Future of asset-heavy ClimateTech ventures

Blackrock just took a big write-down on its Global Renewable Power Fund III. Because of two ill-fated investments in Northvolt and SolarZero. Surprisingly, a $4.8 billion fund saw its internal rate of return plummet due to just two portfolio companies faltering. This fund was BlackRock's third flagship GRP fund, part of its bet on the energy transition and a push towards renewable energy and infrastructure. Many of the funds’s assets are early-stage climate infrastructure investments in: EV charging, renewable generation, and power storage and transmission. Are they simply making bad investments or is this a prequel to what to expect? What this tells me about climate tech investing: 1. The significant impact of two companies on a $4.8 billion fund suggests that traditional risk models needs reevaluation. The conventional playbook for diversification doesn't quite work in climate tech. When companies in your portfolio are all betting on similar technological advances or regulatory shifts, they tend to sink or swim together. Traditional risk models might be missing these hidden correlations. 2. The Northvolt situation is a wake-up call - throwing money at climate tech isn't enough. These companies need investors who roll up their sleeves and get involved. We're seeing a shift from passive to active investing, where deep operational expertise is just as crucial as the capital itself. 3. SolarZero, a major player in New Zealand Energy Sector, was far from an early-stage startup when BlackRock acquired it in 2022. Despite its 50-year history , something went wrong. It hints at a broader challenge: global funds rushing into new markets might be overlooking local market dynamics and regional complexities in their eagerness to deploy capital in the renewable space. As this sector matures, we need a new framework for resilient investment strategies that can better weather the failures of individual companies while capitalizing on the overall growth trend in clean energy. #climatetech #VC #investment #newbook #fundclimatetech #blackrock Link for the news in the comments.

One data point worth pausing on… According to the latest Sightline Climate (CTVC) analysis (https://lnkd.in/ezEChF5h), TDK Ventures was the most active corporate VC in climate tech in 2025 by deal count. In that context, being at the top of the list feels less like an accolade and more like a mirror held up to the market. At this point, the scale of what is happening in energy is no longer debatable. AI-driven power demand, grid modernization, electrification, and industrial transformation are converging fast. The need for clean, firm, and resilient energy is no longer cyclical or thematic. It’s structural. Against that backdrop, being highly active shouldn’t feel exceptional. It raises a different question: if this opportunity is so clear, who is choosing not to lean in, or not to stay the course? Most of the technologies that truly move the needle — grid infrastructure, long-duration storage, advanced materials, power electronics, and AI-enabling systems — do not fit neatly into short funding cycles or hype-driven timelines. They demand endurance paired with conviction. We see this firsthand across our 2025 investments and broader portfolio: - Grid-scale and long-duration storage with Peak Energy, including a $500M+ deployment agreement reshaping the economics of the grid - Advanced grid infrastructure and power electronics through Amperesand’s $80M raise for solid-state transformer technology - AI infrastructure at the physical layer, from photonics with Mixx Technologies Inc’ $33M Series A to inference compute with Groq’s $750M recent funding round (and $20B moment) - Electrification at scale, from industrial systems to mobility, including Ultraviolette Automotive’s electric motorcycles in India - Edge and systems intelligence, with EdgeCortix as our first investment in Japan, bringing AI closer to where energy and data meet - Data center and logistics infrastructure, from Nubis Communications’ acquisition by Ciena to Starship Technologies’ $50M Series C for autonomous delivery What is emerging across the ecosystem is a clear divide: 🔹 Plenty of capital is willing to show up early 🔹 Far less capital is willing to remain engaged when progress is nonlinear, engineering-heavy, and occasionally quiet At TDK Ventures, we invest with urgency because the transition demands action, but we approach the work with endurance, mindful that only patient capital has the chance to compound over time. Conviction without endurance fades. Endurance without conviction stalls. From that perspective, this moment is less about volume than about consistency: the responsibility to remain engaged in sectors that matter, even when they are capital-intensive, technically complex, or temporarily out of favor. The work continues. And so does the commitment.

2025 personal recap — Building real assets for a new energy reality As AI scales, Europe’s energy question is no longer abstract. Compute, data and intelligence are only as sovereign as the real assets that power them. 2025 made this increasingly clear: the next phase of climate and industrial innovation will not be driven by software alone, but by physical infrastructure — energy systems, materials, storage, and the platforms that connect them. It was not a headline year for climate tech. And that’s precisely what made it a meaningful one. Working closely with founders of my 70 portcos across energy, materials, mobility, data and infrastructure, I saw a clear shift this year: less noise, fewer shortcuts — and much more focus on execution. Teams like BioEsol, Bib batteries, MinersAI, Movopack, illuminem and Kumulus Water illustrate this evolution in different ways. Different sectors, different maturities — but a shared reality: building solutions anchored in the real economy, often at the intersection of climate, industry and data. What stood out in 2025: - a move from experimentation to early deployment, - stronger alignment between product, industrial constraints and customers, - founders learning to operate with discipline and patience, - and a growing consensus that sustainability is not a category — it is an operating model. As an investor, this year reinforced a core conviction: Europe’s energy and digital sovereignty will depend on our ability to finance and scale real assets — not just ideas. Progress in this space is rarely linear, and almost never flashy. It requires patient capital, long-term partnerships, and teams willing to navigate regulation, infrastructure and complexity head-on. I’m grateful to the founders, co-investors, corporates and ecosystem partners who continue to build through this phase — often away from the spotlight, but firmly grounded in reality. 2026 will remain demanding. But if 2025 proved anything, it’s that the foundations are being laid — deliberately, pragmatically, and with long-term intent. Onward. PS Picture from the telecabine of Flegere/Brevent - Chamonix this morning that seemed a good illustration

