4 Insights from Investing in Windfall

I am excited to share Windfall Bio, emerging from stealth today.

Windfall converts methane emissions from dairy, agriculture, oil and gas into high grade organic fertilizer. Mayfield incubated and led the inception round of $9M in late 2022. The following are some takeaways from Windfall that can be applied by entrepreneurs fighting climate change.

Solving methane buys decades for us to win the climate war

Josh Silverman holding a methane meter in a dairy barn showing dilute methane measurements

I hadn’t really heard about methane until last year. And certainly not as the molecule with a gun to the planet’s head. Yet I began to learn that around the world, 24 hours a day, a gas known as methane is belched, farted, released and seeped from livestock, chickens, gas generators and pipelines into the sky, where it spends about 20 years trapping 85 times more heat than CO2. These methane emissions are the unknown front line super-villains of climate change. According to a study published in the journal “Environmental Research Letters” in 2021, reducing methane emissions by 45% by 2030 could help to avoid about .5C degree of global warming by 2045 – a significant slowing of the temperature rise, buying humanity decades to win the war on climate change. Well, let’s go after methane then.

Of course, there is a catch. Most methane emissions are 100ppm (parts-per-million)-1000ppm at the source of emission. For contrast, the critical point of runaway global warming is 400ppm of CO2 in our ambient atmosphere. So this methane is incredibly dilute. Because of this, dilute emissions are nearly impossible to capture and cannot be burned off. Trying to use it for fuel is inefficient since concentrating it is far more expensive than using natural gas – which is a whopping 900,000ppm. People have so far focused mitigation efforts on limiting natural gas use and stopping cows from belching methane. Neither work because society wants and needs milk, meat and heat. So the world’s worst greenhouse gas goes up, up and up while we all run out of time.

If we don’t bend the curve of warming soon, widespread loss of life and hospitable zones will occur – from the 2023 IPCC report

Josh Silverman, serial entrepreneur, founder of Calysta, and the world’s leading methane-eating-microbe (methanotroph) scientist had the insight that evolution created a perfect solution for capturing this dilute methane. Methanotrophs, his life’s work. Methanotrophs emerged early in the planet’s evolution as simple bacteria that ate the most abundant energy source, the methane seeping from the oxygen-poor vents and rocks. As methane levels fell, they evolved to capture whatever was available. Today, they efficiently catch stray methane and use its energy to grow – exactly how plants and trees got really good at using dilute CO2 to grow over thousands of years. Together, they form the backbone of our ability to control greenhouse gas sequestration. So back to dilute methane. How can these tiny methane eating bacteria help us?

By literally eating dilute methane emissions at their source. Up to half of methane emissions are dilute forms emitted from agriculture, oil and gas operations. Dairy herds, swine manure piles, cattle, chicken coops – they all produce enormous amounts of dilute methane. Methanotrophs, Josh reasoned, can be harnessed to capture this methane and use it as food to grow, making them our best front line soldiers in the war on climate change. 

His proposal was to pipe the dilute methane from the dairy barns and sheds into simple containers and compost that housed the methanotrophs in conditions similar to their natural environment. There, they feed on the methane and pull nitrogen gas from the air to make their amino acids. This process creates a high quality biomass that plants naturally use for nutrients, creating a win-win situation. Methane from dairy herds are destroyed while creating organic food for plants. The wedge market is dairy since they have no methane solutions and the milk they produce can become more climate friendly.

His proposal was to pipe the dilute methane from the dairy barns and sheds into steel containers that housed the methanotrophs. 

Make a better fertilizer not a new product

Last summer, on a misty, cold and drizzling day I was walking to the newest volcano eruption in Iceland. It had erupted just a couple days prior, and only a couple thousand people had trudged their way across the virgin Icelandic landscape for almost 10 miles, across untouched lava fields covered with inches-deep fields of moss. I kept my head down during most of the hike to avoid the rain and wind stinging my face, giving me plenty of time to study the narrow path getting trampled through the moss. 

It struck me then. The underlying igneous volcanic rock was being pulverized into a mixture with the moss being ground together underfoot, speeding hundreds of years of rock weathering into an afternoon. I was watching volcanic rock become dirt mixed with ground up moss, the nitrogen, phosphate and potassium, amino acids and fats serving as a nutrient-rich base mixed for the volcanic particles. This, I realized, is fertile soil. Primordial soil, the way soil evolved on our planet. And from this new fertility, seeds can gather needed nutrition and become towering plants and trees. And it all started with microbes, lichens, algae and mosses growing on the cooling surface of Earth.

