Podcast Summary – "How a $4B Deep‑Tech Fund Tackles Emissions with DCVC"

Podcast: Inevitable (An MCJ Podcast)
Host: Cody Sims
Guest: Zach Bogue, Co-Founder & Co-Managing Partner, DCVC
Date: April 17, 2025

Overview

This episode features an in-depth conversation with Zach Bogue, co-founder and co-managing partner at DCVC—a leading $4B deep tech venture capital fund. The discussion explores DCVC’s origin story, the firm's approach to tackling emissions and climate solutions, the unique strategy behind their new DCVC Climate fund, and the evolving landscape of climate tech investment. Bogue shares lessons from his environmental background, the role of deep tech and applied AI in climate, philosophies on impact measurement, and the realities of funding industrial innovation at scale.

Key Themes & Discussion Points

1. DCVC’s Origins and Deep Tech Thesis

• Bogue’s Background & Early Climate Interest

  • Grew up in Colorado, fostering a love for the outdoors but also witnessing the environmental impact of mining and resource extraction.
    "I grew up in Colorado... this dichotomy of beautiful outdoors, but there’s obviously mine tailings everywhere and also understanding that energy powers the world... This was the earliest time when I became interested in the climate.” (04:03)
  • Studied environmental science at Harvard; influenced by key mentors and events (Montreal Protocol, ozone hole, Al Gore’s early climate efforts).
    • Innovation as “combination” – merging disparate technologies for breakthroughs (e.g., nuclear submarines, nuclear power).
      "Innovation is just combination. There are more combinations in a simple deck of cards than grains of sand..." (07:41)

• Transition from Law to VC

  • Initially followed Harvard grads into finance/banking, pivoted to law, then the Silicon Valley tech scene post-dot-com boom.
    "The best minds of our generation went into investment banking. That was what you did..." (08:33)
  • Inspired by Ian Ayers’ "Super Crunchers" and the emerging Big Data/AI wave to solve real-world problems like climate.

• Deep Tech as a Differentiator

  • DCVC was born to invest in hard, real-world problems using applied AI and computational innovation.
    • Early investments included scale-out compute, AI-enabled life sciences (2011), and AI-enabled climate tech (2012).
    • "We back entrepreneurs solving some of the world’s hardest problems using applied AI..." (01:51)

2. Investment Strategy—Unlocking Hard Problems with Capex-Light Models

• Approach to High-Tech, High-Capex Sectors

  • Deep tech models allow initial progress in capital-efficient (capex-light) ways, even in sectors like nuclear or geothermal. "At the earliest stages, we look for these deep tech models... you can approach this for a while in a very capital efficient way." (12:33)
  • The goal is to derisk early, unlock contracts/customers, and secure non-dilutive funding before heavy investment.

• When to Break Out a Dedicated Fund (DCVC Climate)

  • Climate investments hit critical mass; computational models/A.I. have matured.
    • "We’re reluctant to launch new strategies... but we can see that it will become almost too big as to predominate in a fund..." (15:00)
  • Shifted from "climate-adjacent" (ag, energy) investing and informal impact to a focused climate vehicle.

3. Climate Fund Structure, Impact & Reporting

• No Return Compromise

  • Climate fund is a for-profit vehicle—expected returns match main and bio funds.
    • "Yes, DCVC Climate is a for-profit fund with the same return expectations and profile as our other funds." (16:13)

• Impact: Not Just CO₂ Metrics

  • Impact and investment intentionality are both central—only back companies that can have “unequivocal large-scale positive impact at scale.”
  • Avoids limiting impact metrics to CO₂ alone; customizes per-company measurements (water, resilience, enablement).
    • “Water is incredibly important... investing in water abundance doesn’t lend itself to a CO₂ metric. For each company, you need to establish what actual metrics are measurable...” (22:18)
  • Impact reporting helps keep the fund “honest” and also informs and supports companies.
    • "If there’s a deal on the border between being impactful or not... we can still do that deal in our main fund." (20:05)

4. Current Climate Tech Environment & Policy Headwinds

• Need for Policy-Agnostic Investment

  • The firm underwrites to succeed no matter who is in the White House—policy can be tailwind or headwind but shouldn’t drive the business case.
    • "Our companies need to be able to succeed regardless of who’s in the White House..." (25:55)

• Pragmatic View of Subsidies

  • Happy to accept government money or tailwinds, but don’t structure deals or companies to require them.
    • "Maybe we should be having someone spend a day a week figuring out if there’s a way to get free money from the government, but it’s not our core thesis." (28:46)

• Sector Outlook in 2025

  • Some sectors, like hydrogen, may face new headwinds.
  • Domestic production of critical minerals, geothermal, and nuclear benefit from enduring market trends.

