What it takes to build a first-of-a-kind climate solution

By MaRS Staff  |  July 24, 2026

The leap from prototype to breaking ground on a commercial production facility is a massive one. Here’s a look at the obstacles facing cleantech companies at this stage — and what can help them scale their solutions.

In the waters of Tufts Cove near Halifax, Planetary Technologies is using alkaline minerals to help the ocean absorb carbon dioxide. Having proven its technology and sold the world’s first ocean alkalinity carbon credits, the startup now faces a major hurdle: scaling up to early commercial production.

Planetary is far from alone. Across Canada, climate tech ventures are reaching the crucial stage of building their first-of-a-kind (FOAK) commercial plants. However, as scholars and investors have long warned, this "missing middle" is where many promising companies fail. Globally, climate tech ventures face a $150-billion FOAK funding shortfall.

Understanding the FOAK Challenge

A typical FOAK plant costs between $50 million and $200 million. Traditional venture capital (VC) is an awkward fit for these capital-intensive, long-timeline engineering projects, while conservative infrastructure funds view unproven technology as too risky.

This creates a "project deadlock":

• Investors want signed multi-year customer contracts before funding a plant.

• Customers refuse to sign contracts until the facility actually exists.

Beyond finance, startups navigating FOAK transition from refining tech to building a complex business—suddenly having to handle municipal permitting, supply chains, legalities, and insurance.

 Traditional Growth Model           Modern Modular Approach
┌────────────────────────┐        ┌────────────────────────┐
│     Pilot Project      │        │     Pilot Project      │
└───────────┬────────────┘        └───────────┬────────────┘
            │                                 │
   [ HIGH RISK LEAP ]             ┌───────────▼────────────┐
            │                     │  Pre-Commercial Demo   │
            ▼                     └───────────┬────────────┘
┌────────────────────────┐                    │
│   Full FOAK Facility   │        ┌───────────▼────────────┐
└────────────────────────┘        │   Full FOAK Facility   │
                                  └────────────────────────┘

Evolving Strategies and Solutions

To bridge this gap, a new generation of Canadian ventures is taking a modular approach. Instead of leaping straight to massive facilities, companies like Carbonova and Green Graphite are building smaller, pre-commercial demonstration units. These smaller sites prove unit economics and product quality, securing the early customer buy-in needed to unlock larger investments.

Support networks are also stepping in to reshape the financial landscape:

• Complex Capital Stacks: Programs like the MaRS First-of-a-Kind Lab help startups blend philanthropic first-loss capital, patient equity, project financing, and debt.

• Ecosystem Networks: Over 50 Canadian organizations—including VCs, government funders, family offices, and institutional investors—are working together to fund the transition.

• Regional Hubs: Provincial support, such as Ontario’s Hydrogen Innovation Fund and Alberta's favorable funding environment, is attracting international projects.

The Path Ahead

Significant hurdles remain—particularly slow regulatory environments where permitting can take up to 18 months, burning through limited capital.

Yet, pioneering companies like Hydrostor, Carbon Upcycling, and Svante prove that success is possible. By pairing modular scaling with blended capital stacks and streamlined regulatory processes, Canada is building a reliable playbook to cross the "missing middle" and commercialize world-changing climate solutions.