Climactic Launches $11M Material Scale Hybrid Fund to Bridge Climate Tech Startups' Valley of Death

In an innovative push to rescue climate tech startups, Climactic has launched Material Scale, a hybrid debt-equity fund targeting the perilous 'valley of death' phase.

Co-founder and managing partner Josh Felser spearheads the initiative, starting with an $11 million special purpose vehicle to fund production scaling.

Conquering the Valley of Death

The 'valley of death' describes the critical gap where startups prove prototypes but struggle to secure buyers and capital for mass production.

This challenge hits hardware and materials firms hardest, unlike software giants that scale effortlessly via cloud infrastructure.

Felser, with his history in software ventures and climate investing, views this disparity as unfair and ripe for disruption.

The Hybrid Funding Model

Material Scale links startups with buyers like Ralph Lauren, who pre-commit to bulk purchases at market rates.

The fund bridges the cost gap through low-dilution loans and warrants, channeling funds directly to production.

Deals are structured simultaneously among buyer, fund, and startup, instantly boosting company valuations with guaranteed demand.

Impact and Future Expansion

Initially focused on climate tech for apparel, the model has drawn interest from major manufacturers and a roster of ready startups.

Plans include scaling to nine figures and venturing into alternative fuels, fostering nimble climate solutions beyond traditional VC.

With Investor Structure Climate as general partner, Material Scale promises to transform how physical innovation reaches markets.