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The Breakthrough Energy Ventures investment company backed by Bill Gates is aiming to raise another $1bn for its third and latest fund to take stakes in companies and technology tackling global warming.
Gates revealed that Breakthrough Energy Ventures is currently in the process of raising its third fund, which is going very well. The number of companies that Breakthrough Energy Ventures will invest in will increase by approximately 40% to about 140 holdings across sectors from energy to agriculture.
Gates mentioned, “We have a little more than $1bn in funds one and two, and fund three will be about the same size. And then we will do some other funds that are more for follow-on type things.”
The first fund closed at around $1bn and attracted a range of fellow billionaires, while the second fund closed with $1.25bn in 2021. Additionally, the group has a $100mn Europe-focused fund. The Breakthrough board and investors include Mukesh Ambani, Jeff Bezos, Reid Hoffman, and Sir Chris Hohn.
While the earlier funds were raised during a period of low interest rates, the opportunistic third fund is being raised at a time when venture capital for start-up companies is challenged by rising interest rates and economic uncertainty.
Gates mentioned, “Some companies will not succeed or some will not work at all, so you can subtract [from that 140]. However, Breakthrough has had a low failure rate across the portfolio.”
“We closed [about] 15% of the things we’ve invested in. A lot of these [that failed] are companies we’ve founded… we have theories where there are no companies, and we’ve created a bunch of companies [to test the theories].”
Breakthrough investments include US green hydrogen electrolyser producer ElectricHydrogen, Arkea Bio, which is working on reducing methane from livestock, green cement maker Solidia, and Fleetzero, which focuses on battery technology for cargo shipping.
While Gates is a well-known advocate of technology to address climate change, he has been sceptical about the use of carbon capture and storage (CCS) as a wider solution to limiting greenhouse gases produced by the burning of fossil fuels for energy.
The coal, oil, and gas industry promote CCS as a way to continue operating for decades to come. However, Gates maintains that CCS is unlikely to be economically viable for mass-scale use in the long term. He mentioned, “It’s kind of a brute force solution. It always costs money.”
“You eventually want to get to the point where you’re willing to tax any emission activity at the marginal cost of capture and then actually spend it on capture. That’s the way you get to zero [emissions],” Gates explained.
“But for most cases, you should use an alternative technique rather than emitting and then paying for capturing. For everything you can, you want to solve it by never generating the carbon dioxide,” he added.
Despite his reservations about CCS, the Breakthrough funds invest in direct air capture start-ups.
Gates stated that even oil and gas producing countries like Saudi Arabia are not actively pursuing CCS at scale. He emphasized the need for innovative companies to address the challenges of cutting emissions in difficult sectors ranging from steel to cement.
“Innovation is how you square the circle,” Gates concluded.
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