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Jul 14, 2022 · 50m · catalyst

Crossing the valley of death

Scott Jacobs · 29m spoken Shayle Kann · 14m spoken
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In this episode of Catalyst, host Shayle Kann and Generate Capital CEO Scott Jacobs discuss the complex realities of financing climate infrastructure, demonstrating why bridging the 'Valley of Death' demands integrated operational capabilities, supply chain resilience, and human workforce development beyond simple financial capital.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Shayle holds 30.8% of the talking time here. How this is scored →

Shayle as informed peer 6.5 Guest teaching 5.3 Guest disagreement 2.4 Shayle pushing back 3.0
05100:0015:0030:0045:003:28–6:43 · Shayle as informed peer 5/10 The Founding Thesis of Generate Capital Kann asks Jacobs to outline the founding thesis of Generate Capital and where traditional infrastructure finance was failing. Jacobs explains that capital markets were structurally misaligned, reframing the issue as a systemic gap beyond just lack of funding.6:44–14:50 · Shayle as informed peer 7/10 Navigating Underwriting Complexity and Anaerobic Digestion Kann exhibits deep industry knowledge regarding project finance pro formas, transaction costs, and underwriting complexity in microgrids. Jacobs details how Generate was structured as an operating company to absorb technical complexity and lack of regional market maturity in areas like anaerobic digestion.14:51–24:02 · Shayle as informed peer 8/10 Macro Volatility: Interest Rates Versus Supply Chain Risks When Jacobs minimizes the macro impact of interest rates by claiming Generate provides equity rather than project debt, Kann pushes back firmly with financial fundamentals, arguing that substituting debt with equity makes the overall cost of capital higher. Jacobs concedes the point on cost of capital but pivots to argue that supply chain volatility is currently a far more disruptive threat.24:02–26:39 · Shayle as informed peer 6/10 Mitigating Supply Chain Disruptions Through Scale Kann explores how developers can hedge supply chain commodity shocks and re-trading risks. Jacobs describes Generate's balance sheet aggregation strategy that allows smaller project partners to access volume pricing and secure supply.26:43–37:00 · Shayle as informed peer 7/10 Mid-Roll Sponsor Messages: Bloom Energy and Engie Kann questions whether pay-per-mile fleet models have genuine customer traction, drawing parallels to solar PPAs. Jacobs counters bluntly by citing direct enterprise customer demand and explaining internal CFO budgeting barriers.37:02–41:46 · Shayle as informed peer 8/10 Financing First-of-a-Kind Clean Tech Deployments Kann gives a detailed breakdown of the structural hurdles in financing first-of-a-kind (FOAK) infrastructure projects without corporate balance sheets or DOE guarantees. Jacobs provokes by claiming many technologies dying in the valley of death deserved to fail, before explaining blended finance approaches.41:47–45:55 · Shayle as informed peer 6/10 Core Criteria for Evaluating Technology Readiness Kann asks for specific operational data benchmarks that indicate an unproven technology is de-risked. Jacobs lays out a structured four-part underwriting rubric focusing on margin resilience, customer contracts, multi-supplier redundancy, and human operator capacity.45:56–49:41 · Shayle as informed peer 5/10 The Urgent Need for Human Capacity in Climate Tech Kann prompts Jacobs on maintaining long-term climate momentum amid global geopolitical and energy crises. Jacobs reframes the entire transition around workforce and human capacity bottlenecks, particularly in non-OECD countries, dismissing conventional policy and capital discourse as insufficient.3:28–6:43 · Guest teaching 4/10 The Founding Thesis of Generate Capital Kann asks Jacobs to outline the founding thesis of Generate Capital and where traditional infrastructure finance was failing. Jacobs explains that capital markets were structurally misaligned, reframing the issue as a systemic gap beyond just lack of funding.6:44–14:50 · Guest teaching 5/10 Navigating Underwriting Complexity and Anaerobic Digestion Kann exhibits deep