The Hard Thing about Hard Tech
Financing the Industrial Future of Climate Innovation
Three years ago I moved to Spain and began building Rumbo with a simple conviction: that one of the most meaningful things an investor could do in this decade was to help accelerate the technologies capable of transforming our industrial systems—and addressing climate change.
At the time, climate tech was already attracting growing attention as a new investment frontier. But what fascinated me most was not the trend itself—it was the extraordinary wave of scientific progress quietly unfolding across disciplines.
Advances in electrochemistry, new classes of advanced materials, novel carbon capture processes, breakthroughs in agricultural biology, and entirely new approaches to energy storage and industrial decarbonization were moving from theory into reality. What had long lived in laboratories was beginning to move into the real economy.
Working closely with founders, scientists, and industrial partners over these past years has only reinforced that sense of excitement.
The science is real. The technologies are advancing.
Across our portfolio—and across the broader ecosystem—it has been deeply gratifying to see innovations that once seemed distant begin to find their place in real systems. Technologies that promise to reshape how we produce energy, build materials, grow food, and manage natural resources are no longer theoretical. Many are reaching the stage where they can begin operating at industrial scale.
And that is precisely where the real challenge begins.
Because the hard part of climate tech is not invention.
The hard part is turning breakthrough technologies into real systems.
The hard part is deployment at scale.
From Innovation to Systems
Working with companies in Rumbo’s first fund has made this increasingly clear.
Companies such as Parallel Carbon, Karbon CCS, Rarearth, or Seamoretech operate in very different domains—from carbon removal and industrial decarbonization to rare earth recycling and water desalination.
Yet they share a common characteristic.
They are not software companies that scale primarily through code and servers. They are technologies designed to transform physical systems: industrial processes, supply chains, energy networks, and environmental infrastructure.
Bringing those systems to life requires far more than a breakthrough idea. It requires engineering integration, partnerships with industry, regulatory alignment, and often substantial upfront capital before commercial scale can be achieved.
In other words, these technologies do not simply need innovation.
They need financial structures capable of supporting industrial transformation.
The Challenge of First-of-a-Kind Projects
One of the most critical moments in the life of many frontier climate technologies is the transition from early-stage venture funding to what is known as a First-of-a-Kind (FOAK) project.
A company might begin with a €3 million pre-seed round, followed by a €10 million seed round to validate its technology and begin early commercial development. But very quickly it may encounter a dramatically different requirement: the need for hundreds of millions of euros to build the first industrial-scale facility that proves the technology can operate in the real economy.
I have seen this moment more than once in the past few years.
A founder who has successfully raised early venture rounds suddenly finds themselves facing a completely different challenge: a technology that works, industrial partners interested in deploying it, but a first facility that may require €150 million or €300 million to build.
At that point the conversation changes.
Venture investors hesitate. Infrastructure investors see technology risk. Lenders require operating history that does not yet exist.
The project sits in an uncomfortable middle ground: too industrial for venture capital, too novel for traditional infrastructure finance.
Software companies can scale through successive venture rounds.
Industrial technologies must cross a far more complex bridge: the construction of the first real system.
That first plant, that first facility, that first industrial deployment—this is where many technologies either become industries or remain experiments.
We have seen versions of this challenge in our own portfolio.
A company like Karbon CCS, for example, is developing carbon capture solutions designed to operate directly at the point of emission in large power plants and industrial facilities. The underlying engineering—from pressurized capture systems to hot potassium carbonate absorption processes—has already been validated, and industrial partners are aligned around deployment.
Yet moving from a proven process to a full-scale installation requires something entirely different: financing the first industrial facility, a project that can approach half a billion dollars in capital expenditure.
That transition—from validated technology to deployable infrastructure—is where the real complexity begins.
Financing that transition requires a different set of tools.
In practice, this often means combining several layers of capital: venture equity to develop the technology, industrial partners willing to co-deploy it, project finance to fund the underlying assets, and in many cases public guarantees or blended finance mechanisms that help bridge the first deployments.
In other words, it requires structuring capital so that each risk—technological, operational, market, or financial—is allocated to the stakeholders best suited to manage it.
These are principles long established in project finance, but they are only beginning to be applied systematically to frontier climate technologies.
In my view, one of the biggest misconceptions in climate technology today is that the primary bottleneck is scientific discovery.
In reality, the science in many fields is advancing remarkably fast.
What remains underdeveloped is the financial architecture capable of carrying those technologies from the laboratory to industrial scale.
Innovation in a Fragmenting World
All of this is unfolding in a moment of growing geopolitical uncertainty.
Energy security, industrial resilience, and technological sovereignty have returned to the center of political debate across much of the world. Governments are rediscovering industrial policy, supply chains are being reconfigured, and the global economy is becoming more fragmented.
In that context, the deployment of climate technologies is no longer only an environmental challenge.
It is increasingly an industrial and strategic one.
