Shreya Dave, CEO, Via Separations
Johanna Wolfson, principal and co-founder, Prime Impact Fund
One of the things that was, I think, really important for me was thinking hard about, what was it that energized me every day? What day during my research, my graduate work, was a day where I came home and was like, “That was an awesome day.” And those were the days that I could connect what I was doing to the impact. And so, for me, maybe the path to starting a company was not obvious, but the path from the fundamental research that I was doing was.
Shreya Dave: My name is Shreya Dave and I’m the CEO of Via Separations.
Johanna Wolfson: I’m Johanna Wolfson and I am principal and co-founder at Prime Impact Fund.
JS: Shreya and Johanna, you have an interesting story. You both overlapped at MIT, but you didn’t know each other. Then you both went into this climate tech entrepreneurship space, but in very different ways. Now, years later, your paths have crossed again. Shreya, let’s start with you. How did you end up at MIT and what did you do there?
SD: I actually spent 12 years at MIT. Most of them were as a student. Some of them as an undergraduate, but my PhD work was focused on the technology that we eventually spun out into a company. I was studying mechanical engineering, I was working in a materials science lab with Professor Grossman, and we were able to invent a new technology that allowed us to filter streams that haven’t been able to be filtered before. I can get into more detail about that, but what was really interesting about the work that we did was that we were able to look at it with an economic perspective as well, which is pretty unusual for a science or engineering-focused degree. We’re able to say, “Well, this makes a lot of sense here and it makes absolutely no sense there.” What eventually has evolved into Via is the opportunity to take something that was processed using heat, so for example, evaporation or distillation, and turn that into processing using filtration. What that does is, it cuts the cost and it cuts the energy consumption by about 90%. Via Separations was born shortly after I left MIT and today, here we are.
JS: That was what year?
SD: That was in 2016. My cofounder Brent Keller and I spent the next year working on the ideas of this company—the customer, the problems that we were trying to solve—while also wrapping up our work at MIT. I was teaching and Brent was a postdoc, so we formally spun Via out in 2017.
JS: Johanna, same question. How did you end up at MIT, and what did you do there?
JW: I was at MIT for graduate school. I did my PhD in the chemistry department, did my research around physical chemistry and optic spectroscopy and materials. I was doing really fundamental science work. I was looking to understand how energy gets transferred from photons into the electrons and vibrational and rotational modes of materials. This is deeply fascinating to me. It continues to be. There I was, in the basement laser lab, doing this work and developing new instruments to observe physical phenomena.
But at the same time, I was really compelled by this question of what happens after the lab. I had so many brilliant colleagues, lab mates, friends, professors around me, who had great ideas and really promising experimental results that showed promise for, you name it, for a next-generation solar material that could be much more efficient than what we have today, or a new way of doing drug delivery.
I felt that there was really not a sufficient pathway for those technologies to get out of the lab. I felt like the culmination of a Nature or Science article or a splashy photo on MIT’s homepage was kind of the end game. It wasn’t always clear what happened next, or what a student with great findings could do next. That’s what I became really compelled by and, in particular, people like Shreya who took their lab research and wanted to make a business out of it. I thought, “That is what I want to help make happen in the world.”
I just started learning everything I could about the commercialization process in general, as it relates to hardware-based technologies, as well as in the energy and climate sector in particular. I remember going to a seminar or a workshop around energy and finance. It was probably put on by the Energy Club, which I think Shreya and I were both part of. It really struck me, for the first time, why this was so hard. That basically everything was stacked against the process of commercializing new technologies and getting them into the world in the energy and climate sector, where it’s a legacy sector that has existed for hundreds of years. It is in the electricity sector, a sector that values above everything else, reliability and not experimenting. It is going to require, especially in cases of technologies that are capital-intensive, it’s going to require financing structures that are really at odds with most conventional venture instruments, which otherwise are our main tool for bringing new ideas and technologies into the world.
