cells, which are by far better suited for EV’s than for ESS, and are more expensive than LFP cells. Last year, according to the IEA, the volume of installed batteries skyrocketed to over 40GW of installed capacity. Going from less than 10 GW, it is an impressive 4x growth in a year. But don’t get too excited. To put this in perspective - it’s about 40% of the total energy capacity of Turkey. Worldwide, this is a drop in the ocean. The growth of the EV battery market was also impressive, but in this post, I want to focus on grid batteries. While the EV market was driven by technological innovation, growing scale, falling prices, and higher adoption rates, the market for ESS has a different story, albeit, tied to the EV and growth in installed renewable energy capacity. Here are the two main reasons for the hockey stick in ESS: Drop in battery prices due to output ramp-up for EV market. Co-location requirements for new on-grid renewable energy power plants, first of all, in China, but then in other countries as well. Renewable energy installations grew fast, and in some places reached the tipping point, where additional intermittent generation requires a balancing of the grid with batteries. So, the ESS segment is riding on the back of two great waves - EV and renewable energy.  With the expected tripling of renewable energy capacity by 2030, batteries would continue this growth at least for a couple of years. This “Tesla-like” acceleration is a clear sign that batteries are fast on the way to becoming a commodity. #ev #batteries #energystorage #ess #energytransition #renewableenergy

The world is heating up, and while we're all doing our part to cool things down, we've got a long road ahead. In the meantime, understanding which temperatures are merely uncomfortable and which ones are downright deadly is crucial. Let’s break it down. When the heat is on, our bodies rely on sweating to cool down. Sweat evaporates from our skin, taking heat with it. But what happens when the sweat can't evaporate anymore? Stay in this condition long enough, and you risk organ failure and death. Ever been to a sauna? You can handle higher temperatures in a dry sauna. But when your buddy pours water on the hot rocks, suddenly it feels like the temperature jumped a few degrees. This is because humidity makes the heat more dangerous. Adding stuff so that Lana can make a video. Enter the Wet Bulb Temperature (WBT), a metric that combines air temperature and humidity to tell you when the heat becomes truly hazardous. Here are some quick rules of thumb that I use: - 100% Humidity: Air temperature equals WBT. - 50% Humidity: Subtract 2.8°C from the air temperature to get WBT. - 0% Humidity: Subtract 5.6°C from the air temperature to get WBT. Now, let’s decode what these WBT numbers mean for your safety: - Up to 26°C WBT: Generally safe. - 26°C to 29°C WBT: Prolonged exposure or physical activity can lead to heat stress, especially for the elderly, children, or those with health conditions. - 29°C to 31°C WBT: Things get dangerous. Even healthy people can experience heat stroke. - Above 31°C WBT: The human body can't effectively cool itself. Spending too much time outside at this WBT is life-threatening. - Over 35°C WBT: Lethal. You won't survive long in these conditions. Let’s put this into perspective. Right now, I'm sitting outside in Istanbul. The air temperature is 27°C, and the humidity is 43%, according to my iPhone Weather app. So, my WBT is 27 - 2.8 = 24.2°C, which is within a safe range. In Sholapur, India, the air temperature is 39°C with 29% humidity, giving an approximate WBT of 33°C. If I were there, I'd be indoors with the AC blasting. Stay safe and enjoy your summer! And remember, knowing your WBT can be the difference between a fun day in the sun and a trip to the hospital. #sun #summer #climatechange #safety

