(Re)Introducing Khasma Capital: Bridging the Missing Middle in Climate Financing
In 2021, we founded Nexus Development Capital to address a critical funding gap in climate finance — what many now refer to as the “missing middle.”
While billions of dollars have poured into climate initiatives, most funding targets either venture-backed new technologies or shovel-ready large-scale infrastructure. Low-carbon projects that rely on proven technologies but are too early-stage or lack the scale to attract infrastructure investors are often overlooked.
After three years and nearly fully deploying our $50 million Fund I, we rebranded to Khasma Capital in 2024. Named after the Greek root khasma, meaning “chasm” or “gap,” our name reflects our mission to bridge the divide between available capital and the urgent needs of climate-critical projects.
Bridging the Missing Middle in Climate Infrastructure Financing
While climate technology has advanced rapidly, many first-of-a-kind (FOAK) and early-stage climate infrastructure projects never come to fruition due to a lack of capital.
This is especially true for those lacking either the explosive growth potential that venture capital typically seek, or the minimal risks that traditional infrastructure investors typically seek.
Venture investors look for rapid scalability and returns, whereas infrastructure investors prefer stable, cash-flowing assets. Early-stage climate infrastructure projects are often too mature for venture capital and too nascent for traditional infrastructure funds.
At the root of the challenge is the very nature of infrastructure projects. They require significant capital to build, test, and deploy. For developers, securing ongoing capital is an unavoidable requirement, unlike the minimal capital needs of other sectors such as software.
These challenges inspired us to launch our first fund with a strategy specifically designed to support these transformative projects through early development stages.
Our approach to solving the issue in the “missing middle” is to invest within two sectors:
Circular Economy: Waste Biomass Utilization, Waste Heat Recovery, Municipal Solid Waste Recovery, Industrial Water Treatment, Renewable Natural Gas
Emerging Energy Transition: Alternative Battery Materials, Carbon Capture & Utilization, Domestic Mineral Upgrading, Geothermal Energy, Hydrogen, E-Fuels, & Hydrogen Derivatives
These are industries with tremendous potential but high early-stage requirements.
We work with project developers to de-risk these projects, enabling them to attract larger-scale funding and successfully reach commercialization.
The Current Climate Finance Landscape
Climate tech investments peaked at $120 billion in 2021, but declined in 2022 and again in 2023. One reason startup investments are back to where they were five years ago — in addition to external factors like inflation and rising interest rates — are the scaling challenges that come with early-stage technology:
- Many developers of low-carbon technologies lack the capital resources to bring projects to a shovel-ready state.
- Projects often need support to meet new regulatory requirements and integrate innovative technologies into existing systems.
- Developers encounter complex challenges, from securing permits to sourcing sustainable materials, which can slow the path to commercialization.
This is where Khasma’s focus lies.
We provide the crucial development capital needed to bridge these early hurdles, de-risk projects, and make them appealing to later-stage infrastructure investors.
By stepping in when traditional capital sources may hesitate, we accelerate the development of essential, capital-intensive projects that would otherwise be stalled.
Our Capital Investment Thesis
Khasma Capital’s approach is unique in the climate finance ecosystem, blending elements from both venture and infrastructure finance to deliver a tailored strategy.
Our thesis centers on the notion that impactful infrastructure projects need more non-traditional capital partners that are aligned with their growth goals and timeline. They need a partner who can provide technical expertise, industry insights, and network connectivity to help navigate early development.
Our Investment Criteria
- Business Model: We prioritize unique, low-carbon solutions with a pathway to profitability and robust unit economics.
- Technology: We focus on technologies that have exceeded major engineering and manufacturing milestones.
- Key Commercial Aspects: We require some project definition across traditional development workstreams.
- Management Team: We look for experienced, well-rounded management teams and are prepared to strengthen them with additional expertise where necessary.
Through our investments, we aim to help developers move projects through stages of critical risk management — FID (final investment decision) stages, permitting, securing feedstock, and finalizing offtake agreements — thereby increasing their appeal to later-stage funders.
Collaborative Investment for the Greater Good
The climate crisis is a complex issue and it will require unprecedented collaboration to solve. That’s why we’ve been diligent about growing our network of partners over the years, forming relationships with various stakeholders, from brokers and investment banks to EPC firms and accelerators.
By working symbiotically with these partners, we’ve developed a network that both sources promising deals and provides the resources project developers need to succeed.
We’ve seen the value of this approach with partners like SWITCH Maritime and Castlerock Green Energy.
SWITCH Maritime needed an early capital partner willing to understand the complexities of launching North America’s first hydrogen-fueled ferry. Our investment has helped make this pioneering project a reality, showing the impact of dedicated early funding.
“Khasma has been a strong partner through ups and downs and stepped in to support us at a critical point in our trajectory and enable us to successfully push through the final hurdles and commercialize our FOAK project. They helped us through a challenging regulatory approval process and have consistently guided and motivated us towards growth.”
- Pace Ralli, CEO, SWITCH Maritime
Similarly, in collaboration with Castlerock Green Energy, we are advancing renewable fuel production in the US, starting with a flagship project in the Katadhin region of Maine. At completion, this will be the largest project in the world to produce renewable fuel oil using pyrolysis of wood feedstock.
Join Us in Scaling Critical Low-Carbon Infrastructure
Khasma Capital is committed to bridging the climate financing gap and supporting the next generation of climate infrastructure projects. We see our role as more than simply financial — we are strategic partners who bring years of industry experience, sector-specific knowledge, and a track record of helping projects achieve scale.
As we look toward the future, we are eager to connect with developers, fellow investors, and industry experts who share our vision.
If you’re developing a project that aligns with our focus areas or if you’re an investor interested in collaborating to drive impactful climate solutions, we would love to hear from you.