I guess, like any scientist, when I saw this problem that I was really compelled by, I just wanted to run at it and understand what solutions we might be able to develop to better commercialize new energy and climate technologies. As I finished up my lab work at MIT, I decided to pivot my career to this entrepreneurial space of helping new technologies become products. That first led me to the applied industry lab, Fraunhofer, where I did work with startups one-on-one to help them design validation and demonstration projects, to get them ready for investments and get them ready for first customers. We would take a new solar material and actually turn it into a solar panel and put it out on a roof and test it in the weather for four months and see what happens.
Then more recently, that led me to the Department of Energy, where I led the tech-to-market efforts for energy efficiency and renewable energy at the Department of Energy. There, I really got this purview over the U.S. innovation ecosystem and what we do and don’t do a good job of supporting, in terms of helping startups and bringing new technologies to market, including at universities and national labs and the like.
That allowed me to really decide what to work on next in terms of where I saw the gaps. There are many gaps. From shared facilities, to having access to finance, to having access to good talent, and so on. Shreya could, I’m sure, enumerate beyond those. To me, it really did seem that the early-stage financing gap is one of the most critical problems to solve. That’s what led me to Prime, an organization that I had known for some time, but that had developed a really compelling new approach to supporting new technologies, new startups in energy and climate. That was a platform from which we could do new work to support companies like Shreya’s.
JS: What’s really unique about both of your work is that you started in this research-intensive track and then moved totally into entrepreneurship. I think that would be an interesting topic for the graduate students and PhD candidates and the audience. Shreya, can you speak to that?
SD: I think for me, it is 100% about impact. Why did I study mechanical engineering as an undergrad? It was because I cared about sustainability and I wanted to design things that were going to make people be more sustainable in one way, shape, or form. Why did I start working on this water project? It was because I wanted to help improve access in a technical, economic, societal, kind of intersectional way.
Why did I start Via? It’s the same thing. Fundamentally, what we’re doing is taking the energy, and then a lot of costs out of manufacturing goods that we use every day. Things like toilet paper, cardboard, fertilizer, plastics, or semiconductors, are all processes that have a lot of energy that go into them and we’re pulling out a lot of that wasted energy and making it more efficient. For us, a single sector, our very first customer segment, is going to move the needle in full percentage points of U.S. energy consumption and global energy consumption. That is the unifying theme, not necessarily what I’m doing day-to-day.
I think I was really fortunate to have been at MIT during a time when energy was extremely, really high-focus, really well-funded. I started my undergraduate the same year that President Hockfield started the Energy Initiative. I got to see this kind of awakening of the issues and then actually experience and watch other people who had spun out companies or gone to work for the Department of Energy or gone and worked in energy consulting. These are things that my cohort, my colleagues, and my peers were going to do.
I thought I was going to be a professor for about two weeks as I started my PhD. It was until exactly when I started writing my first grant application, that was when I realized that was not likely the path for me. But then five years later, I found myself writing exactly the same grant application but now on behalf of Via. That was really significant to me, because it wasn’t, again, what I was doing every day. It was about where am I going to generate that impact?
JS: Was that a difficult jump for you?
SD: It’s definitely been a slow transition. I definitely don’t think I am 100% CEO, but I’m no longer 100% PhD student either. The skillsets for growing a team and building an organization are certainly different from planning an experiment and analyzing data, but that doesn’t mean that there aren’t parallels. One of the things that was, I think, really important for me was thinking hard about, what was it that energized me every day? What day during my research, my graduate work, was a day where I came home and was like, “That was an awesome day.” And what I realized was, those were the days I was interacting with people, those were the days I was thinking and planning on a strategic level as opposed to experiment planning, and those were the days that I could connect what I was doing to the impact. And so, for me, maybe the path to starting a company was not obvious, but the path from the fundamental research that I was doing was.
JS: Johanna, what about you? How did you transition from this research-intensive work to entrepreneurship? Was that a challenge for you or did it just come naturally?
JW: I relate so much to many things that Shreya said. A lot of people start graduate school thinking that they will become professors. Then, really, if you look at the numbers, it’s clear that that won’t happen, but then also many people discover that that’s not really their calling, myself included. For me, it was really very similar. It was realizing that, “Okay, I’m doing this lab work, I’m good at it, I like it, but what do I love the most?” I really loved understanding what other work was happening, I loved analyzing data more so than I loved being in the lab. There were clues like that. But really, there were other things that stood out to me, like, I’m on fire, I love when I’m doing this.
