What if everything we’ve been told about startup success is wrong? In my work, I spend more than half of my time analyzing climate tech startups for their ability to scale, and I often find myself at odds with investors, especially VCs. This has puzzled me for a time, but after taking a course in VC investment, speaking to several investors, and hearing them speak at events, I finally got it. When I look at a scale-up, I try to understand the challenges it has to manage to get to profit. When investors look at the same companies, they are often looking to see whether they fit the latest hyped-up narrative. You can see it in the movement of venture capital. Last year, investments in one of the most pressing problems facing humanity - climate change dipped, while investments in AI surged. In the past, investments in other “micro-bubbles” like blockchain, NFTs, big data, IOT, drone delivery, and VTOL aircraft followed the same pattern. Massive amounts of cash were burned on spurious technologies, while real-world problems went ignored. I got confirmation of my ideas after reading a book, “Unicorns, Hype And Bubbles: A Guide To Spotting, Avoiding And Exploiting Investment Bubbles In Tech” by Dr. Jeffrey Funk. I’ve run into Dr. Funk's posts on LinkedIn first. These days, it is very hard to avoid posts either singing praises for AI or scaremongering about it. Both types of posts were really pissing me off, so when I saw a post by Dr. Funk, it was, as we say in LinkedInese, a “change of perspective”, or that “aha” moment. After reading his posts for a while, I bought the book. I recommend you do the same - read the posts and get the book. Dr. Funk names and deconstructs myths of modern techno-optimism and exposes its dangers. Being no Luddite though, Dr. Funk suggests principles of separating hype from real breakthrough technologies, or “killer applications” as he calls them. I’ll go over the myths, dangers, and frameworks that resonated most with me. This list is not exhaustive, and barely covers some of the key arguments. But it should give you a feel for the character of the book. The Myths of the Unicorns Musée de Cluny is one of my favorites in Paris. It’s famous for hosting a series of six tapestries, The Lady and the Unicorn, woven in Flanders around the 16th century. Human fascination with unicorns dates back millennia, and the elegant tapestries are one well-known symbol of this fascination with the myth. Another one is startup culture. The first, and maybe the biggest one, is that startups are central to economic growth. VCs peddle this myth to other investors, bureaucrats, and the media. Economic growth depends on increasing productivity and on investments that bring value, i.e., profits to investors. Currently, though, startups that are touted as successes are not the ones that are profitable or deliver extreme customer value, but those that raise the most funds. This is akin to putting a wagon before a horse, confusing inputs with outputs. Yet, the media and social networks are full of it. If we look back to the last century, when real breakthrough technologies emerged, like electricity, the microprocessor, and LED displays, the vibe was different. Here is a quote from the book, comparing startups across the two centuries: “the percentage of startups profitable in the year before their IPO fell from 90% in 1980 to 12% in 2022. Of the 278 biggest, costliest startup failures of all time identified by CB Insights in August 2023, only three that went bankrupt before 2018 had greater than $ 500m in VC; those were Solyndra with $ 1.7bn in 2011, Better Place with $ 675m in 2013, and Abound Solar with $ 614m in 2012.21 Already nine recent startups with more than $ 500m in VC funding have gone bankrupt since 2018”. It’s common to hear now that we live in the age of unparalleled innovation and progress. Looking at the data like this has a much-needed cooling effect. The dangers of mythical creatures Hype is nothing new, it even has its own graph - the famous Gartner curve. The danger with this representation is that it implicitly assumes that ALL technologies follow this curve. Reality is not so forgiving, as many technologies that do not bring profits or productivity increases eventually die. Appealing to the Gartner curve, however, can extend the life of these zombie technologies for very long times. This is the key danger of hype. It draws our attention to superficial and trendy, by feeding on FOMO. Meanwhile, real problems and real solutions get less interest and investment. I’ve started this review with how the AI bubble drives capital away from real climate solutions. But even in the climate space, we have micro-bubbles and zombie industries like hydrogen-powered flight, DAC, and the most recent hype - water startups. These draw away capital from credible solutions such as heat pumps, batteries, and practical applications of green hydrogen. The hype is pushed by the people profiting from it. VCs are the main culprits, as they benefit from new investors down the line, fixed fees, and general unaccountability. Hype is central to getting next investors, in the worst cases, consciously passing it to “the next idiot”. But at least this approach requires guts to stick to the same story for 10+ years. Consultants, on the other hand, are always the first to profit from a new hype. They have zero sunk costs and are there with their slide decks, when exasperated managers call them, after being bombarded with bogus requests from their investors and boards on how they are going to navigate the next wave of big data/AI/3D-printing/other “hopium”. Finally, the real sharks, circling the hype cycles, are established investors who see through the hype and wait for the right moment to short-sell their stock at volume, burning retail and institutional investors. Myth-busting frameworks in Unicorns, Hype, and Bubbles Dr Funk does not provide any ready-to-use frameworks or tools to separate hype from reality. Instead, he pushes us to question the narratives pushed by startups, VCs, consultants, and media along two lines of thought. First, look for a “killer application” technology - a technology