Interview With Nicholas Flanders, Founder Of Twelve, A Carbon Transformation Technology Company

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Can you give us a quick background of the story of how you began with Twelve, and what motivated you to found the company — and what were the main obstacles in the beginning?

So our story starts with my two co-founders, Kendra and Etosha, who both did their PhDs studying electrocatalysts for CO2 conversion at Stanford in the same lab. I met Etosha at the student space club, that’s where we first got to get to know each other, and then the three of us got together to translate this fundamental knowledge about what makes a good catalyst into a product, into a carbon transformation device. And so that was the founding technology vision for Twelve.

Our mission and our vision was to put a dent in climate change by turning CO2 back into useful products and the technology to enable that is this very efficient, very scalable device that takes CO2 water and electricity and makes many of the things that are currently made from fossil fuels. So it’s a way of recycling emissions.

If you look at the process you had in the beginning, how different is it to what you have now?

We’ve made a lot of advances. It’s many orders of magnitude more efficient and durable and in terms of throughput capacity, we started with something that was the size of a postage stamp and the first part of our existence as a company was just pure invention. We didn’t know if this technology would be able to meet the performance targets we would need to get to, but it was worth pursuing this and trying — because it could have a really big impact if it worked.

And so through many months of experimentation, we had our kind of initial breakthrough, but since then, we’ve really scaled it up and improved the performance of the system, because ultimately we’re making something that can compete with fossil fuels. This industry has been developed for a long time, so we need to make something that has really high performance.

That’s the core of Twelve — it’s around the technology and we’ll always be continuing to improve it, but we’re now at the point where we can start introducing commercial products into the market.

You mentioned before the interview that you were visited by some people from Climeworks guys in 2017. 

Yeah.

How did the funding environment in your experience change from 2017 to 2021? You recently announced a quite impressive funding round — what change did you experience?

Completely, it’s a totally different funding environment now. You know, in the early days of Twelve, it was much harder to raise funding. It’s still hard. Let me say it this way, it’s still hard to raise venture capital for a new deep tech company that’s targeting big industrial sectors. I’d say in the last 9 to 12 months, there’s been a huge shift and you’re starting to see a lot more institutional investors, big private equity funds, get involved in climate tech. And that was not the case when we first starting, I think there was still a lot of, at least in Silicon Valley, there were a lot of venture capitalists with a lot of money and you know, the 2008/2009 timeframe from biofuels deals that didn’t work out, solar fuels deals, so there was this narrative of you can’t make money in clean tech. And really, 99 percent of the capital is focused on software, not hardware, and especially not industrial hardware.

There are still some investors who focus on that and specialize in it, and I think they’re now in a really good position because they have a track record of doing this. That’s some of the investors we have, like Capricorn or DCVC. But it’s a limited pool of capital, and now I’d say there’s a lot more opportunities for climate entrepreneurs to get funding. At least to get started. You really have to make a lot of progress in order to get growth capital. That bar hasn’t changed, but at least to get started for a new climate tech idea, I think it’s a really positive environment relative to when we first started.

Do you think it would have been more difficult to keep the company going and to raise this funding if you weren’t in Silicon Valley, San Francisco? Do you think it’s a great location for climate tech companies to be HQed in?

It’s hard for me to say what it would be like in other places.I think there’s pros and cons, I think that Silicon Valley is an amazing place to start a company, it’s a great place to attract and find talent. There’s a lot of companies with talent around electrochemistry or coding technologies, even something like semi-conductor space that are relevant to what we’re doing, so those are all pros. And the fact that you do have a lot of investors here is really beneficial as well.

I think in general though, still for Silicon Valley, the main focus is on software. So you have to target investors who are excited about hard tech.

What sort of product do you sell to whom, if you had to explain it in simple terms? Are those separate products with several groups of customers or how can they think about it?

