Generate Capital, a San Francisco-based startup that just announced a new funding of $2 billion, calls itself a “sustainable infrastructure” company. You could think of it like a modern utility company, where the utility manages everything: solar, energy storage, building automation projects, electric vehicle fleets and charging infrastructure, wastewater and food waste, and nearly two dozen other types of projects.
“We call it infrastructure as a service, sort of like software as a service,” says CEO Scott Jacobs. “You turn an upfront purchase and a long-term management problem into a service that we, ourselves operate.”
The company partners with around 40 different sustainable technology companies and project developers, providing them with capital to build, say, a solar power plant. “Once they’re shovel ready, we buy the asset from the developer fully, and then we’re on the hook to operate it for 10, 20, 30 years,” he says. Then it sells the service to customers like retailers, banks, or communities. “The barrier to adoption for sustainable infrastructure isn’t customers wanting it,” he says. “It’s that customers don’t want to pay for it with a big upfront check, first and foremost, and second, they don’t want to operate it, because most customers aren’t power plant managers.”
In one project, the company partnered with BYD, the electric vehicle manufacturer, to provide electric buses to customers like Stanford University and Facebook. The customers wanted to reduce pollution, but didn’t want to buy the buses directly or build and manage charging stations. Instead, they pay Generate, which makes those investments and provides those services. In another example, Generate worked with a large school district in Florida to add new lighting, air conditioning, and other systems to cut energy use. The district didn’t pay for the upgrades, but pays Generate a lower monthly electric bill than it used to pay the local utility. At Walmart, the company worked with a technology partner to replace diesel forklifts in warehouses with zero-emissions equipment running on hydrogen fuel cells. At Chobani and Nestlé, the company takes food waste and runs it through anaerobic digesters that turn the waste into clean power and fertilizer.
While it’s obviously complex to work in so many areas, rather than focusing on a single type of technology, Jacobs argues that its customers need a range of solutions simultaneously. Because different solutions work together, it makes sense to work on the system as a whole. If a chain of retail stores is going to install solar power, for example, it should start by installing new lighting and taking other steps to improve energy efficiency before calculating how many solar panels to put on its rooftops.
The $2 billion that the company just raised from institutional investors—on top of a $1 billion round last year—will go into long-term investments. “The assets that we build today are likely to serve people and communities that aren’t even born yet as much as those who are,” he says. “It requires a very different mindset and set of incentives. I’m not sure you can find a lot of companies out there that think about that multigenerational responsibility. But that’s why we set this thing up the way that we did, because we want to have that multigenerational responsibility. We’re not looking to do the venture model where you start a company, and a few years later, you’re trying to go public, and then the founders are on to something new.”