so good that users will eventually flock to it. This means that the technology should deliver clear benefits for the users, and at the same time, be able to generate sufficient profits quickly for the technology owner. In the author’s own words, “progress in the form of higher performance or lower cost over time is an important driver of new technologies and their diffusion.” Second, evaluate productivity gains at the systems level. A good example of this is ride-hailing tech. Uber did not invent a taxi. It made it easier and more convenient to book one, and easier for new drivers to start offering taxi services. What it failed to foresee is that as more taxis get on the road and more people order taxis, they create congestion, speed slows to a crawl, and finally, you are not getting anywhere in your Uber. Finally, I’ve found it insightful and fascinating how D. Funk integrates and references recent research and books by my favorite authors, Daron Acemoglu, Vaclav Smil, and Clayton Christensen. In the Christensen case, Dr. Funk sees the problem with his theory as being taken further than its core proposition, that incumbents find it hard to innovate in the niche, low-margin markets. It was assumed a law that low-end innovation would eventually displace mainstream products. That’s clearly not happening across the range of products and services. You can read my reviews of books by these authors here ( Christensen , Acemoglu , Smil ) For anyone involved in evaluating early-stage technology—especially in capital-intensive sectors like climate, energy, or hardware - “Unicorns, Hype, and Bubbles” is a reminder to stay grounded. The work of building real companies still relies on solving real problems for real customers, at a cost they are willing to pay. And that should never go out of fashion.

Going from project to product is hard and unique in many ways. Here is how LeydenJar is doing it. In the early days, LeydenJar was a research company. They tinkered with what was possible with silicon anodes and what it could mean for battery performance. The team was small, mostly engineers and scientists, and the work was defined by speed, uncertainty, and technical breakthroughs. This worked well for a time. Customers took an interest. However, as plans for commercialization became more concrete, the constraints started to shift. A pilot line was no longer just a milestone - it had to function. Samples weren’t just for internal testing - they were being evaluated by major clients. Conversations moved from "can this work?" to "can this be scaled?" The culture powering early discovery started to create friction. Teams were still solving problems in real-time, but the problems were no longer scientific; they became operational. Timelines were slipping, reproducibility was an issue, and the existing quality control systems, built during the R&D phase, were too brittle and too early. It became clear that a reset was needed. At this point, LeydenJar brought in a COO with a background in manufacturing. His role was not to optimize what was already there, but to introduce a completely new logic. There had to be a deliberate transition to a production-oriented organization. “Our COO is a no-sayer. And that’s exactly what we needed”, says Ewout Lubberman, head of product at LeydenJar. As an example, one of the first decisions was to dismantle the early-stage quality control system. It had been implemented with good intentions, but it was misaligned with the maturity of the product and was consuming too much attention from a team that still needed to solve core engineering challenges. This transition also changed how the company thought about hiring. The priority was no longer deep specialization or theoretical brilliance, but execution, discipline, and the ability to operate within defined boundaries. This required different people. The people who thrive in chaos are rarely the ones who maintain order. What LeydenJar understood, and what many FOAK hardware startups sometimes miss, is that scaling is not just a function of capital or customer demand. It’s a cultural transformation. And unless that shift is timed correctly, the entire organization can end up stuck between modes: too structured for real innovation, too chaotic for reliable production. LeydenJar didn’t manage to avoid that tension. They managed through it. 💬 What was the moment when your startup stopped being a project and became a product? Source: LeydenJar #FOAK #scaleup #manufacturing #cleantech #batteries #operations #climatetech

Can you find unicorns in water? There is a hype around water tech startups. Climate is changing, and some countries, such as Turkey, where I currently reside, could face severe water shortages. The recent documentary by Sir David Attenborough spurred more enthusiasm for investing in water startups. I am all for Sir Attenborough’s art and insights. But art is one thing, and investments are another. The only possible unicorn in a water business would resemble Water and Power Corporation from the 90s Tank Girl movie. Why so? Water is so crucial to our lives and many industries. The demand is there, and it will only grow! There are so many new industries using water - AI, robotics, and vertical farming! Yeah, sure. In a recent FT cites a paper, in which researchers estimate that AI water consumption could reach 6,6 billion m3 by 2027! That’s a lot, isn’t it? Well, it sounds like a lot, but compared to the current US total consumption of 444,4 billion m3 per year, it’s peanuts. And if we dig into the report, we’ll find that 3/4 of that AI water consumption happens off-site - either in chip manufacturing or in power generation. We already know how to solve that last bit. And what about robotics and vertical farming? Forget about it. Robotics has been developing for the last 70+ years. They are not even a blip on water consumption. Vertical farming is a waste of time, as you can only grow greens there, which have the lowest calorific density, so not overly useful for feeding people. At the same time, agriculture uses extreme amounts of water, so some innovation might be needed there. What is special about