industry knowledge regarding project finance pro formas, transaction costs, and underwriting complexity in microgrids. Jacobs details how Generate was structured as an operating company to absorb technical complexity and lack of regional market maturity in areas like anaerobic digestion.14:51–24:02 · Guest teaching 6/10 Macro Volatility: Interest Rates Versus Supply Chain Risks When Jacobs minimizes the macro impact of interest rates by claiming Generate provides equity rather than project debt, Kann pushes back firmly with financial fundamentals, arguing that substituting debt with equity makes the overall cost of capital higher. Jacobs concedes the point on cost of capital but pivots to argue that supply chain volatility is currently a far more disruptive threat.24:02–26:39 · Guest teaching 4/10 Mitigating Supply Chain Disruptions Through Scale Kann explores how developers can hedge supply chain commodity shocks and re-trading risks. Jacobs describes Generate's balance sheet aggregation strategy that allows smaller project partners to access volume pricing and secure supply.26:43–37:00 · Guest teaching 5/10 Mid-Roll Sponsor Messages: Bloom Energy and Engie Kann questions whether pay-per-mile fleet models have genuine customer traction, drawing parallels to solar PPAs. Jacobs counters bluntly by citing direct enterprise customer demand and explaining internal CFO budgeting barriers.37:02–41:46 · Guest teaching 5/10 Financing First-of-a-Kind Clean Tech Deployments Kann gives a detailed breakdown of the structural hurdles in financing first-of-a-kind (FOAK) infrastructure projects without corporate balance sheets or DOE guarantees. Jacobs provokes by claiming many technologies dying in the valley of death deserved to fail, before explaining blended finance approaches.41:47–45:55 · Guest teaching 6/10 Core Criteria for Evaluating Technology Readiness Kann asks for specific operational data benchmarks that indicate an unproven technology is de-risked. Jacobs lays out a structured four-part underwriting rubric focusing on margin resilience, customer contracts, multi-supplier redundancy, and human operator capacity.45:56–49:41 · Guest teaching 7/10 The Urgent Need for Human Capacity in Climate Tech Kann prompts Jacobs on maintaining long-term climate momentum amid global geopolitical and energy crises. Jacobs reframes the entire transition around workforce and human capacity bottlenecks, particularly in non-OECD countries, dismissing conventional policy and capital discourse as insufficient.3:28–6:43 · Guest disagreement 2/10 The Founding Thesis of Generate Capital Kann asks Jacobs to outline the founding thesis of Generate Capital and where traditional infrastructure finance was failing. Jacobs explains that capital markets were structurally misaligned, reframing the issue as a systemic gap beyond just lack of funding.6:44–14:50 · Guest disagreement 1/10 Navigating Underwriting Complexity and Anaerobic Digestion Kann exhibits deep industry knowledge regarding project finance pro formas, transaction costs, and underwriting complexity in microgrids. Jacobs details how Generate was structured as an operating company to absorb technical complexity and lack of regional market maturity in areas like anaerobic digestion.14:51–24:02 · Guest disagreement 4/10 Macro Volatility: Interest Rates Versus Supply Chain Risks When Jacobs minimizes the macro impact of interest rates by claiming Generate provides equity rather than project debt, Kann pushes back firmly with financial fundamentals, arguing that substituting debt with equity makes the overall cost of capital higher. Jacobs concedes the point on cost of capital but pivots to argue that supply chain volatility is currently a far more disruptive threat.24:02–26:39 · Guest disagreement 1/10 Mitigating Supply Chain Disruptions Through Scale Kann explores how developers can hedge supply chain commodity shocks and re-trading risks. Jacobs describes Generate's balance sheet aggregation strategy that allows smaller project partners to access volume pricing and secure supply.26:43–37:00 · Guest disagreement 3/10 Mid-Roll Sponsor Messages: Bloom Energy and Engie Kann questions whether pay-per-mile fleet models have genuine customer traction, drawing parallels to solar