An example that stands out for me was when I was actually doing a side project on understanding cement chemistry and different approaches to decarbonizing cement. It was one particular day that, in the morning I was reading technical papers and understanding what different people were doing. Then in the afternoon, I was diving into the techno economics and understanding what the drivers were there and it hit me, “Oh my God, I love doing both of these things together. That’s what I love.” That was a new experience for me, to be bridging between the commercial and technical aspects. That was a big clue.
I do think, as Shreya said, being attuned to that sort of thing in terms of what really sets you afire, what do you love doing, what are the days that are the most exciting to you, are really just really important clues.
I do have to say, one of the best things about MIT for me, in retrospect, was that it is a big and varied enough place with a lot of interesting people that allows you to really explore different things and learn from people who have done policy work or done startups and come back to academia and so on. I felt it was a very rich environment to then go explore these new interests that I had in the techno economic side or in the commercial aspects of developing a business.
I will say, if there are graduate students as part of the audience, I just think that having seen my own career evolution, having seen people like Shreya launch a company out of the lab, it is so valuable to be able to bridge those worlds of the technical and business worlds. I do think it is a quality that a lot of smart MIT students can go after in themselves, if they’re so compelled. I don’t think it’s always raised front and center as an obvious choice. I just think if someone has that inclination, I really encourage them to find ways to develop it because, man, the world really needs more people who can bridge the technical and commercial aspects of a problem. There’s just tremendous opportunity there.
SD: I couldn’t agree more. I’ll also add that a lot of entrepreneurial spirit, a lot of creativity and a lot of guts are also required to go work at one of the companies that is spinning out of the lab. We got lucky but I will not pretend that I knew going into my PhD that we were going to start a company. I would not want to have started it if we didn’t think it was the solution to the problem we were trying to solve. For that, that was a total fortuitous for us.
We, when we’re hiring, are looking for people who are going to jump in and dive into problems that literally have not been solved before, are going to do it with an eye towards cost and scalability and impact, and who and what it does in the world, and they’re going to do it in an environment that’s maybe a little bit more uncomfortable than their PhD research. It’s a little bit more uncertain, it’s probably working with different personalities and different diversity of thought, and it’s really cool and really fun. Maybe one of my most big passions, things that I’m not directly working on besides Via, is getting good people into the climate problem. Without people building the companies, you can’t have 100 founders and no team and you can’t have no team and, and our all team and no founders. There has to be a balance of this and everyone has their really important role to play.
JS: You both left MIT, Shreya’s working on Via. Johanna, what’s going on at Prime?
JW: Well, a little history on Prime. Prime actually also has MIT roots. My colleague, Sarah Kearney, is the founder of Prime. She did some of the initial work that led to Prime as a grad student at MIT. Prime supported several companies in its initial years using this very unique type of philanthropic partner. That’s one of the elements that’s unique to Prime. We call it “catalytic capital.” It’s capital that can come and embrace high-risk, high-reward ventures, even very early on in their lives, in a way that might not be as typical for other types of venture firms.
We more recently, based off of that, that early success of Prime, that early work, built a venture fund around this same concept of leveraging catalytic capital from family offices, from individuals from foundations, that can really take a long term lens, and support companies that have higher capital intensity and have a longer timeframe. We were very proud that, of the initial companies that we supported, Via Separations is one of those. I’ll let Shreya give the details on their funding round from her side, but from our perspective, Via hits all the boxes. It’s going after a really, really big climate wedge in terms of this industrial separations problem that, by the way, almost no one thinks about unless you’re in that sector, but it’s huge. A monster source of greenhouse gases, and here comes Shreya out of the lab with a solution to this, but one that’s going to take a long time to develop. One that has a huge reward from a climate perspective if it’s successful, but one that will take a long time to develop. This is a really good example of what Prime was built to do from the ground up, in supporting companies and getting them to the point where they can be ready for bringing other funding partners on and so on. Again, Shreya can give us the details on that. But this is a good example of exactly what we’re looking to do. The fact that Via was, I think, our second investment out of the fund is very much a point of pride for us that we’re able to support this company.