water is that it is a public good. This means that all people are entitled to access to water, state-run monopolies provide water, and water prices are regulated. Yes, you can still buy bottled water all you want, but you are not likely to use it to shower or wash your clothes. So, which markets are those startups targeting? The only free market is the bottled water market, others are regulated. Now, say a startup develops a novel way of desalination or purification. Would it be able to expand its customer base quickly? Would it be able to charge premium prices? No, and no. Under normal conditions, who would need it, when state-run utilities provide you with cheap water? And in times of water crisis, do you really think that governments of any country would allow a private startup to profit from the crisis by selling water? If you do, then think again. How is it that I am so sure about it? Well, I happened to spend the beginning of my career, the first 13 years, advising municipal water utilities on investments, reading water regulations, and studying the experience of water utilities all over the world. Water issues are taken very seriously by national and local governments. Water underpins the health, safety, and economic development of any nation. No sane government will let private startups and some VCs determine who gets water, when, and at what price. Sources and opposite views: Article by Yoann Berno on watertech: https://climateinsiders.substack.com/p/water-tech-the-most-undervalued-climate?r=14vtgc&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false FT article with link to research paper: https://www.forbes.com/sites/cindygordon/2024/02/25/ai-is-accelerating-the-loss-of-our-scarcest-natural-resource-water/ Water usage data: https://ourworldindata.org/water-use-stress

They IPO’d before raising VC. Here’s why that was genius. ATOME Energy didn’t follow the usual startup playbook. No pre-seed. No seed. No “100-slide deck for Sand Hill Road.” Instead, they went public. Early. That’s not just bold - it’s strategic. 💡 Why? Because in capital-intensive, FOAK-scale cleantech, your biggest bottleneck isn’t idea validation. It’s credibility. To secure $400M in project finance, off-take agreements, and long-term power deals in emerging markets… You need more than a good pitch. You need auditable processes, financial discipline, and regulatory transparency now, not after Series C. An early IPO made ATOME investable to sovereigns, banks, and utilities. It signaled: “We’re not another hydrogen hype deck. We’re building a real business.” 🚫 No gigawatt dreams. ✅ A focused niche (fertilizer). ✅ A capex-heavy but mature tech stack. ✅ A team with finance, policy, and chemical engineering chops (more on that in a separate post - stay tuned!) ✅ A solid business plan with clear margins. ✅ Secured ultra-cheap, already existing energy supply. It’s not a path for everyone, but for FOAK players solving boring but crucial climate problems, it’s an example of a creative solution to crossing the “Valley of Death”. 📽 Full interview with CEO Olivier Mussat here 💬 Have you seen other early IPO strategies in cleantech? Drop them below. Let’s deconstruct what worked. #FOAK #climatetech #hydrogen #greentech #startups #IPOstrategy #projectfinance #scalingup #decarbonization

You don’t need to have a financial degree or a background in finance to understand the key principles of funding a FOAK. As someone who graduated with a finance degree and worked with infrastructure investments all of his life, I know how finance types like to swarm you with jargon and seemingly endless financial options. Shut out this noise. There are three main types of funding available to FOAK scale-ups, and, for that matter, to anyone who raises funds. Below is the breakdown of FOAK funding with extremely extreme examples and some statistics thrown in at the end for good measure. Equity First, are the money people give you and expect high returns, but are ready to tolerate high risks. That’s equity. In traditional finance theory, equity investors take the highest risks, get paid last in the event of bankruptcy, but can lay claim to all the profits of the company. As a founder, you are an equity investor, even though you might not have put in a single dime. Equity investment can take several forms. The most straightforward one is cash for a share in the firm’s stock. Founders most often contribute to equity in kind, with their effort and technology. Some might contribute with intellectual property. Others might contribute with equipment. Equity finance is the prime source of finance for FOAK projects and for startups in general. After all, startups are risky businesses, and equity is the second most risk-tolerant type of funding. So expect a lot of negotiations around company valuations and who gets what share. One example of pure equity funding is a green fertilizer startup, ATOME. It went public in 2021 and raised $12,5M of equity capital in two rounds of IPO. They have subsequently raised an additional $7M in equity over the following years. At the time of writing, these equity injections allowed them to shore up enough assets to start negotiations on a $400M project finance for their FOAK green ammonia plant in Paraguay. Several factors allowed ATOME to raise so much equity. First, they had an A-rate team of finance and industry professionals, with a track record of successful infrastructure projects and IPOs. Second, they had de-risked their project as much as possible. They had the construction site, the off-take, and the cheap, abundant power supply secured. The ATOME approach, however, is extreme and relies heavily on the experience and the network of its founders. Debt The second type of funding, are the money people give you, but expect it to be returned on a precise schedule and with fixed interest. That’s debt. People who give you debt finance generally don’t like risk. They like to give money to safe, predictable businesses with stable cash flows. And they will be the first in line to get paid in case of bankruptcy. Debt can take on many forms. It can be as simple as a loan for a fixed term with a fixed interest