A Conversation on Clean Energy and Catalytic Capital with Amy Duffuor

Written by: Martin Waana-Ang, LLM '26

Amy Duffuor is a General Partner at Azolla Ventures, where she leads investments in early stage climate technologies with the promise of massive impacts. Duffuor spoke on the Yale Clean Energy Conference keynote panel on Investing in Clean Energy Innovation.

 

What first drew your attention to clean energy and renewable energies?

 

My first awareness of energy more broadly—and the fact that it is not guaranteed for everyone—was from visiting my grandmother in Ghana as a young child.

I realized there was so much stress on the grid, and there were frequent blackouts. You really had to plan when you could watch TV or think about when you’d have access to electricity versus candles. That was very different from being born in Philadelphia and growing up in the U.S., where my lights were on very consistently. That early realization of energy’s critical importance, and the inequality of its access, formed the foundation of my current work.

Given this experience, after my undergrad in the U.S., I became much more conscious of renewables like solar and wind. I wondered why a country such as Ghana, with so much sunlight (solar potential), did not have so many solar panels on more of these homes.  Then, 15 years ago, my parents put solar panels on their home in Ghana. It’s just interesting to see how things evolve over time.

 

Most clean energy projects are capital-intensive, and it often takes a longer period to reap the returns. When deciding which clean energy startups to back, what factors help you identify technologies that can truly transform the energy system, rather than just make small improvements?

 

At Azolla Ventures, we are an impact-first fund, guided by one North Star: we only invest in companies with the potential for gigaton-scale greenhouse gas emissions reductions. This means we are guided by our North Star: only investing in companies that have the potential for gigaton-scale greenhouse gas emissions reductions. This is not incremental at all; it is transformative.

We have a third party we work with that does all our climate modeling. We will not invest in a company—even if I love the team, the technology, and the unit economics look sound—if that climate model doesn't demonstrate at least gigaton-scale impact potential by 2050. That's the first piece.

The second piece, to your point about capital intensity and longer horizons, is that just because you have an interesting and innovative technology doesn't mean it will scale. However, we are patient investors. Our fund has a longer fund life to allow us to invest in capital intensive projects with long term return on investments.  Before making such investment decisions, however, we ask several questions to ensure the investments we make are both transformative from an impact perspective and have the best chance to reach large-scale adoption. On the adoption side, we often ask:

• (a) Is the innovation novel, and do the unit economics look sound?
• (b) Is it 10x better on cost, or performance, or some other metric?

 

Azolla Ventures describes its approach as catalytic capital. What does that mean, and how does it differ from traditional venture capital?

 

Catalytic capital, in the U.S., is primarily tax-exempt capital. It is structurally patient and flexible. Azolla Ventures combines this catalytic capital with traditional venture capital that we call full-cycle capital. This blend allows us to de-risk early-stage climate technologies for follow-on investors. We can invest earlier and take on significant technology and market risk because our capital is more patient. We believe the capital deployed should match the risk and reward profile of these startups. We think catalytic capital, alongside traditional venture capital, is much better suited for this.

 

Many promising clean energy companies struggle to scale from pilot to full commercial deployment. What financing or partnership models help them cross this valley of death?

 

There are many valleys of death in a company's lifecycle. Public-private partnerships can be very helpful. While some government funding is currently uncertain, there is still support for specific areas like firm, baseload power—such as geothermal, nuclear and long-duration energy storage.

Beyond that, creativity in the capital stack is essential. This means looking at a mix of equity, project finance, venture debt, non-dilutive funding, and catalytic capital. Common questions we ask start-ups include: whether you intend to finance everything through equity, project finance, venture debt, or perhaps non-dilutive funding?  Or whether you are looking at catalytic capital? Creativity is really what’s required to traverse that gap.

And then, of course, you must have very strong business fundamentals. If you don't have that, and those financiers can't see a relatively stable or high rate of return in the future with many of those risks retired, they are not going to invest.

 

What are the most common challenges clean energy founders face, and how does Azolla help them?

 

We are a broad, sector-agnostic climate fund, and we invest at the earliest stages. Our founders are often highly technical—PhDs or postdocs. A primary challenge for them is storytelling: the ability to share their innovation with investors, customers, and partners who lack their deep research background.

Another challenge is commercialization strategy. A founder may want to sell green methanol to the maritime shipping market, which is a massive endeavor. We help them identify intermediate products or uses that can generate near-term revenue and demonstrate commercial viability.

We also assist with IP strategy. My background as a renewables investment banker means my bias is towards focusing on unit and techno-economics. A technology can be novel, but it must also be scalable to be viable.

Finally, we support our companies in taking an expansive view of impact. Our north-star is gigaton-scale greenhouse gas emissions reductions. But we’re also interested in other forms of impact even if it’s not the north star of our underwriting criteria: climate justice, community engagement, and responsible deployment are critical for scaling. The best time to integrate these principles is at the formation stage, not as an afterthought.

 

How can Azolla ensure clean energy solutions benefit under-represented communities, particularly in the Global South where innovators struggle to access funding?

 

For our current fund, 30% of our committed capital can be invested outside the United States. While we have investments in Latin America, Europe, and New Zealand, we have not yet invested in Asia or Africa.

When investing outside the U.S., partnering with local investors is critical. They understand the context better, and these partnerships can attract other investors. It is about building an ecosystem.

We are also focused on building more targeted and thoughtful relationships with our pipeline partners outside the U.S. We have about 100 pipeline partners—usually universities, accelerators, venture funds, incubators, and other institutions. One of the things we want to be much more thoughtful about moving forward is our international pipeline strategy, making sure those relationships are just as strong as the pipeline partners we have in the U.S.

 

How did policies like the Inflation Reduction Act (IRA) impact your work, and how has the new administration’s rollback of the IRA affected it?

 

Policy is important; and I must say it is a challenging time for certain clean energy sectors, like offshore wind. Firm, baseload power faces fewer challenges. However, there is still a glimmer of hope. Our predecessor fund was raised in 2018 during the first Trump administration, so we are familiar with these headwinds, and our companies are resilient.

The IRA provided significant incentives that spurred adoption and centered environmental justice. It was so attractive that some European companies in our network considered relocating to the U.S.

With those incentives gone, many good climate tech companies may fail. However, in 2021-2022, many companies also raised capital at frothy valuations without strong fundamentals. Those will likely fail as well. The unfortunate outcome is that while we will see a necessary flight to quality, some good companies will be lost due to the policy shift.

 

What policy changes or government actions do you think are most needed now to accelerate private investment in innovation?

 

At Azolla, we only invest in companies with freestanding economics, meaning minimal reliance on government subsidies. Policy can be an enabler or a headwind, but it is not the primary driver of our investment thesis.

Policies like those in the IRA are vital for spurring investment at the speed the climate crisis demands, especially for the most-impacted communities in the Global South. However, our investment decisions are not based on the existence of a subsidy. We would not invest in a company because a policy suddenly made its product cheaper; the fundamental economics must be sound from the start.