Throughout the Biden-Harris administration, climate tech companies looking to build first-of-a-kind projects leaned on the federal government for both funding and guidance.
The next four years, though, could be a little lonelier for those companies. In just the first month of the Trump administration, there have been both funding pauses and the promise of mass layoffs among the career officials who have long offered that FOAK guidance.
But in the last year, the private sector has increasingly developed solutions that could help fill the gap.
One example: Precursor, a FOAK-focused advisory firm that came out of stealth mode today and focuses on industrial and energy infrastructure projects, guiding companies from pilots to mass deployment. The company comes armed with a founding team of industry veterans who have collectively deployed more than $30 billion in FOAK projects, and a pipeline of clients that range from advanced battery recycling to energy storage, as well as green chemicals and hydrogen.
Foundational to the firm’s work, founder David Yeh told Latitude Media in an exclusive interview, is the understanding that the so-called “missing middle” of FOAK isn’t just about capital, but about expertise. With that in mind, Yeh gathered a team he describes as “the Avengers” for FOAK, including Dong Kim, a 30-year DOE engineering lead who served as deputy director and chief engineer at the Loan Programs Office until April 2023, and infrastructure veteran Paul McDonough, who helped lead deployment of NET Power’s FOAK project. They will be working alongside experienced blended capital and operations experts.
Yeh himself, who served as a presidential appointee focused on energy and infrastructure at the Obama White House, said he wanted to bring a diversified team together to connect decades of infrastructure experience with the current realities of building climate and energy projects.
“The golden age of climate tech was under Biden,” Yeh said. “The next four years probably will not be easy, and what we’re trying to be at Precursor…is this partner to get them through the next four years.” That doesn’t just mean surviving, he added, but helping them “grow up healthy under Trump,” including building and deploying.
For more on financing FOAK, listen to David Yeh’s interview on Catalyst with Shayle Kann, from December 2023:
Building successful FOAK companies in the second Trump era, Yeh said, will look a little bit different than it used to. “The new cohort of FOAK,” as Yeh calls them, will need to be “lean and mean” to survive and thrive in the next four years.
“For me, that means your FOAK probably cannot be in the hundreds of millions of dollars,” he added. “You need to do something that’s modular, that you can prove de-risk the technology with tens of millions of dollars, and that that risk can be borne by growth equity investors.” Part of that strategy may be smaller projects that rely less on tax credits, given the current uncertainty about their status.
Another key attribute of companies looking to scale in the Trump 2.0 era is a “very clear product market fit.” Commodity products that are simply competing on price, Yeh added, aren’t going to cut it.
Building the next Tesla
When it comes to building FOAK projects, cleantech is at something of an inflection point.
“People understand that in order for Tesla to become Tesla!, they needed to actually build their first factory,” Yeh emphasized, adding that a truly big company has to be more than a great presentation or something that works in the lab.
Ironically, of course, Tesla’s founder and CEO Elon Musk is leading the Trump administration’s attempt to dismantle certain departments of the government, in the name of “efficiency.” A $465 million loan from the Obama administration, which a few of the Precursor founders helped execute, was integral in the early days of Tesla’s growth.
One tailwind that climate and energy technologies will benefit from, Yeh added, is that a lot of the solutions for FOAK projects — such as business models or financing structures — already exist, but in the infrastructure world. “They exist in LNG, they exist in toll roads, and you don’t need to reinvent the wheel,” Yeh said. “You just need to port them over.”
Precursor has been operating in stealth mode since the fall, and one realization the firm has already made is just how early-on FOAK companies need support. Many of the companies that have approached the firm in its early months have been either seed stage or Series A, Yeh said.
Those companies are seeking guidance on “the basic DNA” required to get to FOAK. “A lot of our clients are asking us for help on laying the commercial foundations of their business,” Yeh said. And in the Trump era, laying those foundations in a way that ensures companies can be “lean and mean” is part of Precursor’s value proposition.
Precursor is only the latest of several projects and firms designed to help get FOAK projects over the finish line.
Last spring, for instance, Tesla alum Milo Werner launched NextGen Industry Group, a nonprofit organization focused on sharing learnings between companies trying to scale advanced manufacturing projects. In September, RMI’s climate tech accelerator and Deep Science Ventures teamed up to launch a “developer-as-a-service” company called Mark1. And in December, FOAK-focused venture fund Axeleo Capital closed its first round.