rate. It can be bonds, issues on the open market. It can be equipment, shipped to you with payments spread out over months. Debt issuers look for two things: stable cash flows and collateral, i.e., something of value, that they can take from you in case you fail to pay on time. And guess what, your FOAK isn’t likely to have any of those. That’s why banks and bond markets are generally not the places where you can raise capital for FOAK. Of all climate technologies, solar and wind were primarily financed by debt. The key here was long-term fixed-price off-take agreements, secured with either big, reliable customers or more often with the government. In my case, when building the first large-scale wind farms in Russia, we were able to secure approximately $1B of debt for our first 600 MW of wind farms and a wind turbine factory. While at the time of signing a loan agreement, we had neither the sites, nor the technology, nor a wind turbine factory, two things worked in our favor and were crucial to convincing the banks. First, we had secured 10-year conditional off-takes with the government. These contracts would enable us to sell electricity at a very high price should we build on time and meet necessary local content requirements. Second, our sole shareholder was Rosatom, the Russian state nuclear corporation, with a sovereign credit rating. While Rosatom did not provide explicit guarantees for the loan, its presence in the deal was enough to convince banks of our creditworthiness. This is again an extreme case of almost 100% debt financing for a FOAK. But extreme cases are good as they show exactly the conditions under which such extreme cases are likely to happen. By measuring your own project against these extremes, you’ll be able to get a more accurate picture of the right funding mix for it. Grant Now, the third type of funds you can get is the money that people give you, and don’t expect much in return. That’s a grant. Grant can be thought of as having the highest risk tolerance. They are not expected to be repaid, and they do not lay claims to any share in the company; that’s why they are called non-dilutive finance. This might sound fantastic, but in reality, this is not so. As a founder, you are likely to be quite familiar with grants already. You’ve probably raised a few during your early development stages. Governments and various foundations, public and private, are keen to spur technological development and regularly give away free money to promising technologies. The sums are usually modest, barely enough to run a team of a dozen researchers, rent a lab, and purchase a minimum amount of materials. When it comes to financing something of an order of magnitude higher, like €10M+, grants suddenly tend to make themselves scarce. Why? Because by the time you are in your pilot-demo-FOAK stages, you start talking more about customers and profits, rather than science and technology. That’s something that grant issuers are trying to avoid, as their mandate isn’t to support commercial technologies, but to spur innovation and science. You could probably consider the Manhattan Project to be an example of 100% grant funding for FOAK, but that’s certainly not a climate tech project that we can relate to. When it comes to climate tech, FOAKs with a large share of grant funding are rare. One such example is Ineratec, a German provider of e-fuels and synthetic chemicals. As of 2025, Ineratec raised almost €40M of grant funding, with the latest round of €31M in grant money coming in March 2025. Out of the total of over €170M raised, grants account for almost 24%. Grants, however, are not completely free money. They are hard to get, and may come with many strings attached. This is such a special financing option that it deserves a separate discussion on how to understand whether your FOAK needs a grant or not, and how to manage one once you get it. You can read more on grants in this post . What can a founder expect from FOAK finance? In the age of the Republic of Genoa's dominance over the Mediterranean, the main way of making a fortune was to trade overseas. This was a dangerous enterprise. Storms, disease, and pirates were all very real and present dangers for any maritime startup of the era. And as you can imagine, the main source of funding for such ventures came from equity. A survey by Net Zero Insights, published in Building and Scaling Climate Hardware: A Playbook, illustrates the challenges of climate tech FOAK financing (see the chart below). As in the times of the Genoa Republic, climate FOAKs are overwhelmingly financed with equity. Source: https://planet-a.notion.site/4-Capital-Stack-174ea18bcd7a497ab8a739c8a5657d0e Investors' appetite grew almost exponentially until 2022, and then dipped. This happened not only to climate tech but also to a range of other industries, owing to tightening capital markets coming to their senses after the pandemic era's boundless government spending. At the same time, a share of debt significantly increased, as climate tech matured and many FOAK projects secured off-takes. Grant funding, not surprisingly, did not amount to a significant share, despite growing in real terms. The statistics by the Net Zero Insights clearly show that equity capital is the only type of capital that can consistently stomach FOAKs. Still, as the examples above and some of the examples in the following sections show, this doesn’t mean that your FOAK is doomed to be 90 %+ equity financed and founders squeezed to mere percentage points of the cap table. In the following blog posts, I will detail what type of expectations different investors have and how to manage them, so that you, as a founder, can keep your share. For now, it is important to get a firm understanding of the three main sources of finance - equity, debt, and grants. Don’t allow yourself to be overwhelmed by your CFO’s or investors’ attack with various financial instruments, such as mezzanine debt, convertible bonds, or SPAC (God forbid!). All are a mix of two or three, or a new take on just one. So, if someone presents you with a novel finance tool, ask them - is it a debt, equity, or a grant?