SD: From our perspective, first of all, we are so grateful that there are smart brains working on solving the capital challenges that companies like ours face. There’s no way I could be thinking about that or have the perspective or know-how to be doing that. It’s really cool to have organizations and investors like Prime.
When we were spinning out, we put ourselves on a clock. My cofounder, Brent, and I were coming out of PhDs and we saw this cool product market fit that we thought had legs. We said, “We want to do this, but we want to do this properly,” it doesn’t mean improperly, we just want to do this all in. We don’t want to be doing this part time because we don’t think we’ll make enough progress and this is something that needs to be solved. We also want to be able to put our heart and souls into this company.
We opted to look for private funding. We applied for grants and we won some, but we also opted to look for private funding, which was a very intentional decision that led us down a very certain path. But when we go look for private funding, who funds this sort of thing? The answer is there are a few folks out there, Prime being one, The Engine being another, some venture funds that are focused on climate and impact and things, but largely, the venture capital world doesn’t see the returns on climate investing the way they might with a software investment. The returns exist, they just take a little longer to get there and there’s not as much pattern recognition. There’s fewer of those deals happening. It’s a lot harder to say, “This is the bucket of successful companies.” There haven’t been enough successful companies. To us, it was very important to find aligned investors who were also going to help us grow our company, who were going to help us see around corners and not make the same mistakes that other companies have made in the past and help us as first-time founders say, “You’re getting ahead of yourself,” or “Have you thought about this?” or “By the way, I think you should talk to that person.” It was really important to us that we did that. We found that in Matthew, who’s at Prime and who actually was the first person we went to for feedback on our pitch deck, with an advisor hat on and who completely tore it up and gave us the opportunity to come back to him with a revision. It’s people like that, and its organizations that build you up that I think really, really make a huge difference in the lifecycle of an early stage company.
JS: What are the main challenges with an early stage company and finding investing from a venture capital standpoint? Johanna, why are venture capital firms not inclined to invest in early stage companies like Via?
JW: I think it’s important to note, and Shreya mentioned this, that there are some. Especially now. If we were talking 10 years ago, we would be talking about the tide having gone out on clean tech investing and a lot of people having lost their shirts and therefore not investing anymore.
The really wonderful development is that there is now a newer generation of climate investors who either watched that happen, in some cases learned lessons from it, or in other cases just have come to the problem with the ability to think longer term or the resources to think longer term. That has given us a lot of powerful tools in our toolbox in co-investors, in the form of entities like Breakthrough Energy Ventures, Congruent Ventures, Clean Energy Venture [Group], Imperative [Ventures]. I’m just really pleased that Prime is operating in an environment with a lot of strong co-investors. That’s actually really critical because we, on our own, cannot carry any one company all the way through. This is going to require a lot of partnerships and so on. That’s critical.
But if we’re not talking about that cohort of very aligned, long-term investors, and we’re instead looking at the more conventional model, which does remain the majority of venture dollars out there, and that’s the important point to remember, then it goes back to some of the points Shreya made around the return that’s being sought is generally one that is in the five to seven year timeframe. Generally, more conventional venture investors are seeking to see those returns on a relatively light investment. They’re looking for companies that can scale on a few million dollars, which you can do if you’re building an app, and you cannot do if you’re building a materials-based innovation or a new manufacturing process. There’s just a fundamental disconnect there. And maybe looking more for companies that can launch into brand new markets. Why was the biotech industry so successful? It was because this was actually a new sector of the economy that was created. The IT boom, same thing, a new sector of the economy that was created. As opposed to energy, very much not a new sector. We’re talking about disrupting legacy sectors here. All of these things together really do make it challenging for conventional venture sources to participate, and for very good reason. The model is not set up to scale capital intensive companies over a multidecadal timeframe.
It does argue for different types of funds structures, different types of investors, which happily we do have in terms of some of those other partners that I mentioned, and which Prime is able to offer as well, given its unique structure and working with foundations and individuals who are more in the mindset of thinking of their capital as catalytic. As leading to something else, as opposed to primarily and solely around return seeking in and of itself. But also tied to impact, tied to being catalytic in nature.