The global shipping industry is responsible for about 3% of global GHG emissions and is considered a “hard-to-abate” sector. This means that electrification won’t work, and alternative solutions, such as biofuels or hydrogen are needed to achieve the emissions reduction targets of 40% by 2030 (with a baseline of 2008) and net zero by 2050. The problem with these solutions is that they are too expensive at present. I didn’t think much about maritime emissions until I stumbled upon an article in the Economist magazine “A new age of sail begins”. The article argued that old and new wind-assisted propulsion systems (WASP) could substantially cut shipping emissions. The technology was first demonstrated in 1926, but was quickly made redundant by falling oil prices. Today, the technology is experiencing a revival, as ship owners look for ways to cut emissions without breaking the bank. My search in Pitchbook INC came up with a spike in investment deals last year, reaching $57 mln - a clear sign of emerging interest from investors. There are six main WASP technologies: rotors, kites, rigid sails, soft wing sails, turbines, and suction wings. Most require some free deck space for installation, and all can be retrofitted on existing vessels. Container ships are the most difficult retrofit, as they require space for cranes to work on loading and unloading. Sails cannot fully replace engines but may cut fuel costs by around 20%. You still need to run your engines. Possibly, these could be made electric, with batteries for limited range and high-efficiency solar modules (like HJT modules) to top them up. It is still too early to tell whether a new age of sail is upon us. Kites and all sorts of rotating turbines have been around in the wind energy industry for a long time, without delivering any value. But I would definitely recommend watching startups in WASP space closely. A simpler solution is always better than a complicated one (like hydrogen). #wind #shipping #hydrogen #biofuels #innovation #startups #investing #windenergy #pv For a more technical introduction, check out this blog: https://blog.3ds.com/industries/marine-offshore/the-return-of-wind-assisted-propulsion-at-sea/ The Economist article is here (paywalled):   https://www.economist.com/science-and-technology/2024/05/21/a-new-age-of-sail-begins

A strategic investor can kill a greentech startup. Here is why and how. We all love big, strategic investors as they can bring not only capital needed to scale. More importantly, they can bring off-takes and market expertise, which will give a solid signal to other investors. What is less well known, is that a strategic investor can kill your startup faster, than it can scale it. A couple of times I was on a strategic investor’s end of negotiations with startups, and a few of those times I told startups that they could get our support, but they would be better off without it. Why? Primarily, because when strategic investors invest, they tend to view your startup as their property. So they feel entitled to do whatever they please. In their thinking, they are your chance of a lifetime, so you should be happy as it is. This will be sugar-coated, but bitter. The first thing they’ll try to do is to slot their director into your board. It doesn’t really matter who that will be, as this unfortunate fellow will have to: a) relay all of his interactions with you to the higher-ups; b) get approval from 5-12 corporate executives for EVERY decision he or she makes as a board member. This will hugely complicate and delay your decision-making. Second, they’ll try to make sure that competitors cannot get you, your product, or your startup. The avenues of attack will be numerous. A simple proposal to give your strategic partner the right of first refusal in any M&A deal will make your startup less attractive to any other investor. A more elaborate approach would be to get permission from the strategy investor for any new significant investor. This will block you from getting their competitors as investors. Non-compete clauses in various forms will be pushed upon your startup. In many cases when I was on the startup side, I had to fight off expanding my supplier’s list to include my strategic investor-related businesses. The strategic corporate’s subsidiaries will be on your phone and in your office in a blink of an eye, making offers “you can’t refuse”. When you actually do - they will make sure that you have a lot to talk about with your corporate representative. And I am not mentioning the amount of additional reporting you’ll have to do. You’ll quickly understand that you’ll need a separate department to handle of the extra paperwork. It is possible to protect your startup from most or all of these interferences. I had it done to me when I was on the buy side, and I had it done to my strategic investor when I was on the sell side.  