DCVC’s Zach Bogue’s Latest Green Bets: Micro-Nuclear, Water, Geothermal

Zach Bogue of Silicon Valley Venture Capital DCVC in 2015. Established in 2011. Since then, he and co-founder Matt Oko have invested in several companies that have gone public or been acquired by similar companies. Google, Twitter, Amazon And Microsoft. DCVC invests in algorithmic finance, cyber security, smart agriculture, space access and intelligence, and climate resilience technology.

While investing in climate technology serves a social good, DCVC is not investing for ideological reasons.

on the contrary.

“There’s an investment bucket that we call ethical investing, and people are investing in things they know they should invest in or they’re investing in things they know they shouldn’t invest in and they’re doing that for ethical or moral reasons,” Bogue said late last month. He told CNBC in an interview. “They are willing to accept a lower rate of return in order to do that. We don’t do that.”

“My LPs are big institutions — college endowments, big charities that run hospitals,” Bogue added, referring to venture capital firms as limited partners or investors. “They give me money, and if I don’t give them a return on that money, they can’t run their hospitals. So we take the profit motive and the return motive very seriously at DCVC.”

DCVC’s investments are all about supporting entrepreneurs who are solving trillion dollar problems with computational power.

“There are a lot of these trillion-dollar problems in the climate space. And if you can solve them, you can build a big, successful, capitalist company and make a big positive impact on the world,” Bogue told CNBC. The goal is to build large, successful public companies.

“When looking at climate technology investments, DCVC does the same due diligence that it does with any other deal,” Bogue told CNBC.

“There is no free pass because someone is solving a serious problem in climate rather than a serious problem in robotics or satellites or biotech,” Bogue told CNBC. “They all have to meet our internal high bar to write those deals.”

But that doesn’t mean Bogue is indifferent to climate change. He grew up in Denver, where his daily life is defined by closeness to nature, and studied environmental science and public policy at Harvard. And DCVC has been investing in climate technology since 2012, long before it was trendy. That first climate investment was in TampoDB, which ran its time series database on, among other things, geothermal energy.

“We’ve been quietly investing in climate for a decade and trying not to talk about it,” Bogue told CNBC. “Relatively recently, it’s become socially acceptable to talk about it.”

The amount of money going into climate technology is actually increasing, according to a report from PricewaterhouseCoopers. In the year ending June 30, 2021, $87.5 billion in venture capital and private equity went into climate technology, a 210 percent increase over the previous 12-month period.

That’s more than $60 billion in the first six months of 2021, up from $87.5 billion in 2021. Discounts are also increasing in the space. In the year Climate technology deals in the first six months of 2021 were $96 million, compared to $27 million in the same six months of 2020.

Bog is interested in investing in nuclear power. But because DCVC has total assets of about $3 billion — far less than it would cost to build a typical large nuclear power plant — the firm invests in capital-light nuclear companies.

One example is Oklo, which plans to build micro-nuclear power plants. If the plan goes ahead, it could cover additional growth with revenue from power purchase agreements, Bogue said.

“Advanced nuclear fission is a very important deep-tech venture capital problem,” Bogue told CNBC. “There are technical and regulatory risks, but if those problems are solved, “there are just huge returns…all these ingredients are a perfect recipe for venture capital.”

Water conservation technology is another big focus.

“Water is rapidly coming to the fore as a climate problem. And as a deeply technology-solvable problem,” Bogue said. For example, DCVC led a recent investment in ZwitterCo, a wastewater recycling startup working to develop membrane technology that enables industrial companies and large farms to reuse their wastewater.

Bogue is very interested in finding solutions to reduce methane emissions. Methane has a more potent effect on global warming than carbon dioxide, but it doesn’t last as long in the atmosphere as carbon dioxide.

“If you can stop the release of methane, it will have an immediate positive effect on the climate. So if we can stop all human methane, it can buy us years to act on other climate problems that will take longer to perfect,” Bogue told CNBC.

Kairos Aerospace, a DCVC invested company, provides satellite imagery of methane emissions from the air and data on oil and gas companies. “This is very low-hanging fruit and a very easily solvable problem,” Bogue said.

DCVC invested in CH4 Global. CH4 is taking the isolated seaweed and supplementing it with feed for livestock such as cows, goats, sheep and deer, allowing them to emit less methane.

Another climate technology investment bog mentioned is geothermal, which is heat generated from the Earth’s core. DCVC recently led a $138 million round of funding in Fairvo, which counts tech giant Google as a client. Much of the same geology and engineering talent currently used by the oil and gas industry can transfer those skills to geothermal, Bogue said. And unlike renewable energy that only generates power when the sun shines or the wind blows, geothermal is a baseload, 24×7 power source.