By Nathaniel Popper
SAN FRANCISCO: With the money he made selling his last startup to Google, Matt Rogers has been investing in companies that are trying to fight climate change.

Rogers, one of the founders of digital thermostat company Nest, has put millions of dollars into startups whose goal is to remove carbon dioxide from the atmosphere. Carbon-removal technology, as it is known, is something scientists have said will probably be necessary to avert an extreme increase in global temperatures.

But Rogers has made a disappointing discovery: Despite all the money sloshing around Silicon Valley, few venture capitalists have been willing to join him in backing companies trying to address climate change.

“We don’t need another photo-sharing app or another blockchain startup,” said Rogers, who is investing his money through Incite Ventures, a fund he created with his wife, Swati Mylavarapu. “We need to solve the carbon crisis. But a lot of folks are chasing the easy money rather than taking responsibility for what needs to be done.”

Rogers knows the arguments: The last time venture capitalists invested heavily in environmentally focused technology during the clean-tech boom of the 2000s, they lost a lot of money. Getting one of these companies off the ground can be expensive, as investors learned a decade ago. But he is not swayed by their caution.

“Sitting on your pile of money while the oceans are rising may not help you stay dry,” he said.

It is common wisdom in the tech industry that it is much easier to raise money for a software company than it is for a startup that wants to work in biotechnology or energy. The current wave of internet-focused startups going public, and reaping billions of dollars for investors, has hardened the bias against hard technology.

Total funding for clean-tech startups fell during most of the past decade, according to data from the research firm Pitchbook. In 2018, $6.6 billion was invested in clean tech, about 15% of what went to software startups. Carbon-removal startups got a tiny sliver of that.

The lack of investment in carbon-focused startups poses a particularly existential problem. Two major scientific organizations said last fall that even if greenhouse-gas emissions were reduced significantly, stopping drastic global warming would require technological breakthroughs that allowed for the removal of billions of tons of carbon dioxide already in the atmosphere.

Some promising methods for accomplishing that involve old-fashioned technologies, like planting trees and changing the ways farmers till their fields. But there are dozens, if not hundreds, of startups developing new technologies that address the issue.
At an event in San Francisco last month, several of these startups made presentations to a room full of investors. One company, Charm Industrial, burns plant biomass to create hydrogen, capturing the greenhouse gases that are produced in the process.

Another, Ocean-Based Climate Solutions, has created a device that stirs up water in the ocean to promote the growth of phytoplankton, which are algae that can take carbon dioxide out of the air and deliver it to the bottom of the sea in solid form.

Noah Deich, the founder of Carbon180, a nonprofit that sponsored the event, said it was encouraging to see investors there. But he said he had not seen the commitment to investing that he believed was necessary to get the technologies working.

“For an internet company, even if you don’t have a real product, you can get money to develop one,” he said. “Here, it’s the opposite.”

The startups face a fundamental challenge: Carbon dioxide is plentiful but lacks the chemical energy that makes fossil fuels and other materials useful for generating power. So far, no one has found an obvious way to turn capturing carbon dioxide into a profitable business.

Many of the startups at the San Francisco event are trying to use greenhouse gases to produce valuable chemicals like fertilizers and biofuels. But it is significantly cheaper to produce those chemicals with processes that emit rather than eliminate greenhouse gases.

“It is tackling big markets and big challenges, but that doesn’t necessarily mean that those are going to be big businesses,” said Daniel Oros, a partner at G2VP, a venture capital fund focused on emerging technology.

Oros said his fund had not made an investment in the sector and he did not see a way for the industry to take off without government policy encouraging it.

Klaus Lackner, director of the Center for Negative Carbon Emissions at Arizona State University, said that for these businesses to succeed it would probably be necessary for governments to create a carbon tax or other subsidies as incentives for new businesses.

A few governments have taken tentative steps in that direction, but nothing close to the scale needed to support real businesses.

Lackner said investors should assume that governments would be willing at some point to pay for what these companies were doing.

“In the end, there is no way for the market to not exist,” he said. “This will be a brand-new industry at a huge scale.”


A small number of companies have had success making this argument to investors. Carbon Engineering, a Canadian company founded in 2009 that pulls carbon dioxide out of the air by running it through specially formulated chemicals, announced last month that it had raised $68 million to build its first commercial facility.

But the investment demonstrated just how difficult it has been for companies in the industry. In the time it took Carbon Engineering to raise one round of $68 million, Slack, a messaging company founded the same year, has raised more than 10 times as much and is now preparing for an initial public offering that could value it at nearly $20 billion.

Carbon Engineering relied on investments from big oil companies, in part because Silicon Valley investors were generally uninterested in Carbon Engineering’s pitch (although a few did get involved).

“We don’t have the build-one-and-a-million-people-buy-it model that they have focused on,” Steve Oldham, Carbon Engineering’s chief executive, said.