If you are planning to take on a strategic investor, or are in negotiations with one, reach out to me and I will help you to prepare your position, lead you through negotiations, and protect your interests. #startups #investors #investing #negotiations #greentech #scalingup P.S. For a deep-dive into whether you should adopt a strategic investor, check out Yair Reem’s article here: https://medium.com/extantia-capital/the-essential-dos-and-don-ts-of-adding-strategic-investors-to-your-cap-table-66f4511b0246 For some practical reflections on working with investors, check my podcast with Duke Oh, CEO and Founder of JR Energy Solutions. Toward the end of our talk, Duke shares his experience of having strategic investors in his startup. https://www.askerov.pro/video#

Is Carbon Capture the superhero the planet ordered, or just another high-cost sidekick in the Greentech saga? With the potential to slash 1 billion tons of CO2 annually by 2030 and 6 billion by 2050, Carbon Capture could significantly cut down our greenhouse guffaws. Bill Gates would give it a thumbs up for surpassing his personal relevance hurdle of eliminating over 1% of global GHG emissions. However, selling this concept is tougher than peddling solar panels on a rainy day in London. The current market demand for captured CO2—mainly from the fertilizer sector and oil recovery—is a mere drop in the ocean, totaling only 230 Mt, while we need to siphon off at least 500 Mt annually to make a dent.   Carbon capture utilization and storage chain, IEA     Investor’s Corner Let’s peek into what the moneybags are doing. Over the past eight years, PitchBook Inc tells us that a modest crowd of 92 carbon capture ventures scooped up nearly $8 billion. Last year, big fish like CarbonEngineering and LanzaTech alone gulped down $3.2 billion of that pie. Meanwhile, the electric vehicle sector was partying with nearly $70 billion across 900 deals in just one year. Clearly, carbon capture is more of an acquired taste in the investor's menu, not quite the main course yet.     Direct Air Capture (DAC) Drama Direct Air Capture is like that expensive gym membership you buy at New Year’s—it promises a lot but depends on your commitment. Leading the charge are LanzaTech, Carbon Engineering, and Climeworks, sucking CO2 straight from the sky. But here’s the rub: making money off DAC is like squeezing water from a stone, with carbon prices needing to breach the $400 per ton mark. And energy? DAC could hog up to 4% of global energy just to hit its targets by 2030. The International Energy Agency fantasizes that by 2035, we’ll need over 40% of our clean energy dedicated to DAC—talk about an energy guzzler.     CCUS: The Grown-Up in the Room Carbon Capture, Utilization, and Storage (CCUS) is like the sensible sibling, catching emissions red-handed at the source. With 45 projects up and running and double that number in the pipeline, the IEA hopes for 1000 operational projects by 2030. Key players in this arena include waste management and "blue" hydrogen—though neither is cheap. Tacking CCUS onto a waste plant inflates costs by about 35%, and blue hydrogen costs twice as much as its grey counterpart. Only a hefty carbon price tag ($80 to $120 per ton of CO2, depending on whom you ask) could justify these expenses, making it a high-stakes game of policy poker.   Creative Carbon Uses On a lighter note, who knew carbon could be so chic? Startups like LanzaTech are turning this black sheep into synthetic fuels, chic fabrics, and even building blocks for carbonated concrete, giving traditional cement a run for its money. At prices, competitive with regular cement, carbonated concrete could cement itself in the market as early as 2027.   Conclusion So, is CCUS ready for the big leagues? It’s a mixed bag. Its cross-industry appeal spreads the bets and lowers the risks, but everything hangs by the thread of carbon pricing. The EU seems to be putting its money where its mouth is with the CBAM, while the US dangles carrots like the IRA. Yet, as any seasoned investor knows, betting solely on government consistency is riskier than investing in tech startups. My money’s on EU-centric projects or any venture aiming at European shores. The old continent might just be where carbon capture finds its footing—or at least, where the incentives align.