Icelandic rock and moss turning to soil while hiking to Geldingadalur

Methanotrophs, Josh realized, can do the same job as the moss. By using methane as the carbon and energy source, Josh’s proposal of growing methanotrophs in dirt would create high quality organic fertilizer while eliminating the methane from our atmosphere. It happens like this. As the methanotrophs eat the methane, they double, and double and double. Every time they double they are pulling nitrogen from the air, and tearing it apart to make amino acids. These nitrogen-rich amino acids enrich the dirt and become readily available as food for plants. 

The resulting fertilizer is different from the synthetic pure ammonia used today. It is organic biomass and so resembles pre-industrial age soils, which are healthier and more fertile than those of today. 

Farmers buy fertilizer, so the best product to sell them is a better fertilizer, rather than something they are not used to buying. Farming is a very low margin, difficult business so farmers want to minimize risk. By offering them a replacement product rather than a new one, Windfall will shorten the sales cycle, and provide a faster go to market strategy.By offering them a replacement product rather than a new one will shorten the sales cycle, and provide a faster go to market strategy.

Great people want to work with other great people

The early Windfall team onsite at a dairy farm

I got to know Josh through my friend Tom Baruch, legendary climate investor and senior advisor to Breakthrough Energy Ventures. He introduced us knowing Josh wanted a partner to work through commercializing his methanotroph idea. I was game. 

The first step was really understanding the problem and its extent. The second was examining the proposed solution and the bench scale prototypes that gave us confidence in the technology. Together we worked on the business assumptions, and the go-to-market strategy. What emerged was a simple pitch deck, compelling enough to get good people excited. We funded Josh to build Windfall in October 2022. Things went fast after that. 

Recruiting the best team to execute the vision was next. The steps to build the team were in two parts: first, identify the core skill sets needed for the seed milestones, then find the best people with those skills.

Josh at work on methanotrophs

Jordan Smith, an engineer with decades of experience designing anaerobic digesters (bioreactors for organic waste eating methanotrophs), signed on first. Carla and Judy, both previously senior scientists at Calysta, have spent their careers becoming methanotroph whisperers. The yin to Josh’s yang arrived in Frank Crespo, former Chief Procurement Officer at Caterpillar and former Chief Supply Chain Officer at IndigoAg as Windfall’s COO to make sure the operational plans were focused and realistic. Steve Chu, former secretary of energy and Nobel laureate, joined the advisory board along with top USDA/EPA regulatory expert Daniella Taveau. Louis Stenmark, their marketing associate, is also an Olympian track athlete, competing for Australia in the 2024 Olympics. Tom Baruch joined the board. As the team came together, the agricultural industry started hearing about Windfall. Cavallo, the VC arm of Wilbur Ellis (largest agronomy company in the country) invested. TetraLaval, the world’s manufacturer of milk cartons and dairy equipment, invested. SOSV/HAX invested to enable mass manufacturing of the sensor enabled steel boxes. The company, advisors and investors are aligned and committed. 

The best sustainability company is the best product company

Rendering of the simple container fertilizer bioreactors

Josh worked out a critical insight early on. Synthetic biology fails when you try to use high tech to build a low tech product. His answer to make a better fertilizer was less technology, not more. Scaling up synbio companies requires a cathedral of steel and pipes hooked up to cauldrons of bubbling bioreactors, engineered to get organisms to make something they normally don’t. In contrast, for Windfall he designed a box filled with dirt and bacteria, and that’s about it. This creates high gross margins since there are few costs. With the price of dirt being cheap and organic fertilizer being around $900/ton, there is a lot of room to build a profitable business. 

The farmer wins. They get methane free milk. See, they want to sell their products to consumers who have woken up to the carbon footprint of dairy. Dairy is under attack, from almond milk, oat milk, and more. A carbon friendly seal of approval on cheese and milk products will help win those consumers back. The farmer wins again with access to a more natural, lower cost, live organic fertilizer. And the planet wins. It gets primordial soils back, land that is more harmonious with nature and a reduction of methane, cooling our planet and buying us time to win. 

Concept art of a label communicating the value of methane free milk

The long term vision of success is a decentralized manufacturing network of live fertilizers across the country which creates a resilient food supply chain, impervious to regional or global disruption. Which is important because when food does not cross borders, armies will.

The idea that capitalism is required to fight climate change may seem odd. Or even inflammatory. But customers will buy products based on self interest. So the best sustainability companies are also the best product companies. Which is why Windfall is focused on innovating and delivering better fertilizer for farmers.

You May Also Enjoy