💰 FOAK climate financing 101 🌎

$100M lesson learned. 100-hour batteries. 25-year planning framework. Why strategic procrastination works. (#178)

Welcome to my newsletter from Entrepreneurs for Impact (EFI).

I share lessons learned from working with 300 climate tech CEOs and investors, investing for 15 years in private equity and startups, reading 50 books per year, meditating for 25 years, and being a super humble guy. 😆

Join 20,000+ folks and access 170+ prior issues.

---

Today’s topics:

1. 🚀 FOAK Financing 101 — Tools Powering Climate Project Deployment

2. 🎙️ Podcast — From Meditation to Metal-based Batteries (Plus $100M)

3. 😮 Why Doing Nothing (Strategically) Can Be Your Smartest Move This Week

4. 🕰️ Think Long-Term — Unlock the Power of The 25-Year Framework

---

1.

🚀 FOAK Financing 101 — Tools Powering Climate Project Deployment

Financing First-of-a-Kind (FOAK) projects is like trying to get the first slice of pie out of the pan—it’s messy, risky, but totally worth it if you pull it off.

(In our house, that reward is pumpkin pie with whipped cream. Completely healthy because it’s a vegetable, of course.)

Here are some resources to get you started.

---

The Challenges of FOAK Financing

• The Valley of Death: More than 90% of FOAK projects face funding gaps between pilot and commercial scale, often because investors fear the unknown. (“unknown” = expensive)

• The Eligibility Maze: Only 20% of FOAK projects qualify for traditional funding programs, leaving the rest to navigate a minefield of red tape and creativity.

---

Key Tools for FOAK Financing Success

1. Blended Finance:

   • Think of it as a financial smoothie: grants, concessional loans, and private capital blended into one delicious de-risking package.

   • Financial players: Governments (e.g., ARPA-E), philanthropic funds (e.g., Bezos Earth Fund), and private investors like Breakthrough Energy Ventures join forces to spread risk and attract capital.

2. Offtake Agreements:

   • These are like season tickets for your project—buyers commit upfront to securing their spot, giving you predictable revenue.

   • Financial players: Corporate offtakers like Microsoft and Amazon pre-purchase carbon credits or clean hydrogen, while developers like Climeworks use these agreements to secure financing from debt and equity providers.

3. Contracts for Difference (CFDs):

   • Imagine someone guaranteeing the price of avocados so you don’t cry every time the market spikes. CFDs stabilize revenue for FOAK projects in volatile markets.

   • Financial players: Governments like the UK are exploring CFDs for carbon removals.

4. Green Bonds:

   • Borrow money while saving the planet. Green bonds link debt to a project’s environmental benefits, attracting impact-focused investors.

   • Key players: Issuers like Ørsted and Iberdrola finance offshore wind farms, with certification by the Climate Bonds Initiative to ensure credibility. Perhaps this could be used for FOAK projects in the future.

5. Insurance Innovations:

   • If you think insurance is boring, you’re wrong.

   • Financial players: Munich Re is developing innovative insurance products for FOAK projects, while the World Bank provides partial risk guarantees for emerging market ventures. Plus, new entrants like Kita are insuring carbon credits. (Listen to my podcast with their CEO here.)

6. Debt Financing:

   • Loans are almost always cheaper than equity, so most project owners want it. However, lenders generally hate risk, so debt for FOAK is still a toddler learning to walk. (But just wait until they’re track and field stars when they’re 19 years old!)

   • Financial players: Development banks like the World Bank or Asian Development Bank might provide concessional loans to FOAK projects, while creative private lenders are launching growth debt products to come into deals before every single risk is eliminated. (gasp!)

—

🎯 So what?

Get even smarter on FOAK with these five resources:

• "FOAK Financing: The Good, The Bad, and The Eligible"
  (Source: CTVC)

• "Navigating the First-of-a-Kind Valley of Death: Climate Tech's Capital Challenge"
  (Source: Climate Insider)

• "A 101 Guide for the First-of-a-Kind (FOAK) Climate Projects"
  (Source: My Startup World)

• "Blended Finance for First-of-a-Kind (FOAK) Nature-Based Solutions"
  (Source: CrossBoundary)

• "The First of a Kind (FOAK) Playbook: How to Secure Offtake Agreements"
  (Source: Greenbackers)

—

2.

🎙️ Podcast — From morning meditation to metal-based batteries (and $100M along the way)

In my recent Entrepreneurs for Impact (EFI) podcast, I hosted James Larsen, CEO of e-Zinc.

e-Zinc produces zinc-based long-duration energy storage technology with discharge durations between 10 and 100 hours. They have raised over $100M in funding and are building their first three commercial pilots.