#HappyEarthDay 🌍 Clean energy investment hit $2.3T globally in 2025. Climate tech raised $77B+ in equity funding. There's a lot happening in this sector. And yet the story is more complicated. Fewer startups are getting funded, early-stage is tighter, capital is concentrating into fewer, larger bets. But #climatetech isn’t disappearing. It’s maturing. We’re moving from: Ideas → infrastructure Vision → deployment Carbon narratives → energy systems And new hubs are emerging: 1. Energy and grid resilience are becoming the core constraint. Electricity demand is rising again for the first time in decades, driven by #AI and #electrification. Grid bottlenecks, interconnection delays, and transformer shortages are now defining what gets built. 2. AI isn’t just a tool; it’s reshaping the energy system itself. Data center electricity demand is surging and could double by 2030. A growing share of climate tech investment is now tied to AI-enabled solutions. 3. Data centers are becoming a major forcing function. They’re driving demand for #nuclear, storage, #hydrogen, and new #grid architectures - and in some cases, even pulling fossil fuel capacity back online to meet load. 4. Energy storage is entering a true scaling phase. #Battery capacity is expanding rapidly, costs are falling, and storage is becoming its own asset class. 5. The frontier is shifting toward physical systems. Low-carbon #fuels, hydrogen, advanced #materials, and #manufacturing are back in focus. At the same time, the geography of climate tech is evolving: 1. SF: capital, AI, and early-stage ideas (9Zero) 2. Boston: deep science and #hardware commercialization (Engine Ventures, Greentown Labs) 3. Houston/Texas: #energy infrastructure and deployment (Greentown Labs) 4. NYC: capital markets and climate finance (Newlab) It’s no longer one hub; it’s a system. The bottleneck isn’t awareness anymore, it’s execution at scale. What’s exciting right now isn’t just “climate tech” as a category, but how deeply embedded it’s becoming in everything else: #infrastructure, #compute, #defense, materials, built environment. Earth Day used to be about asking people to care. Now it’s about building systems that make this change obvious. If you’re building in this space, I’m always curious. 📍Boston #EarthDay2026

Clean water is quietly becoming a tradable asset class. Not metaphorically. Not in some distant future. Right now, under Article 6.2 of the Paris Agreement, verified carbon reductions are crossing borders as tradable instruments. Rural water infrastructure is one of the qualifying sources. Here's the mechanism: a solar-powered water box deployed in a village replaces the need to burn firewood to boil water. That avoided carbon is quantifiable, verifiable, and critically, sellable. Gold Standard issues the credits. Digital MRV: real-time sensors, satellite data, automated reporting, proves the reductions are real and ongoing. Fewer manual audits, more continuous, machine-verified data. Hydrosun Technologies and Bondh E Shams are running one of only twelve digital MRV pilots globally under Gold Standard. Each unit generates recurring carbon credit revenue over a 15-year lifespan, meaning the infrastructure pays for its own operating costs instead of needing fresh donor capital every cycle. That's what makes returnable grant capital possible: funders get their money back because the asset generates its own revenue. If we price into compliance credit markets, the numbers sharpen the picture: at $30 per carbon credit, the project breaks even. At $60, IRR hits 34%. That spread, between $30 and $60, is the social impact bet. Carbon markets are volatile, but credible, high-quality credits from verified clean water infrastructure command a premium. There is no question that climate tech innovation and disruptive, scalable models are still a key part of our future. Think about the implication for clean water: if a $10,000 box in a village generates its own revenue stream for fifteen years, clean water becomes a balance sheet entry. Not a liability that needs perpetual funding — an asset that pays for itself. That's the shift. Not "how do we fund clean water for the next billion people." Instead: "how do we deploy infrastructure that finances its own existence." One framing depends on generosity. The other scales like any other tradable asset class. We're building toward a world where clean water everywhere is self-financing. If you're a WASH funder and interested in learning more, please reach out: hfarrukh@stanford.edu or DM me. #carbonfinance #climatetech #impactinvesting #article6 #cleanwater #carbonmarkets