Off-takes are the holy grail of climatetech FOAKs. You would expect one to be signed by every hardware scale-up. But ask Northvolt’s investors, and you’ll find most off-takes aren’t worth the paper they’re printed on. 🚩 A typical, conditional off-take goes something like this: “If you hit these specs, and if the price is right, and if we’re still interested… We’ll buy it. Maybe.” Can we do off-takes differently? LeydenJar, a solid-state battery startup from Netherlands, shows how: 🔁 They run a customer through the following framework: 1. Intro + NDA 2. Sample testing → Claims verification 3. Joint development agreement (JDA) – Tailor performance specs to actual applications 4. Design-in validation – Send kilometers of anode foil to the client’s contract manufacturer – Prove yield, cost, and scalability 5. Then, and only then, off-take And not a conditional one. A real one: So, a JDA-based off-take would sound like “We’ve validated your product. You’ve demonstrated cost-competitive mass production. Now we commit to buy X volume at Y price.” Still, this approach is not for every climate scale-up. Pros: You get to build traction and trust with a customer You get to refine your product to full customers’ specs before launching at scale You get a “hard” off-take Cons: No conditional off-take - harder to raise funds Longer validation process, During which you need to somehow finance your burn 💬 Would you take the long road to an off-take? What red flags do you watch for in startup contracts? Download the post as a PDF carousel here Follow me for more FOAK and scale-up stories, tactics, and frameworks! #cleantech #batteries #foak #offtake #scaleup #climatetech #hardware

Don’t play with the government. That’s a rule my father taught me. He built his business in the 90s and early 2000s in Russia. He knew first hand that the government will screw you over faster than your private sector partner and in worse ways. For a long time, I thought that this rule applied only to authoritarian states like Russia, where the law is weak. The current passing of the “Big Beautiful Bill” in the US now shows that it is true for the West as well. The Inflation Reduction Act was a defining legislation of the Biden presidency, which set the US on the path to becoming a major clean energy and technology power. Climate capital rushed in, projects were developed, and equipment was ordered. Only two years later, the policy, critical not only for the US but for the world, is being scrapped. Three things stand out to me. First, the US might lose almost 3/4 of its potential clean energy additions. The analysis by Rhodium Group, published recently in The Economist, shows that after the repeal of energy tax credits under the Inflation Reduction Act, clean energy additions to the US grid are likely to go down 4 times over the next decade. This is despite renewables being the cheapest and most readily available form of energy in the US. Source: The Economist Second, an analysis of the “Big Beautiful Bill" on the CTVC concluded that the bill will hit the First-of-a-Kind climate projects the most. Like the FOAK projects didn’t have enough to worry about. To remind you, the whole FOAK debate picked up right at the same time as the IRA was coming into force, and it did not subside. Now, the champions, struggling to commercialize new climate technologies, will face even more of an uphill battle. Third, the EU stands to benefit from the US's short-sightedness. The sheer amount of talent and capital devoted to climate tech in the US is enormous. Some will find ways to advance clean technologies at home by partnering with state and local governments. Some, but not all. Those who won’t will move to Europe, the only other place on Earth, apart from China, that still cares about climate. The US teaches us a harsh lesson - in climate tech, never confuse political winds with long-term certainty. The rug can, and will be, pulled. If you are building a FOAK, you need to plan for policy risk, just like technical or financial risks. And if you are in Europe, congratulations! The spotlight’s shifting your way! Follow me for tactical advice on scaling up your climate venture! #FOAK #USA #Europe #politics #risk #climatetech

Decarbonizing aviation is sexy. Electrifying cars gets headlines. Hydrogen buses and cars are mostly seen in the news rather than on the streets. But fertilizer? 📉 Quietly, it emits over 2.5 gigatons of CO₂ annually. That’s more than global aviation and shipping put together. We can skip a flight. We can choose a Zoom call over an in-person meeting. But we can’t skip a meal more than once or twice a day. 80% of global ammonia production goes to make fertilizer. How do you make ammonia? Yes, with hydrogen. And this hydrogen is now 100% “grey”, meaning that natural gas is used as a feedstock. Which means the real hydrogen economy isn’t in mobility, it’s in agriculture. That’s why I interviewed Olivier Mussat, the CEO of ATOME Energy. Their goal isn’t to chase subsidies or bet on next-gen electrolysers. They’re building a business that works now, in emerging markets, with existing tech and a clear product-market fit: green ammonia. Their first project alone could replace 1% of all nitrate fertilizers used in Brazil, Uruguay, and Paraguay. And if their pilot is successful, it’ll become a blueprint. 🧠 The boldest startups won’t win by reinventing the wheel. They’ll win by changing the axle, quietly, patiently, and with margins that work. 👉 Full interview here 💬 Know a founder tackling a “boring” climate sector? I want to hear from them. #FOAK #cleantech #fertilizer #hydrogen #startups #decarbonization #climateaction #scalingup

