The Right Bridge, the Wrong Timeline
The diagnosis is right. The timeline is not.
We’re back with more hot takes. Today is a response to the white paper BCG and HSBC published earlier this year.
For years the standard read was that climatetech needed more capital. But the capital was already here, it just had nowhere to go. $90B in dry powder sits uninvested alongside a $150 billion scale-up gap.
BCG and HSBC’s whitepaper calls out this architecture problem. FOAK projects are too capital-intensive for venture equity and too novel for infrastructure capital. They fall into a gap no single check writer is built to cross.
The fix proposed is a dedicated FOAK Finance Facility. One privately managed vehicle, capitalized by catalytic investors, banks, infrastructure funds, sovereign wealth funds, and development finance institutions, that sequences capital from first project through early replication until the risk is low enough for infrastructure money to take over.
The strongest idea in it is buried on the capital provider side: A bank will not eat the diligence cost and novel-technology risk of one transaction that goes nowhere. The incentive is the pipeline. Underwrite the first plant and you buy visibility into the second, third, and nth, where risk is lower and checks are bigger. That reframes FOAK financing from charity into positioning. It is the reason the facility could work.
Over a 5-10-year horizon, this is probably the right destination. My quarrel is with when it gets there, and what happens to the businesses crossing the gap right now.
A Bridge That Opens in 2030
Standing up a $5B blended-finance vehicle takes years. But founders raise in a matter of months, against a runway already shorter than they would like.
While the facility gets built, the private FOAK layer that exists today is thinning. Breakthrough Energy Catalyst, the Gates-backed fund that was the marquee private financier of FOAK climate projects, halted new investments in early 2026. The Department of Energy canceled billions in loans and grants. The capital actually crossing companies through the FOAK stage is drying up while the vehicle meant to replace it is still a slide in a deck. A company stuck at its first commercial plant does not get to pause and wait. None of this kills the facility as an idea. It just makes it a 2030 answer to a 2026 emergency.
The Problem Upstream of FOAK
Even fully built, the facility leaves a deeper problem standing. It sits downstream of FOAK. It coordinates the capital that shows up once a company is ready to build its first plant. It does nothing about the capital that feeds these companies on the way there. And venture capital is still pricing hardware on math the hardware cannot deliver. Venture returns run on the power law, where a few outlier bets carry the fund, and you do not get outliers from companies that already locked their offtake and unit economics. In climate the exits are mostly acquisitions, not the fund-returning IPOs that math depends on.
Europe shows the architecture problem in its purest form. European funds raised more than half of all new climate capital in the world last year. In the same year, investment into European climate startups fell thirteen percent to its lowest level since 2020, and Series C deal counts hit an all-time low. The money was raised, but did not reach companies. The deployment machinery is the bottleneck: the EU’s flagship Innovation Fund holds a €40B budget and had disbursed under 1% of it by mid-2025. This is the same architecture failure the paper describes, sitting one stage upstream of anything a FOAK facility would touch.
The Capital Is Already Here
The capital to scale a climate company exists right now. It is not sitting where most pitch decks point.
Stop building the stack out of one instrument. Venture equity is the most expensive money you can use to clear a milestone, and the milestones VCs now demand are the exact ones non-dilutive capital was built to fund. Match each use of proceeds to the capital priced for it. Grants and catalytic capital for the early de-risking. A development loan to finance the work that produces a signed offtake. Equipment financing against hardware that holds resale value. Each one clears a milestone without selling a piece of the company at a hardware discount. Now, the investor who wanted to see traction has to compete for a company that no longer needs them as badly.
The single biggest unlock in that sequence is an offtake. A blue-chip commercial contract, increasingly a hyperscaler power deal, pulls everything else behind it. Project debt follows contracted revenue. Infrastructure equity follows project debt. Your first plant does not open the public markets. Contracted demand does. Sign a creditworthy buyer before you break ground and you have done more for your bankability than any round will.
The institutions will build their facility, and founders should want it to exist. But no one crossing the gap this year can wait for a bridge that opens in 2030. The money is already here. Go find the part of it built for you.