Why Toniic members invested in Fervo Energy’s $244M Series D

Geothermal Energy is energy produced from heat that is generated within the Earth. Geothermal energy is a clean, renewable resource that can be harnessed for use as heat and electricity.

While the United States is the country which generates the most geothermal electricity in the world — about 3,692MW in 2021 — geothermal energy currently accounts for only 0.4% of electricity generation in the country.

Less than 0.7% of geothermal electricity resources has been tapped and the US Department of Energy estimates that there may be over 100 GW of geothermal electric capacity in the continental U.S.

Fervo Energy

Fervo is looking to change the paradigm of geothermal energy production from a niche, geographically-constrained industry to a ubiquitous resource capable of supplying up to 20% of total US electricity demand

Geothermal energy production is currently limited to geological formations with a combination of near-surface heat and inherent rock permeability. These geologies allow sufficient flow of water through the thermal reservoir to allow economical heat extraction. Such rock formations are rare and have largely already been developed for energy production.

Fervo Energy is a company which provides 24/7 carbon-free energy through the development of next-generation geothermal power.

Fervo’s technology is based on leveraging Oil & Gas well stimulation technologies to generate high permeability in near-surface “hot dry rock” formations with low inherent flow capacity. This approach could greatly expand the geological ubiquity of geothermal electricity production and significantly lower the Levelized Cost of Energy (LCOE) vs. conventional resources.

Fervo’s mission is to leverage innovation in geoscience to accelerate the world’s transition to sustainable energy. Geothermal has a major role to play in the future electric grid, and Fervo’s key advancements in drilling and subsurface analytics bring a full suite of modern technology to make geothermal cost competitive.

Fervo has established itself as the leading company in enhanced geothermal systems (EGS) development. The company is looking to change the paradigm of geothermal energy production from a niche, geographically-constrained industry to a ubiquitous resource capable of supplying up to 20% of total US electricity demand.

• Unlike some sources of low-CO2 electricity (e.g. wind, solar), geothermal energy is non-intermittent and can provide both base load supply as well as matching power for intermittent renewables
• Offtake agreements are structured as long-term PPAs with utilities and private companies, allowing predictable cash flow and conventional project finance

Fervo recently completed its first pilot-scale production well (Project Red) adjacent to an existing Cryq geothermal plant in northern Nevada. A 30-day trial validated water temperature and flow rates sufficient for electricity production using conventional binary cycle turbine technology.

Fervo connected the 3.5-megawatt power plant to the Nevada grid and will power Google’s data centers in the state.

Fervo has also begun drilling at Cape Station, a 400 MW project in Beaver County, Utah. Early drilling results show reduced drilling times and lower costs that significantly exceed Department of Energy expectations for enhanced geothermal system (EGS).

Fervo’s Series D

Fervo recently announced the closing of their $244M series D

Between 2019 and 2022, Fervo raised Series A, Series B and Series C rounds, for a total of over $150M. Investors include BHP Ventures, Breakthrough Energy Ventures, Impact Science Ventures, Congruent Ventures, Elemental Excelerator, Capricorn’s Technology Impact Fund, DCVC and Prelude Ventures but also early angel investors including Jeff Bezos, Richard Branson, Bill Gates and Masayoshi Son.

Fervo recently announced the closing of their $244M series D, led by Devon Energy. Other investors include Galvanize Climate Solutions, John Arnold, Liberty Mutual Investments, Marunouchi Innovation Partners, Mercuria, and Mitsubishi Heavy as well as many existing investors, including Impact Science Ventures.

The fundraise will support Fervo’s continued operations at Cape Station, which will begin delivering clean electricity to the grid in 2026.

Toniic, Impact Science Ventures and the Fervo SPV

I identified Fervo as the leader — using Horizontal drilling technology to unlock geothermal energy — and Toniic found a way into the SPV

Last december, Toniic member Jim Fournier — a private investor who’s developed a detailed personal investment thesis focused on Climate has the existential challenge of our time — shared with the Toniic Investment team that Fervo was one of 3 “indicator” companies that solves a core problem with a fundamental solution in materials / energy. Jim shared that he would consider investing if Toniic was able to find coinvestors setting up an Special Purpose Vehicle (SPV) for Fervo’s Series D.

Jim Fournier:

“As solar prices continue to fall, dispatchable power and storage are the next huge opportunity. My father was a geochemist who invented key geothermal prospecting tools doing pure science, so I grew up knowing that hot dry rock could scale. Horizontal drilling technology from oil and gas finally unlocks that. I identified Fervo as the leader, and Julien from Toniic found a way into the SPV.”

Fortunately, thanks to our network of climate VC funds, notably funds that have taken part in Toniic’s fund program before, we were able to reconnect with the Impact Science Ventures team, which was putting together an SPV for their LPs.

Impact Science Ventures (ISV) is a Deep tech VC fund commercializing science-based innovations produced by the world’s top scientists across critical impact sectors. ISV had been featured in Toniic’s Fund program previously and successfully secured funding from two Toniic members. ISV has been an investor in Fervo since 2022.

Along with an investment from their fund, ISV also set up an SPV to enable their existing LPs as well as other investors to participate in the deal.

Robert Ethier, Impact Science Ventures:

“We already have several Toniic members in our fund and given the alignment in our investment theses, it made perfect sense to bring this deal to the Toniic membership.”

With the Series D closing in late January, the Toniic team quickly put together a deal memo, which we circulated within the Toniic community. We hosted the Impact Science Team on a call in mid-January for them to share their views about Fervo, the energy sector, their technology, market, impact potential as well as financials and return prospects.

A total of 3 Toniic members ended up committing to the SPV, filling up half of the allocation.

Rob and Ashley Craig also shared:

“We have followed Fervo for the last few years as a leader in new geothermal technology, leading the transition from fossil fuels to a carbon-free economy. We were excited when Toniic brought up the unique opportunity to invest alongside Impact Science Ventures. Fervo has a first mover advantage with cost-competitive sites, and is moving forward with the commercialization of its first projects so is at a key inflection point for significant value creation.”

About Toniic:

Toniic is a global community of private asset owners seeking to steward wealth and use influence to enable a thriving world. Our members — more than 500 high net-wealth individuals, family offices and foundations from more than 25 countries — are active impact investors and philanthropists, for whom Toniic provides education, investment opportunities, impact support, events, and community. Toniic also seeks to build the field of deep impact investing, moving money and mindsets and leading by example.

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