When the U.S. Department of Energy’s Office of Clean Energy Demonstrations (OCED) speaks, I listen. Their November 2024 publication, “Learning from Case Studies: Financing and Development Approaches from Recent First-of-a-Kind Projects,” is possibly the most comprehensive collection of real-world examples for getting cleantech from the lab to steel-in-the-ground scale. If you’re in the weeds of building a FOAK (First-of-a-Kind) project, or advising someone who is, this report deserves a place on your desk. Here's what stood out to me: 🧠 The Core Insight: FOAK ≠ Bankable FOAKs aren’t bankable. That’s not a bug, it’s the nature of the beast. OCED hammers this home: the projects that succeeded didn’t tick every “project finance” box. They were financeable, not bankable. There’s a difference. These companies hustled capital from wherever they could: corporate equity, strategic investors, customer prepayments, even construction loans backed by custom insurance packages. It’s less textbook project finance, more Frankenstein capital stack. And that’s okay. Key quote: “All case studies diverged significantly from the model of fully wrapped EPCs and long-term, fixed-price offtakes.” 🔧 Build Fast, Integrate Yourself Forget handing everything to a global EPC. These teams sliced and diced their scope, acted as project integrators, and built fast, often starting procurement before designs were finalized or financing was secured. Risky? Yes. But speed matters, especially to your investors. In the case of JR Energy Solution, which I am familiar with, they ditched the EPC and built their half-a-giga factory in just nine months. From my own FOAK work, this rings true: speed eats perfection for breakfast. 📉 Tech Risk Isn’t the Only Risk Most of us FOAK-heads focus on TRL (Technology Readiness Level). This report gives equal billing to ARL - Adoption Readiness Level - which includes things like demand certainty, workforce availability, permitting complexity, and capital flow speed. Below is the one table that maps out ARL in detail. I’m still thinking whether it is a good framework to use, as it seemed to be a little overcomplicated. It is worth examining, though. Source: OCED 🔁 Refine, Repeat, Refuel Many case studies follow a pattern I call: Pilot → Early Demo → Refinance → Deploy. Companies like Solugen, Via Separations, and Twelve used early demos to de-risk tech and off-take, then refinanced or raised project equity later. It’s the FOAK lifecycle in practice. 💸 Equity Is Expensive. But Sometimes, It's the Only Way. The report doesn’t sugarcoat it: in early demos, project debt is rare. Equity is king. Some raised super-rounds, some blended grants, customer finance, and concessional capital. Government grants helped, but often came with tradeoffs - longer lead times, complex compliance. As a FOAK advisor, I’ve seen the same: grants are gold, but sometimes they slow you down when you need to move fast. 💼 My Take What makes this report valuable isn’t just the case studies - it’s the distillation of real tactics: how companies actually moved from demo to deployment, who they hired, how they managed contractors, and what kinds of financial gymnastics were required. The report doesn’t claim to offer a universal playbook, but it does deliver a strong foundation to build your own. If you’re working on a FOAK project - hydrogen, CCS, SAF, batteries, you name it - this is essential reading. --- 📘 Want to go deeper into FOAK strategy? Explore my curated FOAK blog series with frameworks, real-life cases, and step-by-step planning: https://www.askerov.pro/foak-scaleup-and-cleantech-blog/categories/scale-up Let’s stop building just “firsts.” Let’s build the first of many. Here is the link to the full OCED report: https://www.energy.gov/sites/default/files/2024-11/FOAK%20Financing%20and%20Development%20Approaches_112024_vf.pdf

A climate tech idea that needs more energy than it saves? That’s not innovation. That’s a waste. During a recent advisory project on the hydrogen economy, one question kept bugging me: Where is all the clean energy supposed to come from? And at less than 1.5 cents per kWh? Then I revisited Michael Liebreich’s writings on hydrogen, and it clicked. Instead of burning gigawatts of clean power to make hydrogen, why not just use that same energy to push coal out of the system? Seems obvious, right? This week, while digging into the Climeworks saga and the DAC sector, another piece fell into place. There’s a blind spot in climate tech investing: input energy and its opportunity cost. I am specifically focusing on investing, not startups - they’re supposed to test the wild ideas. But for investors, failing to vet energy inputs is inexcusable. Look at where we are today: DAC, hydrogen, SAF—all on shaky ground. Not always because of bad science or bad engineering, but because we forgot the basics. How much clean energy do you need - and what else could that energy be doing? So I’m adding another checkpoint to my FOAK strategic planning framework - The Energy Test Framework : 🔹 Estimate total energy inputs at scale 🔹 Model worst-case scenario 🔹 Ask: Could this clean power displace coal instead? And would the CO2 savings be greater? 🔹 If yes, maybe your tech isn’t the best use of clean energy It’s simple. But it’s missed far too often. Before we back the next DAC or hydrogen moonshot, let’s be clear-eyed about what the energy math tells us. We don’t have time or clean terawatt-hours to waste.