SD: I’ll add also that I think that a lot of the things described just there, in terms of what a traditional venture investor is looking for, are things that we can all become. “We” being clean tech startups. We can, at some point, we will be five years away from billion dollar returns, or billion dollar valuations. It’s just that that’s not going to be where we are when we come out of the lab.
Maybe to illustrate that point, when we came out of the lab, we were making material on the order of a square centimeter, and now we’re making it in hundreds of square feet. That scaling takes time, that development, that technology, that innovation takes time, it takes resources, it takes labs, it takes people, it takes travel to conferences, all that stuff that costs money. I do think, I truly believe, that we are getting very close to being the type of company that a traditional venture capitalist would invest in. But we were certainly not there four years ago.
JS: Is the idea that after this initial funding you will be more attractive to those conventional investors and will go on to lead more rounds through another venture capital firm that’s not Prime?
SD: Yeah, and maybe not venture capital either. Maybe other forms of structured finance or other pathways to scaling up. But certainly, venture capital is one of those options.
JW: I’ll add to that to underline that point. When Prime looks at potential investments, we’re looking at three things. Most of them we pin on, but that one we haven’t. The first is huge climate impact potential. We talked about how Via can achieve that. The second is that there’s a fit for our unique type of capital. Generally, that’s because it’s a bit earlier, as we talked about, then might be attractive to other investors. The third is that there’s a clear path to follow on capital after our investment. We very much want to invest in companies that can look attractive to follow-on investors, including conventional sources, although not just conventional sources, could be strategic capital or others, and to do that in a relatively near timeframe. We are able to be patient investors but we’re not looking to support research projects that won’t see the light of day for 40 years. That’s also not what we’re looking to do. We’re always walking this balance between where are the needles in a haystack that can become really compelling commercial propositions in time for their climate impacts to matter on the grand scale of the challenge we’re all after. Finding companies that really walk that line is the art of what we do and what makes opportunities and partnerships like the one with Via so important for us to cultivate. It’s because finding that bridge between the commercial viability and the climate impact is a really special one.
JS: How are you measuring the climate impact when you’re picking these companies? Is there some kind of assessment that you’re using? Is there something quantitative about this decision?
SD: Oh, yes. We hail from MIT. We are very rigorous in this regard. I’m glad that you asked that. We do seek to support companies that have the potential for large scale emissions reduction, we think about that on the gigaton scale by 2050. Now, that’s looking into the future, so there’s no clear way to assess that in a measured way, which is what you would ideally want to do.
But we do model out, with pretty well-developed models, what a company might be able to do in terms of deploying their solution and what impact that could have on the emissions reductions. That entails things like looking at, what is the grid mix likely to be for the next few decades? What might this company be able to displace in terms of emissions, given that grid mix, given other solutions that might otherwise be developed? We always want to be sure that we’re crediting companies only toward what their solution could bring, not what’s going to happen anyway. We do this modeling on a company-by-company basis and have been doing that for some time and, again, we’re looking for that gigaton scale target or “entitlement”, you could call it.
Then more recently, because we have now done this many times over at Prime Coalition, the parent’s nonprofit organization with which our fund is associated, has developed an online tool called CRANE. It’s called Carbon Reduction for New Enterprises. That tool actually collects some of these common frameworks for modeling out different market scenarios and different adoption scenarios for new technologies. Because we have learned that other investors would also like to do this type of projecting out of emissions reduction potential, and not just investors, but also government agencies and incubator and accelerator programs to be able to evaluate companies on that basis.
JS: When you looked at Via, there must have been a pretty high score on this climate impact?
JW: Yeah, that was pretty unambiguous. This problem that Via is going after—in terms of turning thermal-based processes that currently occur by boiling one substance off another with the much lower energy requirements of pushing a mixture across the membrane—that’s an almost mindbogglingly lower energy intensive requirement. With Via that was really unambiguous. Some of the companies that we evaluate, I wouldn’t say the potential impact is any less, but sometimes the impact could be less direct. There’s sometimes more thinking to do in terms of how we modeled it out. But what sticks in my head about the reduction modeling we did with Via was that in some applications the energy requirements could be up to 90% less and the emissions out of those processes even more than that, just because of the carbon intensity of the fuels that some of these processes use. Via really stands out as huge potential in our portfolio for emissions reduction.
