Zigging when most are zagging, ex-Meta CTO raises $250M climate fund

Gigascale, the venture firm led by former Meta CTO Mike Schroepfer, announced on Monday that it had raised a $250 million fund to back founders who are 'rebuilding the physical economy.' The new fund will focus on energy, grid infrastructure, and critical minerals all through the lens of climate tech. By continuing with the overt climate focus, Gigascale is bucking conventional wisdom which has soured on the 'climate tech' thesis. Gigascale's second fund is shaping up to be a continuation of the sort of bets that Schrep, as he's known, has made in the three years since he started Gigascale.

The firm has backed some high-profile startups in the climate tech space, including Commonwealth Fusion Systems, Heron Power, Mill, and Form Energy. Gigascale emerged from Schrep's study of climate tech during COVID, and the new fund is the first with an early-stage focus that includes institutional investors. Climate tech has always been a wide-ranging sector, and Gigascale's portfolio reflects that.

But in recent years, the sector has become increasingly focused on energy and infrastructure, a shift that has been largely driven by the demands of AI. It's no surprise, then, that power is a significant focus of the new fund. With rising demand for electricity, there's an opportunity to invest in new energy sources and new ways to deliver that to businesses and households.

Schroepfer pointed to solar as a recent example of a clean technology that's faster and cheaper and winning the market. While solar and batteries have come to dominate conversations around clean power, Schroepfer clearly sees more opportunities. AI and broader trends in electrification have made it challenging for companies to connect to the grid.

In response, many have been seeking to develop their own power sources, though there, too, competition is stiff. Natural gas turbines, for example, have a waitlist that stretches into the early 2030s. The power crunch gives energy startups an opening.

In energy-intensive industries, bring-your-own power 'is going to be a competitive advantage over time,' Schroepfer said on the Inevitable podcast last year. Startups that can supply power cheaper or more flexibly — or both — can win on those merits alone. 'The companies we back win because they're cheaper, faster, and more reliable,' Schroepfer said in a statement.

'That's how adoption scales. Climate impact is the result of better-performing systems.'