Why Bill Gates’ Breakthrough Energy and Other Investors Are Scouring Universities for Founders

The humble garage is so steeped in Silicon Valley lore that it’s almost banal. Yet that’s exactly how Caleb Boyd and Kevin Bush founded Molten Industries: in the garage of a Stanford professor’s house, where Kevin was renting an apartment.

It had everything they needed: space and, most importantly, power. They wanted to break the methane backbone, so to speak, by taking hydrogen from carbon in a way that wouldn’t emit atmospheric-warming carbon dioxide.

“We call it a garage, but it was really just a carport. We plugged into an EV charger, heated up the methane pyrolysis reactor to about 1,000 degrees Celsius, and started cracking methane,” Boyd told TechCrunch.

The professor who lived there “was super helpful,” Boyd said. “He would just come in and help us tinker with things and give us advice.”

While the garage can still be a great place to do basic research, the next step is a problem. Climate tech companies often face a “valley of death” between the lab experiment and the investment firm.

Founders used to have to solve this problem themselves. But increasingly, investors are stepping in early.

While Boyd and Bush were still in the garage, they were visited by Ashley Grosh, vice president of Breakthrough Energy, a climate technology organization founded by Bill Gates that includes a for-profit venture capital arm and various nonprofit programs. Grosh was representing one such program called Breakthrough Energy Discovery, a new division dedicated to early-stage companies, TechCrunch reported.

Discovery is an evolution of the Breakthrough’s Fellows program, which launched in 2021. Discovery identifies promising founders, who are often fresh out of graduate school or post-doctoral degrees, and awards them grants of up to $500,000, Grosh said. The organization has also created digital resources for common problems and pays fellows to attend various conferences and meetups.

To date, the Breakthrough Energy Fellows program has supported 42 companies across the climate technology spectrum, from cement and hydrogen to agriculture and fusion energy, raising a combined $250 million.

Grosh has overseen the program since 2020. “The way we built the thesis around this is that there’s government funding, there are programs like ARPA-E, but they’re not able to pick winners. They can do the science, but they’re not really going to go out and pick winners and bet on a company,” Grosh told TechCrunch.

Venture capital has historically been hesitant to commit to companies it considers too early. “We saw what happened in cleantech 1.0,” she said, referring to the first wave of climate-related investing that peaked about 15 years ago. “People got in a little too early. Now they’ve pulled back and figured out where the strike zone is for venture capital. But I think we’re seeing that there’s still a lot of science to be done.”

For investors who can stomach the earlier stages, the benefit is obvious: an early window into tomorrow’s founders. These bets are typically riskier, and because valuations are lower and paychecks are modest, the potential rewards can be significant.

“The term we use internally about this is proto-companies,” Johanna Wolfson, managing partner at Azolla Ventures, told TechCrunch. “It’s not a company yet, but if you squint, you can see how it could become a company.”

In addition, in climate technology, getting ahead of the curve is about more than just returns. At Azolla Ventures, finding companies and opportunities that have been overlooked is part of the organization’s mandate.

“As time goes on and as we miss our emissions targets, the crisis deepens,” Wolfson said. “And so the stakes are getting higher to make sure we leave nothing on the table.”

Funding Basic Research: Sooner Than Before

In the case of Breakthrough Energy, the application process itself helped identify promising areas where basic research still needs funding.

“We started seeing some ideas that were more advanced. We said, ‘Oh, this is interesting. It’s not ready to be a grantee yet, but this research would be really helpful,’” Grosh said. “We started collecting a list of these applications, and then we started funding a few of them as research grants.”

Soon, Grosh and her team realized they needed to be more systematic. Instead of issuing a simple request for proposals, Breakthrough Energy Discovery began hosting workshops for researchers with a wide range of experience, from postgraduate students to Nobel Prize winners, to identify the most promising and impactful opportunities.

“That’s where we’re going to start doing some research projects,” Grosh said.

Azolla Ventures has taken a slightly different approach by hiring what they call a technology specialist.

“We fund a postgraduate student to look around for interesting projects and tell us what excites them,” Wolfson said, “because the postgraduate students are the ones who are going to be most engaged.”

The program is still young. For now, Azolla is working with graduate students at Georgia Tech, a research powerhouse that the company says has been overlooked by venture capital.

“If you had to guess how active the venture capital community is there, you’d probably guess less than MIT, Harvard, Stanford or Berkeley, just based on geography, unfortunately. Georgia Tech is an example of a place where we’re experimenting, we’re saying there are probably some underappreciated opportunities.”

Even among the usual suspects, promising research can fall through the cracks and opportunities can be missed. That’s why the Collaborative Fund has given Harvard University’s Wyss Institute $15 million to set up a lab for sustainable materials research. The goal is to identify promising projects and researchers and hone them to the point where they’re ready to raise funds, according to partner Sophie Bakalar.

From Lab to Real Business: How Founders Benefit

The Collaborative has been prioritizing projects that have involved detecting PFAS and addressing air quality issues, and Bakalar is now also a visiting professor at the Wyss Institute, keeping a front-row seat at the institute. Along the way, Bakalar and the Collaborative are offering support to help founders bridge the valley of death between lab project and investable startup. Bakalar said she expects the first project to emerge from the lab in the next few months.

These kinds of resources can be helpful to founders that climate tech investors need. Many of them have spent years in the lab. Even if they’ve been exposed to the business side through courses, it’s a completely different experience than running a startup.

“We’re still operating in a university setting,” said Mattia Saccoccio, co-founder and CTO of NitroVolt, which produces sustainable ammonia for fertilizers. “Sometimes we miss the exchange with other companies or companies that are working on climate solutions or deep technology like us.”

To combat this isolation, Breakthrough Energy groups its fellows into cohorts and encourages them to stay connected during and after their tenure, including with its growing alumni network. “We meet regularly with other founders,” Saccoccio said. “I’ve found that to be one of the most valuable parts of the program.”

The founders also said that access to Breakthrough Energy’s business associates was particularly helpful. The business associates are a mix of what VCs might consider advisors or operating partners.

“If we need IP help, we can get it there. If we want to get into the ammonia business, there’s someone who’s worked with the industry and can help us open doors,” said Suzanne Zamany Andersen, co-founder and CEO of NitroVolt.

For Boyd, co-founder of Molten Industries, his business partners have been essential to his company’s growth. In addition to hydrogen, the company’s process also produces carbon. At first, “we thought we’d just bury it or cover it in concrete or something,” he said. But as the startup began raising Series A funding, he began considering alternative applications, eventually settling on graphite for lithium-ion batteries.

“The whole Breakthrough Fellows team has been super supportive during this time, helping us not only think through this and what the implications are, the pros, the cons, but also just take it in stride,” Boyd said. “As a founder, you want your investors to be your partners, not to be panicking or controlling. That’s something the Breakthrough Energy Fellows team does really well.”

Ted McKlveen, co-founder and CEO of Verne, which is developing a new way to store hydrogen, agreed. “This helps you go from zero to one, from nothing to something you can show investors and say, ‘Okay, well, we’ve got this, we’re real.’”

Bridging the gap between idea and reality is just the first of many that climate tech startups must overcome. Not all will do it, but as investors and their partners step in to bridge the gap, their chances certainly improve.