Every morning, I find comfort in the ritual of making coffee with a simple drip machine. As the hot water percolated through the coffee grounds, I was reading an article in The Economist about the bumpy road EV startups face in disrupting the established carmaking industry. It was hard not to draw parallels. Just like the coffee grounds are filtered to brew the perfect cup, EV startups must seep through the tough layers of investor scrutiny to emerge as a robust business. This morning's brew got me thinking about a graph used in a recent report to my customer on VC investments in the EV space.   Source: https://tracxn.com The Charge Begins   Sparking an Idea to Securing the Investment   Our funnel starts full of energy, with 10,638 startups ignited by the prospect of revolutionizing transportation. Yet, the road to securing initial funding proves to be the first big roadblock. Only a fifth – 21% manage to power through. That's 2,236 companies convincing the world that their vision is worth the investment, despite recent reports of falling valuations and the tough truth that building cars isn't as easy as it might seem.   Accelerating to Series A+   At the Series A+ stage, we see a significant drop-off. Only 30% of funded companies reach this checkpoint after about 2.3 years on average. This phase is crucial—it's where startups begin to prove they're not just another prototype, but a viable player in the challenging EV market.   Turning onto the Investment Highway   Series A+ to B+ - Gaining Momentum   Advancing to Series B+ is where dreams either pick up speed or come to a halt. With a 52% transition rate, the 357 companies reaching this stage are those who've managed to sustain their drive in an increasingly competitive space, one where the playing field is becoming tougher than expected.   Series B+ to C+ - The Valley of Death   The pass from Series B+ to C+ is no less demanding, with only half of the companies enduring the journey. These 187 companies have navigated around 3.9 years of development, showing not only resilience but also defiance against the odds, especially as valuations dip and the industry's giants fight back.   Series C+ to D+ - The Final Stretch   By Series D+, we're looking at the trailblazers of the EV world. A mere 98 companies have reached this summit after an average of 4.5 years since their initial funding. These are the frontrunners, pushing forward despite a market that's starting to question the stability and future of EV startups.   Looking in the rear-view mirror   The EV startup funnel paints a picture that's both inspiring and cautionary. The journey from an idea to a tangible, profitable product is fraught with more potholes than many anticipate. Reaching the D+ stage does not mean reaching the finishing line. The industry is realizing that to compete with the heavyweight carmakers, startups need more than just innovative technology—they need strategic prowess and staying power.   While valuations may be cooling, the resolve of these startups should not. They are the pioneers in a sector that has all the potential to redefine mobility and sustainability. Looking at the funnel is just scratching the surface. Below it lies a web of technologies, that have much potential, but also carry high risks. If you are interested in EV startups, or you are yourself behind the driving wheel of such a company, reach out, and together we will ensure that the brightest ideas don't just simmer away but come to a boil, ready to serve the world's needs just like a good cup of coffee in the morning.

How do you identify the next promising technology? One way to do it is to throw a lot of money (preferably other peoples’ money) at all the fancy tech that you can find and see which one grows. This is called venture capital. The other is to throw even more of other people’s money at a technology, recommended by the highest-paid consultant-de-jure , and then tough it out until you run out of (other’s) money. This is called strategic investment.   In the last couple of years, both ways have been tried in hydrogen technology with truly spectacular results. There are many technologies involved in hydrogen, but most new hydrogen projects are banking on water electrolysis – the technique of getting hydrogen by splitting hydrogen from water, using electricity. This is the way to make “green” hydrogen, by using electricity generated from wind and solar power plants and water. Now all this water stirring is causing a tsunami to rise.   The technology behind water electrolysis is, predictably, an electrolyzer. In 2024 the total capacity of electrolyzer manufacturing worldwide has reached 35GW, according to Bloomberg. In a race to meet the hallucinatory demand of 175 to 420 GW by 2030, investors have been throwing money at building capacity to match it. Now, the total installed capacity of electrolyzers in 2023 was just 2 GW.     With nothing to support this 35 GW of overhanging capacity, it is a matter of (short) time before this electrolyzer tsunami comes crashing down, washing away the hopes and money of investors. Will there be anything left of hydrogen technology after it passes?   The alternative approach to identifying a potentially disruptive technology was described at the end of last century by Clayton Christensen, in his book “The Innovator’s Dilemma”. Rather than throwing huge amounts of someone’s else money at technology, this approach advocates looking for specific traits of the emerging technology. For one, it should appeal to a niche, currently unserved market. It could be very expensive, relative to the existing solution, but it should solve the specific problem, faced by the niche in a way, that makes it worth paying the premium. Finally, the technology should be able to quickly evolve to deliver benefits outside the initial niche. For example, hydraulic excavators were initially used only for digging small trenches by farmers, and inkjet printers, with their high cost per printed page, first found their application among private specialists.   Recently I was analyzing the hydrogen technology scene and startups for a client, and the PEM (Proton Exchange Membrane) electrolyzer stood out, as it seems to have some of the properties, described by Mr. Christensen. PEM technology is expensive, about five or seven times that of a more widespread alkaline electrolyzer. Still, PEM is compact and has lower weight, making it convenient for a wide range of applications. The high electric current density allows for using less energy to produce hydrogen, and the hydrogen produced is of high purity. They are also good at handling intermittent energy from wind and solar, making them a good choice for “green” hydrogen applications. Finally, the PEM unit capacity is small, Most electrolyzers today are in the 0,5 to 10 MW capacity, which is the perfect range for the PEM electrolyzer. The recent tendency to go over 10 MW I attribute to the abundance of cheap other peoples’ money in the hydrogen sector, not to real demand.   Currently, the cost of "green" hydrogen produced using renewable energy is 2-3 times higher than the cost of "gray" hydrogen. I expect “green” hydrogen to replace existing “grey” hydrogen uses. There are very few new use cases for green hydrogen, but the existing industrial use is coming under pressure from governments around the world, for example in the form of the Carbon Border Adjustment Mechanism in the EU.     With its maneuverability, modularity, and robustness, PEM electrolyzers may fill this opening niche. As PEM technology evolves, the price will gradually decrease in price and make green hydrogen more accessible. So after the electrolyzer overcapacity tsunami passes, PEM technology might emerge as a survivor. However, I do not think this will happen in the next decade. Few investors plan for such a long term.

