In a zigzag When most people are in a zigzag, former Meta CTO raises $250M climate fund

Gigascale, the investment firm led by former Meta CTO Mike Schrofer, announced Monday that it has raised a $250 million fund to support founders who are “rebuilding the physical economy.”

The new fund will focus on energy, grid infrastructure and critical minerals through a climate technology lens. By remaining overtly focused on climate, Gigascale is bucking the deteriorating conventional wisdom on the “climate technology” thesis.

Gigascale’s second fund is shaping up to be a continuation of the kind of bets that Schrep, as it’s known, has made in the three years since Gigascale started. The company has backed some notable climate technology startups, including Commonwealth Fusion Systems, Heron Power, Mill, and Form Energy.

Gigascale emerged from Schrep’s study of climate technology during the coronavirus crisis, and the new fund is the first with an early-stage focus and to include institutional investors.

Climate technology has always been a broad sector, and the Gigascale 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 artificial intelligence.

It’s no surprise, then, that power is a big focus of the new fund. As demand for electricity rises, there is an opportunity to invest in new energy sources and new ways to deliver this to businesses and households.

Schroepfer pointed to solar energy as a recent example of a faster, cheaper clean technology that is winning the market.

As solar and batteries come to dominate conversations about clean energy, Schroepfer clearly sees more opportunities. Artificial intelligence and broader trends in electricity have made it difficult for businesses to connect to the grid. In response, many have sought to develop their own energy sources, although competition there is also intense. For example, natural gas turbines have a waiting list that extends into the early 2030s.

The energy crisis gives an opportunity for energy startups. And in energy-intensive industries, bringing your own energy “will be a competitive advantage over time,” Schrofer said on “Inevitable” last year. Startups that can deliver energy more cheaply or more flexibly – or both – can win these advantages alone.

But Gigascale also expects its energy investments to extend beyond power generation, citing grid infrastructure, critical minerals and physical artificial intelligence as other places the company will look for opportunities.

“The companies we support win because they are cheaper, faster and more reliable,” Schroepfer said in a statement. “This is how adoption expands. The climate impact is a result of better performing systems.”