How VCs think about deploying reserves & follow-on funding + Quaise CEO Carlos Araque | E1546

TL;DR

Quays Energy is developing millimeter wave drilling technology to tap into the vast reserves of deep geothermal energy. This clean and reliable energy source has the potential to revolutionize the energy transition and provide scalable power globally.

Transcript

all right happy sunday everybody welcome to the podcast no day of rest none none that's right it's sunday we got a great vc sunday school we're going to talk about the nitty gritty of deploying your reserves and how vcs recycle the first set of reserves to put into their big winners it's a great segment marlin have a great discussion yeah this is h... Read More

Key Insights

• ✊ Deep geothermal energy has the potential to be an abundant and reliable source of clean power.
• 👋 Quays Energy's millimeter wave drilling technology is a breakthrough in making deep geothermal energy economically viable and scalable.
• 🫢 The transition to deep geothermal energy could provide a pathway for the oil and gas industry to transition to a more sustainable and profitable sector.
• 🍉 The commercialization of deep geothermal energy is expected to occur in the 2030s and beyond, making it a long-term solution for the energy transition.
• 👨‍💼 Quays Energy's business model focuses on selling energy rather than the technology itself, positioning them as an energy company rather than a drilling services provider.
• 💨 Land and resource intensity of deep geothermal energy is much lower compared to other renewable energy sources like solar and wind power.

Questions & Answers

Q: What is deep geothermal energy and how does it differ from traditional geothermal energy?

Deep geothermal energy refers to tapping into heat sources deeper beneath the Earth's surface, typically beyond 3 miles. Traditional geothermal energy relies on hydrothermal systems near the Earth's surface, while deep geothermal involves drilling to access higher temperatures that can generate electricity.

Q: How does Quays Energy's millimeter wave drilling technology work?

Millimeter wave drilling uses electromagnetic sources to heat up the drilling process, enabling access to deeper and hotter geological formations. Quays Energy is developing machines that can effectively drill to the necessary depths and temperatures for deep geothermal energy extraction.

Q: What are the advantages of deep geothermal energy over other renewable energy sources?

Deep geothermal energy offers several advantages, including its reliability and scalability. Unlike solar and wind power, which are intermittent, deep geothermal is available 24/7 and can provide a consistent power output. Additionally, it has a smaller land footprint and can potentially repurpose existing oil and gas infrastructure.

Q: How does Quays Energy plan to commercialize deep geothermal energy?

Quays Energy aims to become an energy company that sells kilowatt hours or BTUs of steam and/or electricity generated from deep geothermal sources. They envision repowering existing power plants by replacing traditional steam boilers with steam from deep geothermal sources. They also plan to explore partnerships with emerging industries like hydrogen production or green steel and cement manufacturing.

Summary

In this video, the host discusses the nitty-gritty of deploying reserves in venture capital and the concept of recycling returns. They talk about how VCs can use their reserves to invest in their top-performing companies and the importance of budgeting investment dollars. The host also interviews Carlos Araki, the co-founder and CEO of Quays, a company that is developing drilling systems to access deep geothermal energy. They discuss the potential of geothermal energy and the technology behind it.

Questions & Answers

Q: What is the significance of reserves in venture capital?

Reserves in venture capital refer to the funds that are set aside by VCs after making initial investments. These reserves are meant to be used to invest in the top-performing companies in their portfolio.

Q: How do VCs decide when to use their reserves?

VCs typically look for companies within their portfolio that have the potential to be breakout successes. They consider factors like the company's growth trajectory, subsequent funding rounds, and their own confidence in the company's potential.

Q: What is the concept of recycling returns in venture capital?

Recycling returns in venture capital refers to the practice of reinvesting the returns obtained from successful investments back into the fund. This allows VCs to allocate more capital to their top-performing companies and maintain their ownership percentage.

Q: Why is it important to budget investment dollars in venture capital?

Budgeting investment dollars is important in venture capital because it ensures that there is enough capital available to make follow-on investments in promising companies. This involves making strategic decisions about how much capital to allocate and to which companies.

Q: How does Quays plan to unlock deep geothermal energy?

Quays is developing drilling technology called millimeter wave drilling. This technology repurposes advancements in plasma science and uses electromagnetic sources to drill deep into the Earth's crust to access the heat needed for geothermal energy.

Q: What are the advantages of deep geothermal energy?

Deep geothermal energy is reliable and scalable. It is always available and can be accessed globally. It offers a clean and abundant source of energy that can help transition away from fossil fuels.

Q: Why did Carlos choose to focus on geothermal energy?

Carlos chose to focus on geothermal energy because of its similarities to the oil and gas industry, which he had prior experience in. He saw the potential for the oil and gas industry to transition to geothermal energy and wanted to be a part of that.

Q: What is the technology behind millimeter wave drilling?

Millimeter wave drilling uses higher frequency electromagnetic waves to heat up the rocks deep in the Earth's crust. This technology has been repurposed from advancements in plasma science and fusion research.

Q: How does Carlos convince investors of the potential of deep geothermal energy?

Carlos emphasizes the urgency of the energy transition and the need for new technologies like deep geothermal energy. He presents it as a high-risk, high-reward opportunity with the potential to become a trillion-dollar company.

Q: What is the current stage of development for Quays?

Quays is currently in the process of building machines for drilling deep geothermal wells. They are working on improving the technology and plan to demonstrate its effectiveness in the field.

Takeaways

Investing reserves and recycling returns are crucial strategies in venture capital. VCs need to carefully budget their investment dollars to ensure the best allocation of funds. Deep geothermal energy holds the promise of a reliable and scalable clean energy source. Quays is developing millimeter wave drilling technology to unlock this potential. The high-risk nature of deep geothermal energy is balanced by its potential for massive rewards in the trillion-dollar range.

Summary & Key Takeaways

• Quays Energy is working to unlock the potential of deep geothermal energy, which is an abundant and reliable source of clean power located just a few miles beneath the surface of the Earth.

• The company is developing millimeter wave drilling technology, which will allow them to drill deep into the Earth's crust and access temperatures of 300 to 500 degrees Celsius.

• By repurposing existing drilling technology and leveraging advancements in the field of plasma science, Quays aims to make deep geothermal energy economically viable and scalable on a global level.