How should climatetech startups prepare for ​‘the Great Deployment’?

A surge in funding for early-stage climate startups has produced a bounty of new technologies. Now founders must confront a new challenge: getting past the first installation of novel climate solutions so they can move on to large-scale deployment.

Doing anything that’s never been done before is hard. But first-of-a-kind clean energy demonstrations bring specific challenges. Hardware startups must suddenly become savvy project developers. They need to find new sources of funding that make sense for infrastructure projects, even though their initial plans will be far too small to attract typical infrastructure investors. This transition even entails learning a whole new lingo, as noted in a December episode of Catalyst with Shayle Kann.

Entrepreneurs have to overcome these barriers to realize the potential climate benefits of advanced geothermal, clean hydrogen, direct air capture, carbon sequestration, carbon-free industrial heat and more. Investors looking to catalyze new markets and get in early on emerging trends need to figure out which of these projects to support.

Entrepreneur Chante Harris has tackled these challenges from numerous angles. She raised millions of dollars for climate startups, created a climate venture studio and recently worked on climatetech strategy for Schmidt Futures, the philanthropic venture arm of longtime Google CEO Eric Schmidt. This week, Harris launched her own company, Eunoia Group, which helps climatetech startups accelerate their first project installations and advises financiers on which emerging technologies could serve their investment goals.

Canary Media’s Julian Spector spoke with Harris on how to unlock the next wave of clean technology deployment, what startups should keep in mind as they transform into infrastructure developers and who’s scaling up successfully. The conversation was edited for length and clarity.

Julian Spector: You’ve written that we’re entering ​“the Great Deployment” era — what does that mean, and how should we prepare for this next phase of the energy transition?

Chante Harris: The Great Deployment is this critical moment where we’re seeing a huge increase in early-stage dollars going into climate technologies and innovations. A lot of technologies have been de-risked or are expected to be de-risked in the next couple of years. Simultaneously, we’re seeing BlackRock and others acquire huge infrastructure firms that have an energy or climate component.

So it’s this merging of infrastructure finance, project finance and early-stage capital to create the perfect recipe for deploying solutions at scale. We also have the Inflation Reduction Act, the Bipartisan Infrastructure Law — all of these policies that are in alignment with these goals. The Great Deployment elucidates this really exciting and incredible time to see impact and returns at scale, and break through bottlenecks for scaling climatetech solutions.

Spector: So these new clean technologies could drive billions of dollars of infrastructure deployment. But they need to achieve first-of-a-kind installations before they can reach the promised land of widespread adoption.

Harris: That’s exactly right. I think we’re really looking at a trillion-dollar industry — I’m not the first person to talk about [climatetech] being a trillion-dollar space, but it really is that. So I’m focused on the multibillion-dollar scalability gap that gets us to that trillion-dollar outcome.

Spector: What are the big problems standing in the way of this massive climatetech deployment? 

Harris: Once these companies have built their product, they’ve scaled it to pilot stage, and they have successful proof of concept and some market traction, what they’re up against is really a financial ecosystem that has not matured as quickly as the technology innovation has matured over the past, I’d say, five to eight years.

A bunch of capital has come in at the earliest stages of climatetech companies. But we’re not seeing that same level of knowledge, capacity and interest at the project-finance stage, which is really where companies that are moving past the pilot facility and are launching their first-of-a-kind facility would go. These projects tend to fall very much below the threshold of [conventional] project finance, which is $100 million, typically.

We have this existing huge finance gap at the same time that we’ve seen incredible investments and technology scalability at the early stage. There’s an increase in capital flowing into the space. How do we make sure that that capital goes into the right areas and solves this valley of death?

Spector: What key bottlenecks have you identified for first-of-a-kind climate infrastructure deployment specifically?

Harris: What we see is companies really struggling to get from a few pilots to multiple demonstrations, or from one demo facility to large facilities that are going to lead to commercialization.

The challenges include where to get the capital for predevelopment. If you do take VC, you still struggle with whether this is the best place to be putting that capital. Because venture capital is expensive. And then you can go to debt or credit lenders, which can be an opportunity depending on the market and how favorable the terms are. How do you ensure that whatever money you’re taking on is not in direct contrast to the expectations of venture capital? It’s a lot to navigate as a tech founder.

For carbon-capture solutions, it is probably going to make more sense to go the corporate venture route, and probably also government grants. But for regenerative-agriculture startups that are focused on carbon and soil, where are you going to go for your $20 million equipment purchase and demo facility, particularly if you’re scaling in rural areas? With first-of-a-kind [projects], you can really have totally different blueprints.

Spector: Which startups do you think have done a good job jumping through the hoops to build their first-of-a-kind? 

Harris: [Advanced geothermal pioneer] Fervo is a great example, not just from the creative financing side or innovative capital strategy, but also with how well they diligenced where they were going to go in the first place, which can get overlooked, especially if you’re VC-backed.

I’ve seen multiple examples of founders using a couple of million dollars for a feasibility study, only to find out after the fact that the zoning parameters wouldn’t have allowed them to actually build there. That’s part of the data analytics side of Eunoia — ensuring that founders are taking that time, but also accelerating the time it takes to actually do that diligence upfront.

Spector: What are you trying to do with Eunoia that you weren’t seeing happen in the marketplace?

Harris: I spent years scaling various companies in the clean energy and climate space, working with waste startups, mobility startups, but also corporates from all over the world — the leading fleet manufacturer for EVs, a leading hydrogen fuel-cell company, and then incumbent companies like IBM. I’ve seen firsthand the challenges for corporates that are trying to adopt these solutions, the challenges for emerging technologies — VC-backed or not — that are trying to scale.

Eunoia really gets at the bottlenecks to scalability for the Great Deployment, so that not only are we deploying more capital, but that capital is going toward those critical bottlenecks. That piece is what I’ve coined as the ​“de-risk-as-a-service” studio, mapping and understanding risk for projects. A lot of those risks pertain to the predevelopment process: structured finance, permitting and licensing, zoning analysis, feasibility studies and community engagement.

These are all areas that historically, founders have navigated successfully. But these insights aren’t all in one place for companies to leverage or tailored toward their specific challenges and scalability. That’s what Eunoia Analytics is doing — it’s standardizing the processes that can be the most clunky and difficult for startups that are scaling.

Incubators and accelerators are doing that, and I have worked with many of them, but not everyone’s going to do an incubator or an accelerator — not everyone’s going to be accepted into one.

Eunoia Capital also creates strategies alongside institutional investors and then works with them to deploy that capital based on their parameters.

Spector: It sounds like you’re creating a central clearinghouse for understanding these questions that a lot of different startups and investors have had to figure out separately.

Harris: There’s definitely a centralizing component to all of this. I’ve watched founders go from, ​“Hey, I’m just a startup founder” to ​“Wait, now I’m actually a developer.” Those are two very unique experiences professionally that oftentimes aren’t tied together. Not to say that they don’t figure it out, but time is of the essence here, and we’re trying to accelerate solutions at scale.

Spector: What’s the origin story for the name? I’m guessing it’s Greek, based on the prefix?

Harris: Yes, Eunoia means ​“beautiful thinking.” It’s embedded in this collective collaboration, spirit and mindset. And that’s really who I am but also what I’ve built a track record on in the climatetech ecosystem.

Spector: Are you raising venture funding yourself?

Harris: No, I’m meeting a market need, generating revenue from the beginning. We don’t have any goals to fundraise. We’re just building tools, licensing them out, building strategies alongside financiers and deploying capital with them as well. All that stuff is really profitable from Day 1.