Climeworks is back in the news—and not for the reason they’d like. Reports from Heimildin and others claim that their latest DAC (direct air capture) facility might not even cover its own emissions. That’s a brutal blow for a company that promised to remove 1% of global CO₂ by 2025. Their CEO Jan Wurzbacher published a response . He acknowledged commissioning problems, but didn’t refute the claim that the total carbon footprint may be net positive. That’s a hard pill to swallow. Before the comments fill up with “DAC is a scam” takes, let’s pause. In 2023, I ran a deep dive for a private investor into CO₂ removal technologies. With the help of German Minkin, we concluded that point-source capture and storage is the only viable tech at scale today. Not sexy, but it works. Still, this isn’t about DAC vs CCS. The real lesson here is about FOAKs. Just like with Northvolt, Climeworks shows us that building FOAK plant is one thing. Running it, scaling it, delivering on its promise—that’s something else entirely. You need a runway, not just to build, but to ramp. To test, tweak, and run at full throttle. You also need to manage expectations: claiming “1% of global CO₂” and delivering ~1,000 tons a year is a gap you don’t want to explain to stakeholders later. Let’s get better at building and operating FOAKs. And let’s stop mistaking commissioning announcements for commercial success.

During my time scaling up climate tech, I wouldn’t touch government grants. Even when they could clearly reduce my capital costs, help to avoid dilution and generally help to speed up a project. In Russia, dealing with government money means that sooner or later, you’ll have a budget controller knocking at your door, whose sole purpose is to find out how you misused public funds, so that he can ransom money from you or throw you into jail. The jail could actually be the first step, so that you are more pliant to buying your way out of it. The fact that you are squeaky clean and used all public funds as promised to the last kopek doesn’t matter. The creative part of the budget controller’s job is to find an excuse, any excuse, to threaten you with jail. That’s just part of doing business with government money in Russia. And that’s in addition to all the paperwork you’d need to submit. Government grants are often cited as one of the best ways to finance a climate tech FOAK, or any FOAK for that matter. The main reason, apart from grants being essentially free money, is that grants do not dilute founders' shares and allow startups to take the next step. While the benefits of grants are evident, there are costs, and not all of them are clear at the outset. If you deal with grants outside of Russia, or any other state where it is normal for government officials to receive kickbacks from the grants they issue, you are likely at least to avoid an embezzlement case. Still, the “free money” is not really free, and does come at some cost. The cost of free money First of all, getting the grants is not easy. The competition can be fierce, and competitors are many. For example, C1, a German startup developing a new process for manufacturing green ethanol, applied for the EIC Accelerator Grand and failed. It was one of the 1100 applicants, of which only 300 made it to Brussels for selection, and only 45 were awarded the grant. Second, compliance and reporting requirements are usually complicated and require devotion of a significant amount of time by your team, especially if you are unfamiliar with using grants. There is a reason why the grant industry in Europe has its own dedicated consulting industry. Governments are bureaucratic organizations, and any money from the government will come with requirements of extensive reporting. For example, Traceless, a circular bioeconomy startup, secured €5,1M grant for its production site. They used a consultancy service to get it, but it still took six weeks of full-time commitment from the founders. Third, getting a grant usually means you have to adapt and lock in your project schedule to accommodate the grant selection procedure, its payment schedule, and deliver results when bureaucrats need to report back. For example, Metafuels, a SAF startup, started preparing for getting a grant a year in advance and submitted its bid 6 months in advance. Then, a typical grant would have a term of one to three years, sometimes more, during which you must deliver on key performance indicators. Are grants for FOAK realistic? Now, let’s say that you are not in Russia and you are unfazed by all these challenges. How realistic would it be to fund your FOAK with grants? Well, not very. FOAK is rarely funded by grants. According to Deloitte, climate tech firms raised $840M in grants in 2021 and $4B in 2023. But most of these go to pre-seed, seed, and early-stage startups. Only 13% by deal count go to later-stage companies. Most grants are awarded to small businesses, with fewer than 50 employees and revenue or balance sheet asset value of less than $10M, and 86% of these are under 10 years old. While it is statistically rare that you’ll get a grant for your full-scale FOAK plant, note that when you get to build your pilot facility, you are most likely to fit the description of a typical grant receiver - less than 50 employees, asset value under $10M and being around less than 10 years. Thus, from a statistical viewpoint, considering grants for your pilot stage is much more reasonable than considering them at later stages. There are, of course, examples of large-scale FOAK plants getting hundreds of millions of public money, like Tesla factory or Northvolt. But these are outliers and require deft political maneuvering and connections, which most cleantech startups lack. So, how do you decide whether