Dive Brief:
- A group of 27 investors from 10 countries has come together to form what is reportedly the largest ever fund to invest in emerging energy technologies, Greentech Media reports. Former Microsoft CEO Bill Gates heads the group and announced its creation on Monday.
- The group, dubbed the "Breakthrough Energy Coalition," has laid out five principles underlying which projects it will support, including investing early in development projects, across a broad range of technologies, while making wise but bold investments.
- The coalition, which includes Amazon founder Jeff Bezos and Facebook CEO Mark Zuckerberg, will focus its investments in countries that have committed to increasing government research into energy.
Dive Insight:
On the same day climate talks kicked off in Paris, where more than 150 world leaders will attempt to forge agreements to limit global warming and greenhouse gas emissions, a much smaller group of tech investors has launched their own initiative aimed at changing the global energy space.
While the COP21 talks will focus on reducing emissions by utilizing more established technologies and policies, the "Breakthrough Energy Coalition" will target ideas and concepts on the fringe and in the early stages of development.
"The most transformative ideas are emerging out of research institutions and the great capital gap is in getting these ideas out of the lab and on the path to commercialization," the group said in a document outlining its investment principles.
"We’ll take a flexible approach to early stage, providing seed, angel and Series A investments, with the expectation that once these investments are de-risked, traditional commercial capital will invest in the later stages," the coalition explained.
Also involved in the group are: Richard Branson, founder of Virgin Group; Vinod Khosla, founder of Khosla Ventures; Neil Shen, founding managing partner of Sequoia Capital China; and George Soros, chairman of Soros Fund Management LLC.
In a paper announcing the group's launch, Gates made the case for government investment in energy and explained how private industry partnerships would allow innovative technologies to be scaled up and developed. "If investments in energy research are so valuable, why not simply let the market guide them? The answer is that the energy industry differs from other industries in some crucial ways," he said.
Because it takes so long to adopt new technologies, energy innovation is slow to advance, Gates explained. While American pharmaceutical companies put 20% of their revenues into research and development, and about 15% for IT and semiconductor companies, in the energy sector that figure is far less – about 0.23% of revenues go back to research.
"This is why governments play an indispensable role in supporting energy research," Gates said. "The field will become only more important in the years ahead. As the world’s need for energy continues to grow, bright people with new ideas will flock to the places that support efforts to make cheap, reliable,
clean energy. Any country that wants to lead the world in innovation and energy independence should be doubling down on this research."
