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 cliché. Yet that’s exactly how Caleb Boyd and Kevin Bush started Merged Industries: in the garage of the Stanford professor’s house on campus, where Kevin rented an apartment.

It had everything they needed: space and, most importantly, power. The two wanted to destroy methane, so to speak, by removing hydrogen from carbon in a way that doesn’t emit carbon dioxide, which warms the atmosphere.

“We called it a garage, but it was really just a garage. We plug in its EV charger, heat a methane pyrolysis reactor to about 1,000 Celsius, and start breaking down the methane,” Boyd told TechCrunch.

The teacher who lived there “was very helpful,” Boyd said. “He would just stop by and help us fix things and give us advice.”

While the garage can still be a great place to do basic research, it’s the next step that poses a problem. Climate technology companies often face a “valley of death” between the lab experience and the investable company.

Founders typically had to solve this problem themselves. But investors are increasingly intervening early.

While Boyd and Bush were still in the garage, they received a visit from Ashley Grosh, vice president of Innovative energy, the climate technology organization founded by Bill Gates that includes a for-profit venture capital arm and several nonprofit programs. Grosh represented one such program called Breakthrough Energy Discovery, a new division dedicated to early-stage companies, the company told TechCrunch.

Discovery is an evolution of Breakthrough’s Fellows program, which has been operating since 2021. Discovery identifies promising first-time founders, often fresh out of graduate school or postdoctoral work, and provides them with grants of up to US$ $500,000, Grosh said. The organization has also created digital resources for common problems and pays for fellows to attend various conferences and meetings.

To date, the Breakthrough Energy Fellows program has supported 42 companies spanning the entire spectrum of climate technology, from cement and hydrogen to agriculture and fusion energy. In total, the startups raised a cumulative total of US$250 million.

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

Historically, venture capital has 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 investments that peaked about 15 years ago. “People arrived a little too early. Now they have retreated and discovered where the attack zone is to venture out. But I think what we’re seeing is that there are still a lot of scientific discoveries that need to be made.”

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For investors who can tolerate earlier phases, the upside is clear: an early window into the founders of tomorrow. These bets tend to be riskier, and because the valuations are lower and the checks are modest, the potential returns can be significant.

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

Furthermore, in climate technology, moving forward earlier in the process involves more than just returns. At Azolla Ventures in particular, finding companies and opportunities that have been overlooked is part of the organization’s mandate.

“As time passes and we continue to miss our emissions targets, the crisis deepens,” Wolfson said. “And so it increases the risk so we can make sure we’re not leaving anything on the table.”

Basic Research Funding: Sooner Than Soon

For Breakthrough Energy, the application process alone helped identify some promising areas where basic research still needs to be funded.

“We started to see some ideas that were further upstream. We’d say, ‘Oh, that’s interesting. He’s not ready to be a fellow yet, but this research would be very helpful,” Grosh said. “We started putting together a list of these applications and then started funding some as research grants.”

Soon, Grosh and his team realized they needed to be more systematic about this. Instead of issuing the usual request for proposals, Breakthrough Energy Discovery began organizing workshops for researchers spanning the spectrum of experience, from graduate students to Nobel Prize winners. In a workshop, they would identify the most promising and impactful opportunities.

“From there we will start to seed some research projects,” Grosh said.

Azolla Ventures is taking a slightly different approach by bringing in what they call a technology companion.

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

The program is still young. So far, Azolla is working with graduate students at Georgia Tech, a research powerhouse that the company feels is being ignored by venture capital.

“If you had to guess how active the venture community is there, you would 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 undervalued opportunities.”

Even among the usual academic suspects, promising research can fail and opportunities can be overlooked. That’s why Collaborative Fund gave to the Wyss Institute at Harvard University US$15 million to start a laboratory to research sustainable materials. The goal is to identify promising projects and scientists and improve them to the point where they are ready to raise funds, according to partner Sophie Bakalar.

From lab to real business: How founders benefit

The Collaborative is the first to participate in the projects, which range from detecting PFAS to addressing air quality issues, and Bakalar is now also a visiting scholar at the Wyss Institute, maintaining a front-row seat at the institute. Along the way, Bakalar and Collaborative offer support to help founders overcome the valley of death between lab project and investable startup. Bakalar said he expects the first project to come out of the lab in the coming months.

These types of resources could be useful for the type of founders climate tech investors need. Many of them spent years with their heads down in the laboratory. Even if they have had contact with the commercial side through courses, it is a totally different experience than running a startup.

“We still work at a university,” said Mattia Saccoccio, co-founder and CTO of NitroVolt, which produces sustainable ammonia for fertilizers. “Sometimes we miss exchanges with other companies or companies that, like us, work on climate solutions or deep technology.”

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

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

“If we need help with IP, we can get help there. If we want to enter the ammonia industry, there is a colleague who has 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, business fellows have been indispensable as his company has evolved. In addition to hydrogen, the company’s process also produces carbon. Initially, “we thought, let’s just bury it or put it in concrete or something,” he said. But as the startup began raising Series A funding, it began considering alternative uses, eventually deciding to make graphite for lithium-ion batteries.

“The entire Breakthrough Fellows team was very supportive through this, helping us not only think about it and what the implications would be, the pros and cons, but also to take it in stride,” Boyd said. “As a founder, you want your investors to be partners on your side and not freak out or control. This is something the Breakthrough Energy Fellows team does very well.”

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

Crossing the chasm between idea and reality is just the first of many that climate tech startups have to cross. Not everyone will make it, but as investors and their affiliates step in to fill the gap, their odds are certainly improving.