you should go for a grant or not, and if you do, what should be your steps to getting one? Here is a framework that you can apply. The 6-step framework to decide if you need a grant or not Check with your suppliers for the possibility of equipment loan or deferred payment. Check with your customers (if you have them at this stage) for advance payment Look for “patient capital”, like impact funds or corporate VCs, who might be willing to provide you with cheaper capital than VCs. Look for non-government grants from foundations or universities. Check that you still have at least a year of burn available before launching your pilot/demo/FOAK If all of the above turn out not to be enough, and you still have a year to go, congratulations, you need a grant and have enough time to get it! Otherwise, focus on getting less cumbersome non-dilutive funding. The 5-step framework of getting and managing a grant Now that you’ve decided you need a grant, apply the five-step grant framework below to maximize your success in securing and successfully implementing the best possible grant: Get a grant manager. Treat grant management as a full-time job. Is there anyone on your team who has experience in applying, securing, and completing a grant? Is he or she able to devote at least a third of their time to grant management? If yes, good, you now have a grant manager; if not, seek outside help. Hire a consultant with a proven record of securing grants. You’ll probably need only one person, not a full Deloitte team, unless your project is exceptionally big, and you can afford to blow €100-200K on a grant application and management. Hire a consultant not only for selecting and applying, but also for reporting, after the grant is secured. This will free up your team to focus on running your project, rather than filling out papers. If your business is closely government-related, like the government is your main investor or customer, or you are heavily dependent on particular government regulations, it makes sense to hire a full-time government relations (GR) manager. He will take care not only of your grant but all other cabinet shoulder-rubbing as well. And boy, government officials love long meetings! You wouldn’t want your CTO running off to a ministry in the midst of commissioning your plant! Determine which program you should apply for. This should be done by your GR officer or a consultant. Feed them your FOAK plan, just make sure that you have at least a year of runway during which you will be applying for the grant. Don’t skimp on it, and read the fine print of the grant documentation. Make sure your project goals 100% align with the grant's purpose. You don’t want to explain to a government budget committee why you’ve spent taxpayers' money on something that doesn’t match the grant’s description. Devote necessary resources to the preparation of the application. Your GR officer or consultant is not an expert in your business or technology. They are experts in getting shit done in the corridors of power. They will need your and your team's help in preparing documents and in conversations with government officials. Recall the example of Traceless above, where the founders had to devote a full one and a half month of their time to the preparation of the application, despite having a consultant. Talk to your team, explain to them that their contribution is critical to grant financing. They must see talking to your GR or consultant as a priority; otherwise, in a frantic startup environment, they’re likely to push grant applications down the list as it is not “real work”. Plan your project with grant limitations in mind. Include grant application time, grant term, and reporting cycles in the planning. Include time buffers for critical deliverables to manage the risk of slipping past grant reporting or tranche release milestones. Make sure you know how fast you can get the grant money, so that you plan your cash flows accordingly. And just to be on the safe side, add another two months to the planned date of funds release. There is always some additional document to be filed, of which you’ll never know until it is time to get your money. After securing the grant, include your consultant or GR officer in the project reporting flow, so that they get project updates as regularly as you do. They must not fight to get the necessary data from your team and must not be excluded from project discussions. Treat them like a representative of your main shareholder. Takeaways As the Deloitte research shows, grants are most commonly used in FOAK for financing pilot plants. By the time your project gets to building a pilot, you’ve likely already become familiar with grant funding. But getting grants for pilot or demo, or even FOAK, takes the grant game to a whole new level. Now it's not only about research and development, it is about implementation and real assets. The stakes are higher. When planning for grants as a non-dilutive funding, remember that getting grants takes a long time, with no guarantee of success. Plan accordingly, and ensure you have enough burn to see you through the grant application process. Finally, get someone with experience in grant applications and reporting. Usually, that would be a consultant. Occasionally, if your business is dependent on government decisions one way or another, you’ll have a full-time GR manager. In any case, grant application and management require a certain skill set, which startups normally lack. The examples and figures are taken from Deloitte and Climate First report "Driving Climate Tech Growth: A Startup's Handbook for Non-Dilutive Funding", which can be downloaded here: https://www.deloitte.com/il/en/services/consulting/perspectives/ndf-climate-tech-report.html