PPAs. Jacobs counters bluntly by citing direct enterprise customer demand and explaining internal CFO budgeting barriers.37:02–41:46 · Guest disagreement 3/10 Financing First-of-a-Kind Clean Tech Deployments Kann gives a detailed breakdown of the structural hurdles in financing first-of-a-kind (FOAK) infrastructure projects without corporate balance sheets or DOE guarantees. Jacobs provokes by claiming many technologies dying in the valley of death deserved to fail, before explaining blended finance approaches.41:47–45:55 · Guest disagreement 2/10 Core Criteria for Evaluating Technology Readiness Kann asks for specific operational data benchmarks that indicate an unproven technology is de-risked. Jacobs lays out a structured four-part underwriting rubric focusing on margin resilience, customer contracts, multi-supplier redundancy, and human operator capacity.45:56–49:41 · Guest disagreement 3/10 The Urgent Need for Human Capacity in Climate Tech Kann prompts Jacobs on maintaining long-term climate momentum amid global geopolitical and energy crises. Jacobs reframes the entire transition around workforce and human capacity bottlenecks, particularly in non-OECD countries, dismissing conventional policy and capital discourse as insufficient.3:28–6:43 · Shayle pushing back 2/10 The Founding Thesis of Generate Capital Kann asks Jacobs to outline the founding thesis of Generate Capital and where traditional infrastructure finance was failing. Jacobs explains that capital markets were structurally misaligned, reframing the issue as a systemic gap beyond just lack of funding.6:44–14:50 · Shayle pushing back 3/10 Navigating Underwriting Complexity and Anaerobic Digestion Kann exhibits deep industry knowledge regarding project finance pro formas, transaction costs, and underwriting complexity in microgrids. Jacobs details how Generate was structured as an operating company to absorb technical complexity and lack of regional market maturity in areas like anaerobic digestion.14:51–24:02 · Shayle pushing back 6/10 Macro Volatility: Interest Rates Versus Supply Chain Risks When Jacobs minimizes the macro impact of interest rates by claiming Generate provides equity rather than project debt, Kann pushes back firmly with financial fundamentals, arguing that substituting debt with equity makes the overall cost of capital higher. Jacobs concedes the point on cost of capital but pivots to argue that supply chain volatility is currently a far more disruptive threat.24:02–26:39 · Shayle pushing back 2/10 Mitigating Supply Chain Disruptions Through Scale Kann explores how developers can hedge supply chain commodity shocks and re-trading risks. Jacobs describes Generate's balance sheet aggregation strategy that allows smaller project partners to access volume pricing and secure supply.26:43–37:00 · Shayle pushing back 4/10 Mid-Roll Sponsor Messages: Bloom Energy and Engie Kann questions whether pay-per-mile fleet models have genuine customer traction, drawing parallels to solar PPAs. Jacobs counters bluntly by citing direct enterprise customer demand and explaining internal CFO budgeting barriers.37:02–41:46 · Shayle pushing back 3/10 Financing First-of-a-Kind Clean Tech Deployments Kann gives a detailed breakdown of the structural hurdles in financing first-of-a-kind (FOAK) infrastructure projects without corporate balance sheets or DOE guarantees. Jacobs provokes by claiming many technologies dying in the valley of death deserved to fail, before explaining blended finance approaches.41:47–45:55 · Shayle pushing back 3/10 Core Criteria for Evaluating Technology Readiness Kann asks for specific operational data benchmarks that indicate an unproven technology is de-risked. Jacobs lays out a structured four-part underwriting rubric focusing on margin resilience, customer contracts, multi-supplier redundancy, and human operator capacity.45:56–49:41 · Shayle pushing back 1/10 The Urgent Need for Human Capacity in Climate Tech Kann prompts Jacobs on maintaining long-term climate momentum amid global geopolitical and energy crises. Jacobs reframes the entire transition around workforce and human capacity bottlenecks, particularly in non-OECD countries, dismissing conventional policy and capital discourse as insufficient.