You could think about it as CO2 conversion as a service. So we install our technology. We put it at a manufacturing plant and we take their CO2 emissions, either generated from their processes or in the future we can take CO2 that’s been captured through direct air capture, like with Climeworks. And then we turn that CO2 into feedstocks that those manufacturers are already using in order to make finished products.

Today they’re using fossil fuels to make those feedstocks, whether it’s to make lenses for your sunglasses or foam for your running shoes, we can make the same ingredients from captured CO2, instead of from fossil fuels. That’s where our device goes in at the manufacturing site. And we’re basically replacing the way that they get their manufacturing inputs today. So that’s the main place. And that’s kind of the industrial customer set.

We also have ultimately downstream from those manufacturers, there are a lot of brands who are looking for sustainable materials without compromising quality. And so we’re making big changes to their supply chain. So that’s why we’re also interacting with partners like Mercedes and Procter & Gamble which ultimately are incorporating those ingredients into their products.

We have industrial customers where we are integrating a device and then we have brand customers who are using the CO2-made materials that our process enables.

For industrial plant owners, how does your business model work? Does the owner get a cut of the product you produce and sell or does he pay you for reduced emissions or how does he pay for your service?

Ultimately the products that we’re making from CO2 have value and so we’re selling back those refined products. So removing the CO2 and then selling back a clean, upgraded product.

If you go two years or three years into the future, on how many plants do you hope to be active with this device?

I can say geographically, you’ll see us deploying in North America and Europe. And I think you’ll see plants in a few different sectors. You can already see from our existing customer collaborations that we have partnerships in the automotive space, in the home goods space, and in a couple of other sectors that we’ll be announcing soon. And so I think you’ll see a range of different industrial applications where people will be able to buy products now where the carbon in them comes from CO2 instead of from oil.

I’ll give that as the answer: A couple of target geographies to start in a range of different sectors.

Does it make sense for company’s plant owners to reach out to you? Do you have capacity for those inbound requests or is it something where you, for the foreseeable future, have enough pilot projects and can’t even process any interest?

We’re talking to inbound requests and creating a roadmap for the timeline for us to deploy those facilities.

If you look at one sort of type of factory, where does it make the most sense to install a Twelve device? Is it a cement factory?

Where we’re seeing a lot of interest are customers who both have CO2 emissions and have demand for the products that we make from CO2. So that it’s like a closed loop. We can take their CO2 and turn it right back into material that they already need at that same location, before the emissions reach the air.

So that can be for materials, chemicals, and fuels. All of those categories do. Something like cement is also interesting for us to talk to. In that case, they might not have a direct application for the material, but we can partner with them to turn them into a product that we then sell to someone else nearby.

You recently raised $55 million. What are the main challenges you are having to scale the company or develop the product? What’s most important now?

One analogy we make for how our technology scales is — it’s kind of like a solar panel. So we have this core reactor that’s about the size of a suitcase and you can think of that as our solar panel. And so then to make a large capacity system, you would combine multiple modules together, just like you deploy a solar farm made up of many different panels. This funding round, we’re now building a final sized panel and scaling up our manufacturing to produce multiple panels, multiple core reactors, so we can start to do large projects with customers. That’s the roadmap ahead with this funding.

And then over time, we’ll introduce new catalysts which allow you to make other products from CO2. Eventually we’ll have a kind of platform of different molecules that you can make from CO2 really at any scale of demand.

Do you have any opinion if this manufacturing should ever be done by a third party or licensed out? Is that something you’ve already thought about, or would you always want to do it yourself?

At least for the medium term, we plan to keep it inhouse. There’s a lot of IP related to the manufacturing process, and especially early on I think it’s important for us to retain all of the learnings and also have the speed of iteration to always incorporate the latest and greatest innovations. For the medium term we’ll keep it inhouse, for the long term there’s always a number of options, where the goal is just to be able to make as much product as possible. We’ll evaluate the right pathway at that point.

If new engineers — potentially inventors — come out of university, where should they go, what’s the best place where they should apply their knowledge and motivation? Should they go into carbon removal? 

