Episode Summary
Executive Summary: Jason Jacobs interviews Scott Jacobs, CEO/co-founder of Generate Capital, about building a permanently capitalized sustainable infrastructure company. Scott explains why traditional fund structures and short-term incentives fail climate infrastructure, and how Generate uses flexible balance-sheet capital, operations expertise, and aligned long-term investors to finance, own, and operate projects across energy, water, waste, and transportation.
Main Topics: Generate Capital’s structure and mission (Priority: 5/5): Scott describes Generate as a company, not a fund: permanently capitalized, balance-sheet financed, and designed to solve the long-term infrastructure needs of climate and resource systems while aligning communities, customers, investors, and project developers. Why traditional capital markets are broken for climate infrastructure (Priority: 5/5): He argues that short fund lives, fee-driven intermediaries, and short-term public-market incentives make it hard to finance long-duration, capital-intensive sustainability assets even when they offer strong risk-adjusted returns. Scott Jacobs’ career path and the origin of Generate (Priority: 4/5): Scott traces his journey from biology and civil rights law aspirations to tech, VC, consulting, McKinsey cleantech work, and ultimately entrepreneurship in climate, driven by an interest in people, resources, and systemic impact. Generate’s capital strategy and investor base (Priority: 5/5): The company rejects time-boxed capital and instead attracts permanent or long-duration investors such as family offices, foundations, sovereign wealth funds, and pensions who value aligned incentives and long-term returns. Operational model: one-stop capital and asset management (Priority: 5/5): Generate provides multiple forms of capital and also operates assets, bringing in-house expertise where needed and partnering where markets are mature, enabling it to support projects from development through long-term operation. Impact philosophy, screening, and reporting (Priority: 4/5): Scott says Generate only backs projects that materially advance resource productivity and sustainability, uses judgment on gray areas like nuclear or carbon removal, and reports impact using SASB without treating impact reporting as concessionary. System change, policy, and the future of fossil fuels (Priority: 4/5): The discussion closes on broader system change: the need for innovation, capital, customers, and policy; the importance of pricing pollution; and Scott’s view that fossil fuels should have no role by 2050 while carbon removal and better policy mechanisms become essential.
Key Arguments: Sustainable infrastructure requires a different capital model than venture-backed software or traditional private equity because projects are large, long-lived, operationally complex, and need flexible financing over time. Finite fund lives and fee-driven intermediaries distort incentives; a permanent company structure better aligns Generate with the long-term needs of assets, customers, and investors. The real economy wants long-term, contracted cash flows with reasonable risk, but capital markets often fail to deliver because of short-termism and structural friction. Generate’s integrated model—capital provision plus operations—creates a competitive advantage because it can solve both financing and execution problems for project developers. Impact and returns are not in conflict; Generate argues it has produced strong financial returns while delivering climate/resource benefits, proving sustainability can be economically compelling. The biggest system lever would be pricing pollution, but in the absence of strong policy leadership, private-sector companies must still move aggressively on their own. Customer demand, especially from younger generations, is a leading indicator of climate transition and is helping pull capital and policy in the right direction.
Data Points: MCJ membership community size: more than 1,300 members - Jason describes the My Climate Journey Slack community as a peer group for climate-focused people Generate team size: about 160 people - Scott says this is the current company size Generate balance sheet capacity: about $10 billion - Scott states the amount Generate can invest into projects and companies Latest equity raise: about $2 billion - Scott says Generate raised this amount earlier in the year, its largest capital raise to date Customers served: about 2,000 - Generate now serves customers relying on it for decarbonization, resilience, and cost savings Technology partners: 50 - Scott says Generate works with 50 technology companies and project developers Projects owned and operated: 2,000 projects - Scott says Generate owns and operates projects across the world Capital raise minimum ticket: $5 million - In Scott’s anecdote about an early investor, this was the minimum investment amount in Generate’s first round Early impact investor offer: $3 million - The investor initially offered this amount, below the minimum ticket Chemicals company savings example: $2 billion investment into $9 billion profits - Scott cites a client that invested $2B in energy conservation and generated $9B in bottom-line profit over six years Time horizon of those savings: over 24 or so quarters / six years - Context for the chemicals company example showing long-term ROI Year Generate founded: 2014 - Jason introduces Generate as founded in 2014 McKinsey cleantech practice period: 2007 to 2012 - Scott says he worked there during those years First major growth focus areas: battery storage, solar water heating, commercial and industrial solar, community solar - Scott describes early theses and market opportunities Hypothetical impact bucket minimum failure: $3 million offered vs. $5 million minimum - Illustrates Scott’s insistence on being judged as a normal financial investment rather than concessionary capital
Pivotal Quotes: "We had to have the flexibility that a balance sheet gives you to provide any kind of capital that these project developers and technology companies need." — Scott Jacobs: Explaining why Generate was structured as a company rather than a finite-life fund "We rejected all time-limited money." — Scott Jacobs: Describing Generate’s decision to exclude capital with fixed fund lives in order to preserve long-term alignment "The real economy and the financial economy aren't always perfectly linked." — Scott Jacobs: Discussing why high-quality climate infrastructure opportunities can be underfunded despite attractive economics
Implications: Generate’s model suggests climate infrastructure can scale when capital, operations, and incentives are aligned. For listeners and industry, the lesson is that durable structures, not just better technologies, may be key to speeding the transition.