(Bloomberg) — Breakthrough Energy, the Bill Gates-backed group that bankrolls climate tech, has stopped making new investments from one of its key funds to scale up nascent green technologies, just as the market for these startups is being squeezed by President Donald Trump’s assaults on climate policy.
Launched in 2021, Breakthrough’s Catalyst fund raised more than $1 billion to finance the demonstration and scale-up of first-of-their-kind green solutions, which often struggle to get off the ground due to their unproven technologies and hefty costs. After supporting 10 startups and spending “high hundreds of millions of dollars,” a Breakthrough Energy spokesperson said, it has now suspended new investment from the fund.
As the organization learns from its early investments, “Catalyst has transitioned from evaluating new funding opportunities to managing and supporting its existing companies,” said the spokesperson. “It is too early to say what the future of our deployment work will look like.” Axios first reported on the fund’s change in direction.
There was no immediate plan to raise more money for the Catalyst fund, according to the spokesperson, who declined to elaborate on what will be done with the remaining capital. As part of the ongoing reform, Breakthrough Energy Catalyst has also laid off some employees, including its former leader Mario Fernandez. The spokesperson said that the “evolution of the work requires a smaller team.”
Unlike most project financing funds, Catalyst is structured as a hybrid of philanthropic and return-generating financing, which adds a layer of complexity in its execution. The latest move also reflects the broader challenges facing climate tech investors to gain financial returns from first-of-their-kind technologies amid political and economic headwinds. In a memo published in January, Gates warned that the market alone cannot solve climate change and urged for more government support.
The Catalyst fund is among a series of green initiatives that Gates has established in recent years under the Breakthrough Energy banner. Breakthrough Energy Ventures, a venture-capital firm, has also bankrolled roughly 150 climate-focused startups, of which about 30 or 40 have failed, Gates said in an October interview. In pursuit of solutions to decarbonize the world, “there’ll be lots of dead ends,” he added.
Trump’s climate policy rollbacks have taken away hundreds of billions of dollars that would have supported green technologies under President Joe Biden’s Inflation Reduction Act. That’s made it even more important for existing startups to find new sources of cash to support scaling up technologies. In September, a group of venture firms, including Breakthrough Energy Ventures, launched the All Aboard Coalition with a goal of raising $300 million for its first set of investments.
The rethinking of the Catalyst fund investment strategy comes after Gates was criticized by some climate advocates when he said in October that prioritizing the climate fight above all else risks overshadowing issues such as health and equality. Early last year, following Trump’s return to the White House, Breakthrough also rolled back its public policy advocacy work and let go dozens of employees in the US and Europe. But Gates said that his views on the necessity of the Paris climate treaty and the need for companies to cut emissions have remained unchanged.
Breakthrough Energy Ventures, the organization’s venture arm, raised some of its money from billionaires including Jeff Bezos and Michael Bloomberg, the founder of Bloomberg LP, the parent company of Bloomberg News. Catalyst is run separately and funded independently.