I think broadly looking at solving climate change through technology is the imperative for humanity and I think by pursuing a career using technical skills to develop new technologies that are going to help address climate change you’ll feel very aligned in that your work will have — I’m speaking from personal experience — every day I wake up and I go to work and I feel great and aligned and motivated because I know every moment that I spend on Twelve is advancing us towards something that could have a positive impact for the planet.

I do think this is not just about profit, it’s also about the impact and the world that we leave to our children, honestly to ourselves, the timeline is so short. There’s a very tight timeline to address this. One of our core beliefs is that it takes everyone. And so even within carbon transformation we have partners upstream on the CO2 capture side, we have partners downstream who can take our materials and create the finished end products. And there’s the renewable energy that powers our devices. So we need a whole ecosystem of motivated technical people addressing climate change from every possible angle. We need everybody, all oars rowing together. And obviously, Twelve is a very exciting place so they should certainly take a look at our careers page.

What company size do you think you are going to grow within the next 12 months? 

Maybe say over a hundred employees.

There’s a lot of positions you’re looking to find people for. That’s the good news. 

Yeah.

A lot of demand is probably driven by policy. If you could enact or suggest one policy in the US, what would you suggest or enact?

I think that the existing policy in California called the Low Carbon Fuel Standard is a pretty nicely designed and rational approach where you get points based on the calculated CO2 emissions reduction per unit energy of your new technology, relative to a fossil baseline. It’s not just a fixed amount, you get rewarded by creating an even more sustainable pathway. That type of policy, if deployed more broadly, and if expanded to include not just fuels, but also chemicals and materials. I think that’s a really nice way of being able to have incentives that go down to the technology level.

I also think having specific policies that highlight the idea of carbon transformation as opposed to CO2 storage or say enhanced oil recovery, would really accelerate the space. Ultimately, what we see is our carbon transformation technology long term creates kind of a sustainable carbon loop. We still need carbon, we just don’t need to get that carbon from fossil fuels in the ground. And by using CO2 to make those products, and then recycle that carbon once again, once we’ve used them, that creates this permanent loop that gets us off of fossil fuels. If there’s policies that can emphasize that, I think that will be important to the long term objectives for society.

When are the first consumer products that have Twelve materials in it available?

This year. The PANGAIA Lab x Twelve glasses, for example.

Do you think some technologies in climate — or cleantech in general — don’t receive enough attention?

I’m always interested to follow the latest developments in power generation. There’s this discussion of the electrification of everything, and that’s very true, and maybe even more expansive than people think, in that in some ways our technology is allowing you to electrify materials or electrify fuels, or electrify chemicals, which means that we just need even more clean power. And so thinking about both power generation technologies, whether renewable or nuclear fusion, as well as transmission infrastructure, in order to move clean electrons from one place to another. I think all of that will underpin many other technologies, whether it’s direct air capture, carbon transformation, like we’re doing, or many of the other things that are transitioning toward being fully electrified. The base infrastructure we need is clean power. So I think that really underpins all of this.

Looking back, what would you do differently today starting a company, if you had to do it again?

Maybe just one thing that I think we’ve done well that I would emphasize and maybe do even more of even earlier, is getting early customer engagement. So getting the whole value chain together, like we did with Mercedes, for example, where we worked with them and with their parts supplier and the whole value chain for making the polymers. That was a really important way of showing how our technology could integrate into the value chain in a way that’s just so concrete for people to understand. More than just describing electrochemistry or things like that. Having a tangible product I think is really important. So the advice that I would give to new clean tech founders is, what is the way that you can, as quickly as possible, manifest your technology in a way that people can really grasp? And then from there, imagine how it scales.

Nicholas, thanks a lot for the interview. Have a very good day in the Bay Area!

Thanks — specifically we’re based in Berkeley.

That has a very progressive ring to it.

Good place for a climate startup. It’s really close to Lawrence Berkeley National Lab, which is a very important energy research center. So it makes a lot of sense for us to be there.