When first-of-a-kind advisory firm Precursor came out of stealth last year, it was already clear that building climate tech infrastructure during the second Trump administration would require a completely different playbook. Successful companies, founder David Yeh anticipated, would need to be “lean and mean,” building modular projects with less money and prioritizing operational bankability over technical novelty.
A year in, Precursor’s pipeline has grown to more than 20 projects, and its business model has expanded with it, Yeh said. What began as a strategy and project development shop now also offers licensed investment banking services and brokers offtake agreements between climate tech startups and hyperscalers. Those were meaningful additions that clients asked for directly, that they needed to actually close financings, he added.
Precursor’s founding thesis, that the “missing middle” of climate tech is a shortage of project development expertise rather than a lack of capital, has held up. But over the course of the last 12 months, the rest of the playbook has been rewritten.
The 2021 FOAK approach, of raising hundreds of millions of dollars in a few months based on inbound term sheets, net zero goals, and “good vibes,” as Yeh put it, is effectively dead. “It’s almost comical how many startups haven’t updated their deck since 2021, 2022,” he said. “One of the things we spend a lot of time doing is getting them to be mindful and dwell in the present and understand what this new normal is.”
Today, the FOAK landscape is a “K-shaped” economy for projects, Yeh told Latitude Media. On the upper leg of the K are the “haves,” including geothermal, nuclear, and critical minerals, which are being “supercharged” by the Trump administration’s focus on energy sovereignty and the relentless power demands of hyperscalers. These sectors are already seeing unprecedented growth in the last year, alongside anything that touches a data center or is seen as a critical component of the broader AI value chain.
On the bottom leg of the K are the “have nots,” including carbon dioxide removal, hydrogen, and battery recycling, which are facing significant slowdowns. These sectors, among others, have been hit by shifting policy priorities and market dynamics, Yeh explained. He pointed to Microsoft’s “pause” on carbon removal purchasing, and the bankruptcies of battery recycling companies like Li-Cycle and Ascend Elements.
For those companies on the bottom leg, the access to funding that climate tech enjoyed under the last administration was a “mixed blessing,” Yeh said, because startups weren’t forced to be as scrappy or creative as during times of scarcity. The current administration, he added, will likely push those sectors toward a DeepSeek moment — the Chinese company that built a model on par with OpenAI and Anthropic for significantly less money and power. “These entrepreneurs are having to figure out how to do more with less,” he explained.
Unlocking capital
Another necessary mindset shift for FOAK has to do with the capital stack. Precursor is advising companies to avoid over-relying on climate venture capital, which is currently too expensive to anchor a FOAK financing. Yeh would recommend that founders blend in equipment financing, surety bonds insurance, foreign investment, and even government-backed instruments to build their stack.
But the single biggest capital unlock right now is a hyperscaler offtake agreement. A commercial, blue-chip deal with a tech company is becoming the prerequisite for everything that follows — project financing, debt, scale, and any plausible path to public market — which is why Precursor itself moved into brokering them. The path to IPO, Yeh said, “is gigawatts of offtake, not the success of your first project.”
For both sides of the FOAK economy, AI is a lifeline right now, Yeh said. “Without AI and hyperscaling, it would have been much worse,” he said. “In some ways, clean tech is [now] just a subset of the data center buildout.”
The companies on the bottom leg of the K that are nonetheless doing well, he explained, are those that read the demand signals early and pivoted accordingly. He pointed to Precursor client Arbor, a carbon removal company founded in 2021, whose byproduct is energy.
Arbor’s original system used a proprietary oxy-combustion gas turbine to capture CO2 from biomass-derived synthetic gas. In mid-2025, Arbor signed a $40 million offtake agreement with the Frontier Coalition to help fund its first commercial-scale project.
Less than a year later, the company had made a strategic pivot, selling clean firm power to data centers.
“They realized if they took a gasifier off their turbine…it would become a zero emissions gas turbine, and the amount of interest that generated versus [carbon removal], it was a sea change,” Yeh explained. Now, Abor’s pitch is a baseload data center power solution that is potentially faster, cleaner, cheaper, and more flexible than traditional gas turbines. The company’s modular, fuel-agnostic turbines are small: 25 MW each, compared to the 500 MW of a standard large-frame unit.
What enabled that pivot in such a short amount of time, Yeh added, was institutional experience. More than half of the Arbor team came from SpaceX, and several leaders in its C-suite developed gas turbines at GE. In that sense, “they were the customer,” Yeh said. That meant they didn’t need to do a lot of customer discovery to know where the market was heading.
Building smaller and smarter
Precursor is warning its clients against an approach to building that was common during the Biden era, but has become more dangerous: The “all-singing, all-dancing project” is one that involves a massive flagship facility designed to simultaneously de-risk the technology, prove market demand, and deliver jaw-dropping internal rates of return on the order of 20% to 30%, Yeh said.
First projects often cost twice as much and take twice as long as initial projections suggest, even with the best teams in place, he explained. Most delays stem not from the innovative core technology, but from mundane process and equipment issues. The lesson, according to Yeh: Go from kilowatts to megawatts, and then through tens and hundreds of megawatts before attempting gigawatt-scale operations. Jumping to gigawatt-scale too soon means companies lose the opportunity to experience the “unknown unknowns” that are inevitable in infrastructure builds.
Fervo Energy is a clear blueprint for this strategy, he added, having proven its technology at the three-megawatt scale with Project Red before leveraging that success into gigawatts of offtake. Fervo leaned on that project to transition to utility-scale — and of course went public this week in a $1.9-billion IPO with a pipeline of more than 38 GW.
