How Capture6 Used a D-SAFE to Unlock Project Finance and Community Impact

We sat down with Ethan Cohen-Cole , CEO & Co-Founder of Capture6 to discuss how catalytic funding helps essential climate infrastructure get off the ground. Through Elemental’s Development-SAFE (D-SAFE)—an innovative and flexible new financing tool—Capture6 unlocked critical capital to launch Project Monarch, a first-of-its-kind facility in Palmdale California that removes carbon and produces fresh water for the local community. Below, Ethan shares how this funding approach helped bridge the gap between venture and infrastructure finance, and what it means for the people their project serves.

What is the core challenge that the D-SAFE helped to address for Capture6 and the Palmdale, CA project? 

When kicking off an infrastructure project like this, investors want to see that you have everything in place—from commitments from the local utility to engineering, procurement, and construction firms (EPCs) secured. But there was one more step that was necessary as well: we had to show that we could be responsive to different types of capital. 

How does a company putting steel in the ground attract venture capital and get sufficient construction capital? Steel alone can be hundreds of millions, or even billions of dollars for larger-scale infrastructure projects. The problem is, the scale of capital requirements and the financial return opportunities don’t align with venture capital. These facilities return 20% - 25% at best and, while that's great if you're an infrastructure investor, it makes absolutely no sense to raise $50 million from a venture capitalist and then go buy a bunch of steel and pay a construction company. 

So we had to show—for ourselves, our investors, and to demonstrate for the industry more broadly—that we could structure our capital stack to meet the expectations of different investors. That’s how we ended up using a D-SAFE.

What specifically did the D-SAFE investment unlock for this project? 

The flexible approach that Elemental took with the last bit of cash [via the D-SAFE] showed that the project could be financed. By first organizing the rest of the financial ecosystem, the D-SAFE helped us finalize a deal and get other investors off the sidelines. 

The D-SAFE enabled two things. One, it enabled us to unlock the next phases of Project Monarch and show momentum on the project. Two, it enabled us to replicate this so we can scale. We've begun structuring our projects in New Zealand, Australia, Korea and elsewhere, in a way that allows that next tranche of catalytic capital to play the same role—whether that comes from Elemental or somebody else.

What does this project mean for the community on the ground?

Project Monarch generates fresh water for the local community in Antelope Valley. In this phase and the next, we’ll be generating a half million cubic meters of fresh water each year, which will be re-injected into the ground for long term storage for the community. 

Part of Palmdale Water District’s criteria for working with us was that there had to be a benefit to the ratepayers in the community. Since Palmdale Water District is mandated to serve ratepayers and not earn profit, the 20-40% cost savings provided by Capture6’s process flows directly through to Palmdale Water District’s bottom line and supports their ability to lower ratepayers bills. This means that water bills can go down in Palmdale by virtue of using our technology. 

Ultimately, with Project Monarch in place, they no longer have to have 80-100 acres of evaporation ponds emitting toxic chemicals and people pay less for the utility. 

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Explore the D-SAFE and see how flexible, catalytic funding can bridge the gap from idea to implementation.