5. Firm Culture, Team, & Approach

• Team Composition

  • DCVC emphasizes scientific depth: more scientists than MBAs.
    • "You need a lot of different skill sets natively on your team... from the fundamental sciences to large-scale computational modeling." (29:37)

• Network & Diligence

  • Leverages a collective model with a core investment team and a network of operating partners for due diligence and board work.

• Stage & Role in Company Lifecycle

  • Early stage (seed/Series A) via flagship fund; DCVC Climate typically comes in at Series B—after technical risk is largely retired, focusing on industrialization and scaling.
    • "We like to engage at Series B... define that as technical risk is largely retired, there’s nascent commercial traction, and there’s a real pathway to unsubsidized parity with market pricing." (31:23)
  • Specializes in the "missing middle" or "valley of death," helping companies transition from R&D to scalable commercial deployment.

6. Addressing the "Valley of Death" & First-of-a-Kind Financing

• Capital Challenges at Scale-Up

  • Recognizes that some VC money will fund capital-intensive pilot/demo plants.
    • Prioritizes deals where there’s a credible pathway to non-equity financing (project finance, debt, offtake agreements) within 24 months.
    • "You ultimately do end up spending some VC dollars on that expensive capex... there actually is a pathway to unlocking capital in the near term..." (34:32)

• Unsolved Problem—First-of-a-Kind (FOAK) Finance

  • No “silver bullet” yet; opportunity remains for new financial products (insurance, loan guarantees, strategic corporate partnerships).

7. Areas of Excitement & Consideration

• Zero-Carbon Energy

  • Keen on new scalable sources: geothermal (Fervo), microreactors (Radiant Nuclear).
    • "People don’t realize that the average data center is currently 15MW… if you can add a megawatt of power… that is actually a big unlock." (38:13)

• E-Fuels & SAF

  • Interested where industries (airlines) have a “social license to operate" imperative to decarbonize, and there’s regulatory/policy and market momentum.

• Commodity Markets

  • Cautious about ventures that compete solely on commodity pricing; looks for unique pathway/niche or clear industry demand.

Notable Quotes & Moments

• On Deep Tech & Disruption:
  "Capex light means a clever entrepreneur can figure out ways to do things 10x, 100x, 1000x better than the incumbents... That’s your only shot at disrupting an incumbent in energy." (14:21)
• Impact Philosophy:
  "How do you have the biggest impact in the world as a climate venture capitalist? You put your money into and help grow an enormous, successful company that happens to be tackling a hard problem in the climate." (23:46)
• On Presenting to DCVC:
  "Please don’t show me pictures of polar bears or wildfires or CO₂ curves... Please start with what’s unique about your business." (24:36)
• On Team Structure:
  "We have more published scientists than MBAs on staff at the firm." (29:21)
• Company Selection:
  "We prefer company B: a team of 20 scientists trying to commercialize a technological breakthrough over a room of smart MBAs figuring out how to move carbon credits around." (28:46)
• On Commodity Markets & Social License:
  "In the SAF market, the airline industry is so carbon intensive… it feels like they’ve gotten real religion that to continue to have a social license to operate, they need to decarbonize." (39:15)
• The Reality of Scale:
  "You try and minimize [VC-funded capex]... but before we make our investment, we need to understand there’s a pathway to unlocking the capital in the near term that this company really needs to scale." (34:32)

Timestamps for Key Segments

• DCVC Origin & Purpose: 01:26–04:44
• Environmental Science & Formative Experiences: 04:44–08:11
• Law, Tech & Arrival in Venture: 08:22–11:07
• Early Investments & Avoiding Cleantech 1.0 Pitfalls: 11:07–12:33
• Deep Tech Capex-Light Strategy: 12:33–14:56
• Launching DCVC Climate Fund: 15:00–16:46
• Returns & Impact Philosophy: 16:46–21:21
• Beyond Emissions Metrics: 22:18–24:12
• Market Context & Policy-Agnostic Investing: 24:45–29:21
• Firm Teaming & Due Diligence Model: 29:37–31:03
• Investment Stages & Valley of Death: 31:23–34:32
• FOAK Financing Challenge & Industry Analogies: 35:14–37:27
• Current Focus Sectors & Commodity Market Risks: 37:57–40:25

Final Thoughts

This episode offers a masterclass on deep tech, climate investment philosophy, and building impactful companies at the intersection of science, technology, and business. Zach Bogue provides actionable insights for founders, LPs, and anyone interested in the realities of scaling solutions to the world’s hardest climate problems—emphasizing relentless pragmatism, a long-term view, and the conviction that true impact and strong financial returns can, and must, go hand-in-hand.