First-of-a-kind (FOAK) financing in Germany - finally a break through with Bill Gates on board?

Decarbonising our economy quite often means investing a lot of money - especially when it comes to capital-intensive infrastructure projects — like energy storage systems or green hydrogen. 

This has been a particular challenge for German Start Ups in this space; they struggle to finance these CAPEX-intensive projects as they often don’t have enough revenue, or are deemed to be too risky, to get the backing of a generalist VC fund. Meanwhile, banks are reluctant to offer debt-financing without seeing tech proven at scale. It’s known as the “first-of-a-kind valley of death" — a moment in a climate tech’s journey when it faces an increased risk of failure. 

The launch of a FOAK-specific fund — of which there are none yet in Europe — could be a significant move for Germany. 

Whilst there are a lot of details still to be ironed out, it is highly encouraging to see that the proposed FOAK fund would ideally be financed by Germany’s Win Initiative, announced in February this year, which plans to make €3.5bn of public and private capital available for growth financing for startups. 

Microsoft founder Gates, who was invited to Berlin to share his knowledge of scaling climate ventures, has also invested significantly in hundreds of large demonstration projects and FOAKs via investment platform Breakthrough Energy Catalyst. Last year, it announced a partnership with the EU to mobilise up to €820m between 2023 and 2027 to invest in climate projects, including large scale FOAKs.