France just dropped €54B to say what Silicon Valley won’t: We need slower, smarter, long-term capital. "Traditional 10-year cycles and SaaS-style traction don’t match the timelines of climate hardware or deep tech." —Raphaele Leyendecker Fabbri, Techstars Sustainability Paris ⏳ These aren’t apps — they’re atomic. We’re talking microreactors, carbon-negative cement, and circular battery ecosystems. France’s bold €54B bet through #France2030 isn’t just about funding — it’s a roadmap. It shows us what the future of climate investing must look like: 👉 Patient capital 👉 Corporate partners at the ground floor 👉 Investors with a vision beyond their fund cycle, committed beyond political winds of the moment And guess what? It’s working. Some French climate companies I'm watching: ✅ Back Market – Europe’s first refurbished electronics unicorn (at peak, valued at $5.7Bn), reducing e-waste at scale "you should have a right to repair your phones!" (Led by Thibaud Hug de Larauze as CEO, Dawn Baker as CTO) ✅ Innovafeed – 🐛 Led by founders Clément Ray and Aude Guo; the team is scaling insect protein to decarbonize agri-food systems. ✅ Fairbrics – CO₂ into textiles? With €22M raised in 2023 and chemists like Fatou Coundoune, led by co-fouder & CTO Tawfiq Nasr Allah these folks are reimagining fashion’s footprint. ✅ Verkor – €2B for low-carbon EV batteries, backed by Renault Group & Schneider Electric. In September 2023, Verkor secured over €2 billion in financing to construct its first gigafactory in Dunkirk, France. The gigafactory is expected to be operational by 2025, creating around 1,200 direct and 3,000 indirect jobs. ✅ newcleo – Next-gen nuclear from a French base, going beyond traditional cleantech. Led by Elisabeth Rizzotti, a physicist who after a brief stint at CERN built a 30+ year track record in the world of finance. ⚡ Let’s fund the future, not just fast exits. 👇 Know a woman-led climate startup we should keep our eyes on? Drop it in the chat! Link in comments for my full conversation with Raphaele Leyendecker Fabbri filmed in the office of Techstars Sustainability Paris for Billion Dollar Moves Podcast Beyond The Billion® 🔥 #venturecapital #startups #climate

Alastair Marsh's recent thought-provoking piece in @Bloomberg highlights critical challenges with the current climate tech investing landscape Climate tech projects are capital-intensive with long timelines. Unlike software, much of climate tech requires massive upfront capital for R&D, pilot plants, and manufacturing before significant revenue. This demands longer development and deployment cycles (often 7+ years to scale) that exceed typical 5-7 year VC exit horizons. The classic VC model - built for rapid, asset-light scale-ups - often misaligns with the realities of many climate tech solutions, especially "hard tech." While there’s an abundance of early-stage VC capital for entrepreneurs, later-stage growth that bridges these projects from venture to infrastructure stage is basically absent—that’s called the missing middle. We need to adapt and supplement that approach by layering in other types of capital and bridge the "missing middle." A broader array of financing instruments is essential for climate tech to scale, including patient equity and growth capital, project finance, blended finance, and specialized debt models. Marsh’s piece lays out how family offices are uniquely positioned to be catalyzing players in this space. Their flexibility allows them to deploy capital across diverse segments, filling the gap and driving significant financial returns alongside impact. https://lnkd.in/gUf85Bwy

The death valley of clean tech: Why $300M FOAK projects are stalling (and how to fix it). From Microsoft, IFM Investors, Cambridge Consultants. The current market for energy transition technologies is stuck. Venture capital successfully backs early-stage innovation but falls short when scaling. And institutional project finance demands historical repeatability that new technology cannot yet provide. This leaves first-of-a-kind (FOAK) infrastructure projects stranded in a $50M-$300M bottleneck that we all have nightmares about: The "Missing Middle."  To move these capital-intensive scale-ups from speculative concepts to bankable assets, this new joint whitepaper outlines three steps: (1) Enforce Techno-Commercial Readiness (TCR): Treat the industrialization phase as a strict systems-level engineering problem, proving predictable, end-to-end reliability under real-world operating conditions. We need more than TRL scores. (2) Re-engineer Capital Formation: Move away from isolated capital injections toward integrated partnerships that pair financing with deeper technical expertise, supply chain alignment, and EPC accountability. Old models won't work for this new infrastructure. (3) Anchor with Corporate Offtake: There's no substitute for this. Long-term procurement signals and credit-worthy demand to effectively de-risk market uncertainty and unlock institutional debt. Easy to say. Hard to do. 👉 Read the full breakdown on bridging the gap from innovation to infrastructure.  Shout-out to Sidd Bhat -- an executive at IFM Investors and an Alumni Mentor with us at Entrepreneurs for Impact (Climate CEOs) -- for sharing this with me. #ClimateTech #InfrastructureFinance #EnergyTransition #VentureCapital #SustainableInfrastructure #DeepTech #FOAK