Bill Gates wrote a book, and guess what? It's not about Windows or how to reboot your PC. It's about something slightly more pressing: avoiding a climate catastrophe. I dove into "How to Avoid a Climate Disaster" not expecting to find the secret cheat codes to save the planet, but I was pleasantly surprised. This isn't your typical doom-and-gloom climate change manifesto; it's more like a pragmatic guide to not wrecking the planet, with a side of optimism. So, let's skip the table of contents and jump straight to the juicy bits that Greentech startups and their investors might actually find useful.   The Central Thesis, Courtesy of Mr. Gates   Mr. Gates's book revolves around a fun fact: that the world pumps out over 50 billion tons of CO2 equivalent each year. The mission, should we choose to accept it, is to slash that number to zero. He points out that while we've got the tech (hello, renewables!), the uptake is slower than a dial-up connection in the '90s. Natural gas and nuclear took seventy and twenty-five years respectively to get their moments in the sun, but renewables need to become the no-brainer choice over fossil fuels, and much faster.   Takeaway One: The 1% Rule   Here's the deal: if your startup's tech can't knock out at least 1% of those annual emissions (we're talking a cool 500 million tons), Mr. Gates suggests it might be time to go back to the drawing board. It's a bit harsh, maybe, but in a world where resources are tighter than the security on an iPhone, we can't afford to bet on the small fries, like hydrogen cars.   Takeaway Two: The Green Premium Enigma   Next up, is the green premium. It's not the latest shade of Tesla, but the extra cash you fork over for choosing green over grimy. Once upon a time, opting for solar or wind energy meant paying more than if you stuck with good ol' coal. The goal? Make that premium as appealing as a free upgrade to first class. If your product's green premium isn't on a downward trend, and fast, it might be time for a strategy pow-wow.   Takeaway Three: The Dreaded Valley of Death   Lastly, Mr. Gates acknowledges the infamous "valley of death" for Greentech startups. It's not featuring in a new season of "Game of Thrones"; it's the grim reality where promising technologies go to die because they can't get from cool concepts to market success. Gates looks to governments and mega-corporations to throw down a lifeline, but let's be real: finding those willing to play hero is tougher than convincing a cat to take a bath.   The Irony of It All   Looking up from the pages of Mr. Gates’s book into the real world, I see the EU and the US as the knights in shining armor for Greentech startups, while the rest of the world seems to be scrolling past the distress signals. It feels a bit like being picked last for dodgeball – unless you're in the cool kids' club, you're on your own. The message here is clear – get in the cool kids’ clubs.   In Conclusion: A Wink and a Nod to Greentech Startups   For those of us in the trenches of Greentech innovation, Mr. Gates' book is a reminder that while the path is littered with challenges, the quest is noble, and potentially highly profitable. So, to all the startups and investors out there: keep hustling, keep innovating, and maybe, just maybe, we'll find a way to save the planet without having to live on Mars.   Stay tuned for more tales of triumph and tribulation as we navigate the Greentech landscape. Because if there's one thing more exciting than reading about climate solutions, it's creating them.