Scaling Deep Tech Beyond Series B with Lowercarbon Capital’s Caie Kelley
Caie Kelley is a partner at Lowercarbon Capital, an early-stage climate fund that invests across the spectrum from clean baseload power to climate adaptation technologies.
Caie Kelley is a partner at Lowercarbon Capital, an early-stage climate fund that invests across the spectrum from clean baseload power to climate adaptation technologies.
What led you to growth-stage investing in climate tech?
I studied economics at Harvard and started my career at JPMorgan covering tech companies when direct-to-consumer startups were being valued like software businesses. It was the first time I saw how even traditional, physical industries could be rebuilt from scratch. Mattresses, insurance and pet food companies emerged with totally different cost structures, customer relationships and narratives.
Working on IPOs like Casper and Lemonade taught me that no category is too old or mundane to be reframed. Technology is a lens that regularly overturns assumptions about what’s possible. After two years, I moved to a middle-market private equity firm where I realized the contrast. The premise of the job was that the future would look like the past with slightly better margins. Meanwhile, my smartest friends were joining companies like SpaceX and Tesla instead of Google or Microsoft. The most interesting work and the biggest opportunities were clearly gathering around climate and hard tech.
During COVID-19, I reached out to about 100 companies seeking chief of staff positions at the frontier of ambition. One founder connected me with Ashton Kutcher’s Sound Ventures, which was setting up a new climate practice. I joined for three years, focusing on Series A and Series B companies that were proving they could manufacture at scale, not just build initial prototypes. That experience led me to Lowercarbon, where I’ve been a partner for two years working with all companies at Series B and beyond as they inflect toward growth.
How does growth-stage investing differ in deep tech compared to traditional software?
I break deep tech growth investing into three categories: software, modular hardware, and single asset builds. Software is straightforward and follows typical SaaS metrics. But modular hardware and single assets have unique dynamics at the growth stage. With modular hardware, you’re often looking at companies that have delivered initial units to customers around the $10 million revenue mark with break-even gross margins. If they’ve hit their price point and can reliably build the product, the moat is far deeper than in software – physical infrastructure, switching costs, and operational expertise are real barriers to entry. Single asset builds are different because you often need to raise large pools of capital for the first commercial facility. At this stage I don’t want founders telling me people like the product; I want direct conversations with customers who will say it themselves.
What separates successful growth-stage deep tech founders from those who struggle?
One key factor is thinking early about how the management team needs to evolve. The talent might be in Silicon Valley, but ultimately, where you manufacture might be in a different part of the country. People who think about that earlier and build teams reflecting that operational knowledge do better.
Second is not underestimating customer education and relationship building. Our best founders try to control their own destiny. For example, we have a green chemicals company that found an underperforming asset and purchased it for a small amount. They inherited existing customer relationships, can demonstrate the technology works in a real facility, and by their Series B will have realized revenue with visible gross margins. There are smart ways to jump around certain hurdles.
Another example is Base Power, focused on establishing customer traction and brand presence before ramping U.S. manufacturing. These founders actively reduce the number of unknowns rather than hoping scale will resolve them.
When does venture capital make sense versus other forms of financing for deep tech companies?
Not everything is venture-backable at the growth stage. If you’re raising huge amounts of capital, it shouldn’t always come as equity. We have companies using equipment financing, asset financing, and financing tied to purchase agreements. There’s the USDA grant program where companies like Fervo, a geothermal energy developer, got $100 million for developing in rural America. You can take advantage of EB-5 grants for employing and building.
The key is that it’s never one sleeve of debt. It’s a variety of different options depending on what you’re servicing. If you’re backed by bankable purchase agreements and developing in different parts of the country, there are creative alternatives to equity. We try to be disciplined about whether there’s still potential for a 10x return even at the Series B. If not, there are many other ways to be thoughtful about capital structure.
How has the climate tech landscape evolved over your time at Lowercarbon?
The underlying themes haven’t changed, but the framing has. Right now is a reminder that climate isn’t even a top five things most people think about daily. The average American thinks about electricity for five minutes per year. They don’t care at all. What drives adoption is pressure on infrastructure, rising energy demand, and the need for more resilient industrial systems.
What we’ve seen is success with companies that sell into hyperscalers as part of the AI data center wave, companies thinking about industrial manufacturing and bringing technologies back to the U.S., and products that strengthen grid reliability like monitoring telephone poles for wildfire risk. These are practical solutions that don’t rely on individual consumers caring enormously about climate to be adopted.
The lesson from the last couple of years is to focus less on riding macro waves, the timing of demand, and more on where fundamental supply constraints will be. If there’s a better innovative solution where constraints are tightening, you’ll see faster adoption, which is ultimately why things live or die at the growth stage.
How do you define deep tech?
It’s anything that involves a meaningful scientific or engineering breakthrough. Something that creates a material step change rather than an incremental improvement. But maybe I’ll just leave it as: companies that are not boring.
HAUS specializes in public relations and creative services for deep tech startups.