SD: I’ll just add quickly to that, I think that there are so many opportunities, Johanna mentioned some of them, but there’s so many opportunities for emissions reduction. A lot of the same ones get talked about all the time, and that’s great, we need a lot of technologies for one to win in something like energy storage, which is a no brainer in terms of “the world needs this.” But there are a lot of, I would call them less glamorous, less sexy, problems that need solving.
JW: Just to double down on that, at Prime, we’re really excited by the unsexy areas, so to speak. We did recently make an investment in a cement company, also an MIT spinout, and steel production and glass production are other good areas like that that we look at that are just hugely energy, and therefore emissions, intensive. Haven’t gotten a lot of attention, haven’t really changed in the last couple hundred years, really ripe for disruption. Especially as we look at conflating factors, like increasingly affordable, renewable energy that could allow you to really change processes and change the economics if you move, for instance, some of these processes from primarily thermal to electrical. There’s just tremendous opportunity in some of these areas that haven’t seen much innovation. Both from the climate impact perspective, but then also from the economic perspective for investors. Because what happens when you disrupt an industry that hasn’t seen it coming? A lot of change happens. That’s how a lot of investors look at their livelihoods.
JS: It’s a great message, too, for people who are working in research and areas that you said aren’t so sexy, but that might have applications because they might have the opportunity to disrupt an industry. How is the current pandemic affecting investments, Johanna?
JW: Ourselves, for Prime Impact Fund, are in an unfortunate position of having just closed our fund. We have a lot of dry powder and we’re going to continue investing that. That’s core to our mission is that we don’t stop investing. Companies need capital. We’ll see what evolves in the rest of the fundraising landscape. As companies go out to raise subsequent rounds, we’re certainly watching it closely. We’re working with all of our portfolio companies to plan ahead, to look carefully at their runway, to be proactive and maybe starting a fundraising round earlier than they would have otherwise, because you never know it might take longer. I do think it’s possible depending on how long the economic impact lasts. We do think it’s very possible that capital will be a bit more scarce as existing funds tend to reserve their capital for their portfolio companies rather than perhaps making new investments. Again, that’s not a trend that we’ve been able to see yet, but it’s certainly one that wouldn’t surprise us if it comes to be true. If that’s the case, I think for us, it just underscores our mission that there are going to be really compelling opportunities that are coming out of university labs and the like that really need patient, long-term, catalytic capital. That’s what we’re here to do.
JS: Shreya, where can people go to learn more about Via and your work?
SD: I mentioned, we just are about to, I would say maybe tomorrow, we’ll be launching a new website: www.viaseparations.com. I’m also around the energy and Boston energy community network. I’m around and about, obviously always happy to talk to folks. Our company sits at Greentown Labs, which is an incubator accelerator based in Somerville, with a hundred of our closest climate impact friends. There are a hundred companies out there working on a huge diversity of different aspects of the climate problem. That’s a great place to go to learn more.
I guess maybe my advice would be, is to talk to anyone and everybody. When we were evaluating markets and talking about different applications, I was talking to people about battery manufacturing while attending a friend’s wedding, or ammonia production because I happened to be closer to ammonia production land in the United States. Finding those opportunities to talk to people doing cool things is always, always encouraged.
JS: Johanna, where can people go to learn about Prime and your work?
JW: We also just launched our website for real. We’ve been quietly investing for over a year now, but we just closed our fund so that allows us to be public about it. You can go to our website at primeimpactfund.com and see the other companies that we’ve invested in. We have an awesome portfolio of companies doing things from lithium extraction to carbon capture and synthetic biology and crop protection, all attacking really big climate wedges in very different ways. I think that in and of itself is an interesting group of companies to learn about. And we’re always keen to talk to folks who are interested in financial innovation around how to better support new climate technologies and hardware-based technologies. We’ve done a lot of thinking about that at Prime, but we’d love to share what we’ve learned, but also continue learning from others about what else is needed to best support the solutions we need on climate.
JS: Thanks so much for joining you guys.
JW: Thanks for having us.