The countries and regions that succeed in scaling these technologies will not only reduce emissions—they will shape the next generation of global industries.
In that sense, climate innovation is becoming inseparable from industrial strategy.
Europe’s Misunderstood Innovation Model
Living and working in Europe over the past few years has also reshaped the way I think about the continent’s role in global innovation.
In recent years, a common narrative has emerged: that Europe has somehow fallen behind technologically. The argument usually points to the absence of trillion-dollar technology companies originating on the continent, especially when compared with the dominance of American platforms in software and artificial intelligence.
But this comparison often misses an important distinction.
Much of the venture capital ecosystem has been optimized to scale digital platforms—businesses that can grow exponentially with relatively little physical infrastructure.
Yet the transition to a sustainable economy will not be driven primarily by digital platforms.
It will be driven by the transformation of physical systems: energy networks, industrial processes, materials production, water infrastructure, agriculture, and the built environment.
And in these domains, Europe has long possessed extraordinary capabilities.
The continent combines world-class scientific institutions, deep engineering traditions, sophisticated financial markets, and an industrial base capable of integrating complex technologies into real economic systems.
Europe may produce fewer trillion-dollar software platforms.
But it is exceptionally well positioned to deploy the technologies that will reshape industrial systems.
Connecting Capital and Systems
My own perspective on these questions has been shaped by the somewhat unusual path that led me here.
I began my career in project finance, working on some of the early independent power projects developed in Mexico during the late 1990s. These were large-scale energy infrastructures built under long-term power purchase agreements.
Later, I spent several years in structured finance, managing investment vehicles built around complex fiduciary structures in the real estate sector.
These experiences reinforced a lesson that still shapes how I think about capital today: large real-world systems rarely depend on a single type of financing. They require carefully designed structures that distribute risks and incentives across multiple stakeholders.
My next chapter took me into venture capital, where I spent more than a decade investing across Latin America.
Over time, I came to appreciate how complementary these perspectives can be.
Project finance teaches you how large systems are built.
Venture capital teaches you how innovation emerges.
Climate technology sits precisely at that intersection.
Over the past three years, building Rumbo and investing in more than thirty climate-related companies has allowed me to deepen this perspective.
And it is precisely this intersection—between innovation, industry, and capital—where we continue to look for new projects, companies, and partners facing the challenge of turning breakthrough technologies into deployable systems.
What Building Rumbo Has Taught Me
When I first began writing about climate tech a few years ago—including essays such as Why Investing in Climate Tech Is the Most Impactful Thing You Can Do and Climate as Competitiveness—my focus was on accelerating technological innovation.
That conviction remains unchanged.
But building Rumbo and working closely with founders and industrial partners has deepened my understanding of what it actually takes to turn those innovations into real systems.
At its core, much of this work comes down to something surprisingly simple: time.
Years ago, Dr. Pedro Aspe made an observation about my professional trajectory that stayed with me. He noted that a defining characteristic of my career had been my comfort operating with long horizons—working on problems that unfold over decades rather than quarters.
Looking back, I realize how much that observation explains the sectors I have gravitated toward throughout my career.
Energy infrastructure, real estate, venture capital, and now climate technology all share one defining feature: they require patience and the ability to think beyond the short cycles of financial markets.
Industrial transformation does not happen overnight.
The climate transition will require investors and builders willing to think in decades, not quarters.
If the last decade was about discovering the technologies that could reshape our industrial systems, the next decade will be about building the capital architectures capable of deploying them.
This is precisely the kind of work we are increasingly focused on at Rumbo. Beyond investing in early-stage companies, we work with founders, industrial partners, and institutions facing the challenge of bringing complex technologies into the real economy. Structuring the capital required to move from innovation to deployment is rarely straightforward—but it is one of the most consequential problems in the climate transition. It is also the kind of challenge we actively seek to engage with, alongside entrepreneurs, corporates, and partners building the systems that will define the next generation of industrial transformation.
The Hard Part
The technologies are emerging.
The science is advancing.
The entrepreneurs are building extraordinary companies.
The hard part now is designing the financial and industrial systems that allow all of this to scale.
That is the real work of the next decade.
And it will require not only better technologies, but better institutions, better capital structures, and a longer horizon for how we think about building the future.
Fernando, thanks for sharing this. The FOAK problem is something I have lived from the founder side. At WAYAKIT we developed sustainable cleaning technology out of KAUST research, and the moment you move from validated science to first industrial deployment, the capital conversation changes completely.
Venture investors see operational risk, infrastructure investors see technology risk, and the project sits exactly where you describe, too novel for one, too industrial for the other.
What strikes me most in your piece is the framing around time horizon. Industrial transformation requires patience that most financial structures are not designed to reward.
The founders who survive that gap are the ones who understand they are not just building a company. They are building a new category of asset.
Would love to exchange notes on how you are thinking about blended finance mechanisms for FOAK projects in the MENA region specifically, where I have experienced first hand being funded.