speaking balance: gold is Shayle, purple is the guest (3 minute bins)

0:00 · Shayle 42.8% · guest 57.2%0:00 · Shayle 42.8% · guest 57.2%3:00 · Shayle 38.6% · guest 61.4%3:00 · Shayle 38.6% · guest 61.4%6:00 · Shayle 37% · guest 63%6:00 · Shayle 37% · guest 63%9:00 · Shayle 2.1% · guest 97.9%9:00 · Shayle 2.1% · guest 97.9%12:00 · Shayle 63.6% · guest 36.4%12:00 · Shayle 63.6% · guest 36.4%15:00 · Shayle 53.4% · guest 46.6%15:00 · Shayle 53.4% · guest 46.6%18:00 · Shayle 0% · guest 100%18:00 · Shayle 0% · guest 100%21:00 · Shayle 24.8% · guest 75.2%21:00 · Shayle 24.8% · guest 75.2%24:00 · Shayle 29.2% · guest 70.8%24:00 · Shayle 29.2% · guest 70.8%27:00 · Shayle 22.3% · guest 77.7%27:00 · Shayle 22.3% · guest 77.7%30:00 · Shayle 0% · guest 100%30:00 · Shayle 0% · guest 100%33:00 · Shayle 59.7% · guest 40.3%33:00 · Shayle 59.7% · guest 40.3%36:00 · Shayle 60.4% · guest 39.6%36:00 · Shayle 60.4% · guest 39.6%39:00 · Shayle 7% · guest 93%39:00 · Shayle 7% · guest 93%42:00 · Shayle 20.7% · guest 79.3%42:00 · Shayle 20.7% · guest 79.3%45:00 · Shayle 26% · guest 74%45:00 · Shayle 26% · guest 74%48:00 · Shayle 38.7% · guest 61.3%48:00 · Shayle 38.7% · guest 61.3%
Sharpest disagreement ▶ 38:55 Most Valley of Death Projects Deserve to Die

Jacobs bluntly dismisses widespread founder grievances by asserting that the majority of early-stage clean tech projects that fail in the Valley of Death fundamentally deserved to fail due to deficient economics.

 Hardest push from Shayle ▶ 21:03 Rejecting the Equity-Avoids-Rates Premise

Kann directly refuses Jacobs' framing that equity financing bypasses interest rate pressures, demonstrating that substituting debt for equity inevitably drives up the blended cost of capital.

 Biggest teaching moment ▶ 47:15 The Global Human Capacity Deficit

Jacobs uses McKinsey's $9.2 trillion net-zero figure to educate the host on why human operating capacity in emerging markets is the true missing link rather than capital availability.

 Shayle holds their own ▶ 11:56 Deconstructing Underwriting Friction and Microgrid Complexity

Kann demonstrates deep domain command by walking through project finance diligence requirements, transaction cost hurdles, and the heterogeneous engineering challenges of microgrids.
the scores for every segment, with the reasoning behind each
ChapterTopicShayle as informed peerGuest teachingGuest disagreementShayle pushing backWhy
The Founding Thesis of Generate Capital 5422 Kann asks Jacobs to outline the founding thesis of Generate Capital and where traditional infrastructure finance was failing. Jacobs explains that capital markets were structurally misaligned, reframing the issue as a systemic gap beyond just lack of funding.
Navigating Underwriting Complexity and Anaerobic Digestion 7513 Kann exhibits deep industry knowledge regarding project finance pro formas, transaction costs, and underwriting complexity in microgrids. Jacobs details how Generate was structured as an operating company to absorb technical complexity and lack of regional market maturity in areas like anaerobic digestion.
Macro Volatility: Interest Rates Versus Supply Chain Risks 8646 When Jacobs minimizes the macro impact of interest rates by claiming Generate provides equity rather than project debt, Kann pushes back firmly with financial fundamentals, arguing that substituting debt with equity makes the overall cost of capital higher. Jacobs concedes the point on cost of capital but pivots to argue that supply chain volatility is currently a far more disruptive threat.
Mitigating Supply Chain Disruptions Through Scale 6412 Kann explores how developers can hedge supply chain commodity shocks and re-trading risks. Jacobs describes Generate's balance sheet aggregation strategy that allows smaller project partners to access volume pricing and secure supply.
Mid-Roll Sponsor Messages: Bloom Energy and Engie 7534 Kann questions whether pay-per-mile fleet models have genuine customer traction, drawing parallels to solar PPAs. Jacobs counters bluntly by citing direct enterprise customer demand and explaining internal CFO budgeting barriers.
Financing First-of-a-Kind Clean Tech Deployments 8533 Kann gives a detailed breakdown of the structural hurdles in financing first-of-a-kind (FOAK) infrastructure projects without corporate balance sheets or DOE guarantees. Jacobs provokes by claiming many technologies dying in the valley of death deserved to fail, before explaining blended finance approaches.
Core Criteria for Evaluating Technology Readiness 6623 Kann asks for specific operational data benchmarks that indicate an unproven technology is de-risked. Jacobs lays out a structured four-part underwriting rubric focusing on margin resilience, customer contracts, multi-supplier redundancy, and human operator capacity.
The Urgent Need for Human Capacity in Climate Tech 5731 Kann prompts Jacobs on maintaining long-term climate momentum amid global geopolitical and energy crises. Jacobs reframes the entire transition around workforce and human capacity bottlenecks, particularly in non-OECD countries, dismissing conventional policy and capital discourse as insufficient.

