Path to ZeroEnergyClimate ChangeElectric VehiclesSupply Chains

How billionaire Chris Sacca’s $800 million fund plans to tackle climate change

September 27, 2021, 5:00 PM UTC

This story is part of The Path to Zero, a series of special reports on how business can lead the fight against climate change. This quarter’s stories explore new markets emerging in the sustainability space.

Chris Sacca made more than a billion dollars investing in startups like Twitter, Instagram, and Uber as cofounder of the venture capital firm, Lowercase Capital. At the height of his fame, he had amassed over a million followers on social media and was guest-starring on Mark Cuban’s hit television show, Shark Tank.

But in April 2017, he abruptly retired and shifted his focus to climate action.

Joined by his Lowercase partners Crystal Sacca and Clay Dumas, the trio began exploring climate tech that could quickly have large-scale impact, and in 2019 formed Lowercarbon Capital to invest in the space.

Today the firm has over $800 million and has backed dozens of startups across a wide range of hot new markets, from air taxis and plant-based meat, to ones not so fervently covered by the press, like plasma fusion energy.

A review of the portfolio reveals investments in the area of transportation, including Heart Aerospace, a Swedish company making electric regional planes, and Boundary Layer Technologies, a Northern California startup building high-speed hydrofoil cargo ships. In the construction sector, they are funding Sublime Systems, a Massachusetts venture making cheap zero-carbon cement. And in the area of carbon sequestration, they have backed Running Tide, a Maine company described as making “kelp-farming carbon-sinking robots,” and Carbon Engineering, a Canadian startup that builds “giant carbon-sucking vacuums.”

Path To Zero-Carbon Engineering
The Lowercarbon Capital–backed Carbon Engineering not only makes “giant carbon-sucking vacuums” but also produces a highly scalable, clean fuel solution.
Courtesy of Carbon Engineering

In all, there are 39 companies in the portfolio with more in stealth, according to Dumas, who spoke with Fortune about the bets he’s placing.

Dumas noted that Lowercarbon Capital is seeking to fund new markets that both reduce and remove CO2 and other greenhouse gases from the atmosphere. It’s a category broader than cleantech, he explained.

Over the next couple of decades we’re going to see the most profound economic transformation in the global economy since the Industrial Revolution, and it’s going to trend toward technologies that are lower carbon, and in some cases, negative carbon,” he said.

The firm is also seeking solutions that will buy more time for those living on the front lines of impending natural disasters like drought, hurricanes and wildfires. To this end, Lowercarbon Capital is also supporting the nonprofit Marine Cloud Brightening Project, an international collaboration of scientists working to infuse clouds with particles that reflect sunlight back into space and produce a cooling effect on Earth to reduce the consequences of global warming.

Dumas explained how funding nonprofits fits into the firm’s investment goals: “In addition to all the for-profit investments we’re making, where we think we’re going to see incredible returns, there are areas related to climate that don’t have clear and obvious business models. As a consequence, they’re not getting funded. So we’re supporting them, but in a separate fund.”

As far as regions they are seeking to invest in, Dumas said Lowercarbon Capital is looking beyond Silicon Valley to fund innovation hubs around the world: “Our thesis has always been that the world’s great research institutions are going to be delivering the breakthroughs we need to build this lower-carbon economy. About a quarter of our portfolio is outside the U.S. with the rest mostly outside California.”

And they are working with early-stage companies, to help with proof of concept and the commercialization of products: “We’re focusing on pre-seed, seed, and Series A, but for companies that flip the switch and start to feel inevitable, we’ll help them accelerate as quickly as possible,” said Dumas.

He confirmed that Lowercarbon has four funds, two early-stage and two late-stage, and although they have started to accept outside capital, the Saccas remain the largest investors of the $800 million fund raised to date and are seeing an abundance of investor interest.

With hundreds of pitches coming in each week from a variety of candidates, ranging from founders working on their Ph.D.s to those with massive exits in tech, Dumas sees strong momentum in startup innovation and capital flow.

The new markets Lowercarbon Capital is most excited about involve hard-to-decarbonize sectors such as heavy-duty transportation, chemicals, building materials, and energy production. The firm is also seeing big transformations underway in electricity production, recycling, plastics, fertilizer, and protein.

“These companies are going to be really successful, have high margins, and ultimately go after trillion-dollar industries,” Dumas said of targeted returns. “We absolutely hope to have huge exits, whether through the public markets or acquisition, same as you would expect in any venture fund.”

Forces of Innovation

When Al Gore sounded the alarm bells over global warming more than a decade ago with his film An Inconvenient Truth, investment in the space surged. But instead of reducing CO2 in the atmosphere, which was 380 parts per million (ppm) at the time, CO2 soared to 415 ppm, where it hovers today. Much criticism has been lodged at early investments in the space, but Dumas credits the movement for laying the groundwork for gains being made today.

Pointing to a G2 Venture Partners blog post that concluded that $25 billion invested in cleantech from 2006 to 2011 now has a combined market capitalization of more than $600 billion, Dumas said, “Many of those earlier investments actually panned out; they just needed a longer horizon.”

But he does see a marked difference in investing in the space today, thanks to key factors driving innovation. These include declining renewable-energy costs, the emergence of synthetic biology techniques, and new electrochemistry, particularly for batteries.

“Today, it’s much easier to tackle key science and technology risks early on, and we’re seeding technologies that are cheaper, faster, more performative, and safer than the 100-year-old industrial processes that they’re replacing. For example, with cement nearly a tenth of global emissions, we’ve invested in a company that’s going to be making it at room temperature from renewable electricity and cheaper than the cost of ordinary portland cement today.”

Prior to becoming a venture capitalist, Dumas worked for the Obama administration in the office of the chief of staff, where he gained a deep understanding of the limits of what government alone can do to solve the climate crisis.

Dumas sees the private sector investing in early-stage startups as the “biggest lever” to have an impact on the environmental future of our planet in the shortest amount of time.

And he’s looking ahead to 2030, when he hopes Lowercarbon Capital’s investments — and their ambitious climate impact — will pay off.

If things go well, we’ll have massively decarbonized big industries like the electricity sector, lower-impact protein, scaled up electrochemical solutions for cement and steel, and commercialized fusion technology,” he notes. “And that would give us more confidence about the world we’re going to live in by 2050.”

More must-read business news and analysis from Fortune:

Subscribe to Fortune Daily to get essential business stories delivered straight to your inbox each morning.