James is also a Board Director of the Long Duration Energy Storage Council (LDESC) and Energy Storage Canada (ESC), and a former Manager at Bain and MaRS.

Four Takeaways From This Episode:

1. The $4 Trillion Opportunity by 2040:
   With the growing demand for renewable energy and the need for multi-day storage, solutions like e-Zinc can play a pivotal role in decarbonizing grids globally.

2. “Resilience as a Service” Business Model:
   Instead of selling storage hardware outright, the company allows utilities and businesses to access reliable backup power without the upfront capital expense, aligning operational needs with financial flexibility.

3. Turning Cost Centers into Revenue Centers:
   Instead of viewing storage as a cost, e-Zinc enables customers to generate value through grid services, such as peak shaving and demand response.

4. The Power of Vipassana Meditation:
   Starting his mornings with “insight meditation” allows him to maintain focus, clarity, and resilience on the roller coaster of the startup world.

🎯 So what?

Listen to the episode and share your thoughts on my LinkedIn post.

—

3.

😮 Why Doing Nothing (Strategically) Can Be Your Smartest Move This Week

Spoiler alert — Not everything on your to-do list deserves your immediate attention.

Some tasks will resolve themselves if you give them time, while others will reveal their true importance (or lack thereof) after some delay.

---

The Upside of Waiting:

1. Time Reveals Priorities:
   Some tasks feel critical at the moment but irrelevant a week later. A study from the Journal of Behavioral Decision Making found that delaying decisions often leads to better outcomes, allowing individuals to process additional information and reflect on the importance of their choices.

2. Better Ideas Come Later:
   Creativity loves procrastination. Research from the Academy of Management Discoveries shows moderate procrastination can boost creative thinking, allowing the brain to wander and connect disparate ideas.

3. Pressure Breeds Focus:
   A study published in Personality and Individual Differences found that people who procrastinate strategically often achieve high-quality results because they focus intensely during crunch time.

🎯 So what?

1. Audit Your To-Do List:
   Review your tasks at the start of each week. Identify which ones can be delayed to filter out unnecessary work or gain more clarity.

2. Embrace Focused Delay:
   When faced with complex decisions, pause intentionally to let your subconscious do the heavy lifting. Research in Nature Reviews Neuroscience shows that the brain continues processing problems even when you’re not actively thinking about them. This is why walking, brainstorming, or sleeping often leads to unexpected breakthroughs.

3. Set a Hard Deadline:
   To avoid slipping into unproductive procrastination, set clear deadlines. The key is to delay just enough to add value, not to be a flake.

—

4.

🕰️ Think Long-Term: Unlock the Power of The 25-Year Framework

If you're an entrepreneur looking for a magic pill to solve all your problems, this book isn't it.

The 25-Year Framework by Dan Sullivan is like a slow-cooked stew of wisdom: it takes time, patience, and discipline to get the flavor just right. 

(Or wrong if you’re me trying to cook for the family on Saturday when the kids expect your wife’s amazing dishes.)

Playing the long game feels almost rebellious in a world obsessed with quick wins and quarterly returns. Be a rebel.

Below are some highlights.

(If this theme scratches your itch, you might like this newsletter I wrote to summarize nine takeaways from Slow Productivity: The Lost Art of Accomplishment Without Burnout by Cal Newport.)

1. Speed vs. Value:
   Forget the hustle culture mantra of “move fast and break things.” This alternative framework says, “Build things that last for decades.” I’m on a 25-year plan for EFI. Think Warren Buffett, not a stock market meme.

2. Power of Focus:
   Stop chasing every shiny object like a distracted squirrel drunk on fermented fruit. Your new mantra: “No, Karen, I’m not launching another side hustle this week.”

3. Time as Abundant:
   This structure breaks down 25 years into 100 manageable quarters, representing 1% of the journey each. If you deliver five major projects every quarter, after 25 years, you’ll achieve 500 completed projects.

🎯 So what?

• Plan Like an Architect, Execute Like a Contractor:
  Your 25-year vision is the blueprint, but quarterly goals are the bricks. Stop staring at the big picture and start laying foundations—one brick at a time. Just don’t get stuck obsessing over the perfect shade of grey mortar.

---

🌎 How else can EFI help you?

• Climate CEO peer group: No one understands CEOs like other CEOs. Find your tribe here. Capped at 100 people, representing $40B of value or assets under management. Don’t be so “lonely at the top.” Join the waiting list today.

• Executive coaching with me: I serve as a private thought partner to 2-3 CEOs, investors, or post-exit founders at a time. We cover business and personal opportunities for growth.

• Apply at our website: www.entrepreneursforimpact.com

—

High fives and such,

Chris

P.S. Shout out to Extantia for the cool climate capital stack graph.