Statements from this episode (9)

Insight
Jacobs: Capital Markets Cannot Catalyze Underdeveloped Infrastructure Markets
“When you have an underdeveloped market, the capital markets are unlikely to be the catalyst for that market to develop. You really need to see customer demand first and foremost that is solid. You need to have products that have product market fit, as you well…”
Scott Jacobs Jul 14, 2022 ▶ 10:15
Assertion Not checkable as stated
Jacobs: US Anaerobic Digestion Projects Have Historically Lacked Profitability
“At the end of the day, what I'm saying is the projects in the U.S. Have not been very profitable historically. And it's for a whole host of reasons that those projects weren't profitable, and as a result, capital wasn't flowing.”
Scott Jacobs Jul 14, 2022 ▶ 10:52
Assertion Not checkable as stated
Jacobs: Supply chain inflation hurts infrastructure developers more than rising rates
“The supply chain and the cost of supplies have gone up far more than the cost of capital has gone up so far, and that volatility in the supply chain has been much more troubling for our partners than cost of capital changes has been so far.”
Scott Jacobs Jul 14, 2022 ▶ 23:44
Insight
Jacobs: Electric Bus Leasing Lags Because Cities Rely on Federal Grants
“It hasn't scaled because municipalities rely typically on federal dollars and are accustomed to doing so when they make purchases for new vehicles. And so the value proposition of a leased bus is actually very difficult to communicate to the typical buyer of t…”
Scott Jacobs Jul 14, 2022 ▶ 29:44
Opinion
Jacobs: Most 2000s cleantech companies that failed deserved to die
“Back in the late 2000, when the first time we heard the Valley of Death moniker come out, most of the things that died in the Valley of Death deserved to die. They didn't have a good proposition to the customer. They didn't have an economic proposition to the …”
Scott Jacobs Jul 14, 2022 ▶ 39:19
Opinion
Jacobs: DOE loan guarantees require massive project scale and bureaucratic endurance
“It's not just loan guarantees from the DOE, which actually needs to be for very large scale projects and for companies that have a lot of time and money to deal with the government bureaucracy.”
Scott Jacobs Jul 14, 2022 ▶ 40:37
Insight
Jacobs: Four criteria determine if novel infrastructure technology is financeable
“Do you have stable customer demand? Do you have a stable ability to produce for those customers? Do you have a solution that has already demonstrated its ability to deliver the output as well as the margins necessary? Do you have resilience in all of the suppl…”
Scott Jacobs Jul 14, 2022 ▶ 45:14
Insight
Jacobs: Even the US lacks human capacity to deploy needed climate capital
“We still lack the human capacity necessary to mobilize the 9.2 trillion dollars a year that McKinsey says is necessary for the net zero transition.”
Scott Jacobs Jul 14, 2022 ▶ 48:20
Opinion
Jacobs: Global climate discourse overindexes on capital and ignores talent
“I am particularly concerned that the discourse, whether it's at the G seven or at COP 26 or at other conversations we have in the climate tech community, it is, it's too much about technology. It's too much about capital. It's too much about policy, including …”
Scott Jacobs Jul 14, 2022 ▶ 49:03
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