Investors and finance specialists explained why scaling climate infrastructure needs new capital, new partners and a more “boring” business plan.
Venture capital can take a climate startup from the lab to its first pilot. However, building first-of-a-kind plants and scaling infrastructure takes a very different kind of money. At Energy Tech Summit, a panel explored how startups can make the leap to project finance and infrastructure investment.
Tyler Christie, Managing Director at Decarbonization Partners, moderated the discussion. He was joined by Pilar Carvajo Lucena, Principal, Investment and Fund Partnerships at Third Derivative (RMI), Maximilian Zoller, Principal at HV Capital, and Mark Robinson, Finance Innovation Orchestrator at EIT Climate-KIC.
Mark Robinson from EIT Climate-KIC, and Tyler Christie from Decarbonization Partners sharing their insights on Energy Tech Summit 2024 stage.
Capital is forming at unprecedented scale
Christie opened with the big picture. Investment in the energy transition keeps growing, and while venture equity for climate startups had dipped, debt was on the rise. Meanwhile, banks, infrastructure funds and asset managers are raising very large pools of capital for energy assets.
Public institutions such as the European Investment Bank are also very active. In turn, that helps crowd in more private capital. The world will still need far more money to fund the transition. Nevertheless, the pace of capital formation is unprecedented.
The question, then, is practical: how can startups and investors tap into it?
Why venture capital alone isn’t enough
Carvajo Lucena explained that Third Derivative, RMI’s climate tech accelerator, backs early-stage startups tackling hard-to-decarbonize sectors. After several years, a growing share of its portfolio is reaching scale-up stage – and needs different capital and partners.
Many teams arrive at that stage without the right skills. Historically, the industry hasn’t helped founders learn project development. Moreover, venture capital is “only going to take startups so far,” she said.
Third Derivative has therefore built a program for first-of-a-kind and pre-commercial projects. It helps founders find the right skills, identify the right risks and bring in suitable capital partners. Early focus areas include green cement and steel, long-duration energy storage and carbon removal.
Zoller sees the same shift. In solar, project finance has been standard for more than a decade, and HV Capital’s portfolio company Enpal already uses it at scale. Yet over the past few years, a new wave of Series A and B companies has realized that venture capital won’t get them where they need to go. For some founders, that came as a surprise.
Building the bridge with blended finance
Robinson approaches the gap from the demand side. EIT Climate-KIC works with governments, cities and regions, including the EU’s mission for climate-neutral cities. Their needs are vast, and its accelerator programs have produced a large pipeline of startups ready to help.
The challenge is to bridge venture capital and project finance. At the time of the session, Robinson was designing a flexible blended finance fund-of-funds, in early talks with European institutions such as the EIB and EIF. Such a structure could finance smaller project vehicles at scale.
The goal is to drive “transformational change rather than just incremental change,” he said, by matching technical solutions with the finance needed to deploy them across Europe.
Choosing the right project finance partners
Not every structure fits every business. Carvajo Lucena described the trade-offs founders face. Partnering with a corporate can speed up scale-up and bring in know-how. Non-dilutive government funding protects the cap table, but it can slow development.
Some startups also work with developers and EPC contractors that take on early risk and lay the groundwork for project finance-style structures. Even so, a transition period lies ahead. New technologies carry specific risks around offtake, EPC partners and feedstock at scale, so they won’t match today’s solar or wind financing overnight.
Founders who come from technical backgrounds also need to hire the right people at the right time. That means business development talent focused on profitability, fundamentals and efficient use of capital.
Who startups should talk to
Robinson admitted there’s no easy answer. Grants can help cover early development costs, which are the riskiest part of any project. Even mature EPC contractors need to recover those costs.
Corporate partnerships are critical, he said. A developer can team up with an EPC contractor downstream, which may fund development, work on a success-only basis or help with legal structuring. After all, the contractor will ultimately deliver the project and share its vision.
Christie added a mantra from Decarbonization Partners: “we look for the desperate customer.” A customer that urgently needs a solution is often willing to finance it and take risk in unusual ways. That, in turn, unlocks other capital.
Robinson agreed, noting that public sector clients often fund upfront development to get projects off the ground quickly. A well-developed design de-risks the project and makes later financing more attractive.
Start building the muscle early
When should startups start preparing for project finance? “You can’t start too early,” Zoller said. Founders don’t need to spend a fifth of their time on it. Instead, they should speak regularly with potential partners to build relationships and understand their mindset.
That mindset is very different from venture capital. VCs embrace risk, because “it’s an outlier business in the end.” Infrastructure funds and lenders, by contrast, are debt-financed and want to limit risk. As a result, the business plan that wins over a VC isn’t the one to show a debt fund. Founders need to be open about every risk.
Christie summed it up. VCs look for innovative, disruptive companies, but infrastructure investors “want it boring” – as predictable as a toll road. Therefore, “a trajectory towards being more boring over time is actually a very positive thing.”
Pilar Carvajo Lucena from Third Derivative (RMI) discussing finance projects at ETS2024 in Bilbao, Spain.
When projects feel too small
An audience member building integrated solar roofs raised a familiar problem: many funds only consider deals of €50 million or more, while smaller projects fall through the cracks.
Zoller’s advice: “got to kiss a lot of frogs to find the prince.” Some funds specialize in smaller project financings, and the landscape is evolving. VCs can also help fund the very first projects, though usually only first-of-a-kind deployments.
Takeaway
Carvajo Lucena closed with a call to action. The climate sector asks founders for constant innovation, so “there should be a lot more creativity on the funding side” too.
For startups, the message is clear. Venture capital opens the door, but scaling infrastructure needs project finance, corporate partners and blended structures. Founders who start building those relationships early – and learn to present a “boring,” well-understood risk profile – will be best placed to cross the gap.
Secure your pass
Want to meet the investors and financiers helping climate startups scale? Join us at Energy Tech Summit Europe 2027, the 8th edition, on 7–8 April in Bilbao, Spain.
Passes cost €1,399 until 30 November, then €1,599 from 1 December, €1,799 from 1 February 2027 and €1,999 from 1 March 2027.
Founders can join with the Founder’s Pass for €699. Use code ETS100 for €100 off.
