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New Wave | Hugo Rauch | Substack

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🌊 Financing the Hardware Era

Why climate founders need to stop treating equity as the default way to pay for CapEx.

We’re joined by William Godfrey of Tangible, who has spent the past few years developing a thesis around how climate and hardtech founders should combine equity, debt, equipment finance, asset-backed lending, project finance, and other forms of capital.

Because one thing is becoming increasingly clear:

We’re not going to solve climate change through software alone.

Climate companies need factories. Equipment. Batteries. Robots. Infrastructure. Physical assets.

And financing all of that with venture equity can become an extraordinarily expensive mistake.

In this episode, we go deep on how founders should actually finance capital-intensive growth — and why the best climate companies may increasingly need to become as sophisticated at financial engineering as they are at technical engineering.

One framework from William stuck with me:

Equity is for uncertainty. Debt is for repeatability.

Equity makes sense when you’re funding something that has never been done before: R&D, prototypes, first-of-a-kind technology, new teams and markets.

But once you’re repeatedly deploying an asset with increasingly predictable economics, a different pool of capital becomes available.

And learning how to access it can fundamentally change the economics of the company. Listen to this episode to learn more or read this guide by Tangible.

✨ Leave a review and share the episode if this conversation challenged the way you think about growth, innovation, and sustainability.