#102 - Meet the Startup Transforming CO₂ Into Synthetic Fuels

Welcome back to The Tech Optimist, where innovation isn't just a buzzword, it's a blueprint for a better future. Today's episode kicks off with a story that sounds like a sci-fi cocktail recipe. Take carbon dioxide out of the air, add some hydrogen, and turn it into vodka? Jet fuel? Cleaning products? Yeah, we're serious. We're diving into this today. So, if you're ready for a journey from Brooklyn bars to Boeing runways, from startup grit to global impact, you're in the right place. But first, we're going to take a quick break for some ads and some disclaimers before we dive into the rest of the show.

Do you have a venture capital portfolio of cutting-edge startups? Without one, you could be missing out on enormous value creation and a more diversified personal portfolio. Alumni Ventures, ranked a top 20 VC firm by CB Insights, is the leading VC firm for individual investors. Believe in investing in innovation? Visit av.vc/foundation to get started.

As a reminder, the Tech Optimist podcast is for informational purposes only. It is not personalized advice, and it is not an offer to buy or sell securities. For additional important details, please see the text description accompanying this episode. Let's talk about the elephant in the atmosphere: carbon dioxide. It's the biggest driver of climate change, and we're producing it faster than the planet can even absorb it. The world's biggest industries— transportation, manufacturing, energy— are built on processes that emit massive amounts of CO2. And while there's plenty of innovation aimed at capturing carbon, The question remains of what do we do with it once we have it?

We're definitely standing on the shoulders of giants in a lot of respect, right? You know, over the course of the last many decades and beyond, there's been a lot of really incredible innovation when it comes to using deep technology and deep science and trying to use that for purpose-driven work. We've been very fortunate that over the course of the last, you know, 10 years, you know, having started the business about 7 or 8 years ago, that there's been a number of, you know, tailwinds that have helped us get to the point that we're at today. And so, you know, while we have definitely innovated from a technological perspective, it couldn't have been done without the work of all of our predecessors as well.

Instead of treating CO2 as a waste product, they treat it as a raw material. Using a technology that mimics photosynthesis, the same process plants use to convert carbon into energy, Air Company has developed a proprietary reactor that turns carbon dioxide, water, and renewable electricity into ethanol. And from there, the possibilities are vast.

And so, yeah, I mean, you know, carbon dioxide is an abundant feedstock. It's readily available and it's everywhere. And, you know, our business has been really built around, you know, how can we take, you know, a feedstock like carbon dioxide and how can we convert it into useful products for our future, essentially? And, you know, fuel being one of those, but also a number of chemicals that can be the building blocks for, you know, for a lot of other applications as well. And so over the course of the last 7 or 8 years, we've been really, really focused on taking CO2 and trying to utilize it in a way that can be useful.

Now that we've set the stage, it's time to meet the force behind the mission. Gregory Constantine is the co-founder and CEO of Air Company, the groundbreaking carbon tech startup turning thin air into everyday products. From sustainable jet fuel to high-end vodka, Greg and his team are reimagining what's possible with captured carbon. Before launching Air Company, Greg built a global career at Diageo, one of the world's largest alcohol and spirit companies, where he helped scale iconic brands like Smirnoff and Guinness. But he wanted to take that experience and apply it to something larger, something with purpose. And that is when Air Company was born. Since founding the company in 2019, Greg has been at the forefront of innovation in climate tech. Under his leadership, Air Company has secured major partnerships, including contracts with NASA and the US Air Force, and recognition from Fast Company, Time, and NASA iTech, just to name a few. Greg is a founder who thinks in decades, not quarters. He's building a future where carbon isn't the problem, but it's the solution. Guiding us through today's conversation is Ryan Musto, a senior associate at Alumni Ventures with a sharp eye for breakthrough tech and bold climate solutions. With a background that builds— that bridges academia, policy, and early-stage investing, Ryan brings curiosity, insight, and a real passion for innovation to every conversation. He'll be the one digging into the details, spotlighting the big ideas, and helping us understand how startups like Air Company are shaping an even cleaner future.

For sure. Maybe paint a picture for our audience of, um, if, if you guys step into one of your facilities, what does it actually look like? I'm talking like the hardware. Um, and how does it do what it does?

Yeah, so, um, it's, it's probably not your, your traditional looking facility, that, that's for sure. But I think if you think about a traditional refinery at scale. You know, that's kind of what we look like at that scale. Now, on the smaller scales, we definitely look a little more sci-fi, a little more high-tech. But when we get to scale, you know, we are very similar in a lot of respect to a traditional refinery in that respect. Now, how it works is we take carbon dioxide, we're agnostic on the source of CO2. So it takes CO2 from any source and we combine it with hydrogen. also agnostic on the source of hydrogen, right? We can, we can currently, we produce the hydrogen ourselves, you know, via a process called electrolysis, but we're agnostic to the source of the hydrogen. And when we combine the carbon dioxide with hydrogen inside our reactors, so inside our systems, the reaction that it causes creates or can create a number of different end products essentially, depending on the parameters in which you make that reaction happen and depending on the catalyst that sits inside the reactors as well. And so we've been very focused focused on commercializing a number of chemical technologies and ethanol and methanol technology, but ultimately on a pathway towards our now fuel technology, which has been, you know, the pathway towards what we're trying to get to today. And the reason why we've been working on, you know, technology like aviation fuel is, as you mentioned in the introduction, it's one of the, not only one of the largest sources of emissions, but it's also one of the hardest or deemed to be one of the trickier industries to decarbonize as well. And so by trying to create, you know, solutions like the ones that we're working on, we have the ability to have a really massive impact and hopefully one that can really help be the staple for a really successful business as well.

Yeah, that's for sure. And I would love to circle back at some point to that market and how you go after some of these big enterprise customers, both commercial as well as military. But before we get into that, now that we have a little bit of the grounding of kind of like what this looks like and what it does at the high level, would love to hear a little bit more about the origin story of AERCO because I think our audience is gonna find it really interesting. You guys always wanted to tackle SAF, which like I mentioned is a big, juicy, fast-growing market, but you had to start out with another exciting market, which is liquors and fragrances. You kind of foreshadowed that you guys work on a couple chemicals. Um, would love to hear about that origin story and, and, uh, so some of the anecdotes from, from the early stages of the business.

Yeah, for sure. Look, we really tried to tackle these beachhead markets because, you know, we looked at the, the failures essentially of a lot of other companies that have tried to scale these new and innovative, you know, chemical or fuel technologies. And they're very capital intensive. They take a long time, right? It's not a software business where you can scale almost instantly, right? Like you're innovating with science, you're putting steel in the ground and really building these facilities. So, you know, it takes time. And so when you're building a business essentially that takes time and a lot of capital, you need to be able to generate revenue along that journey as well so that you can continue to keep the lights on, but really help fund the research and development so you can get to that scale. And so Yeah, we took a pretty interesting approach, which is, you know, how can we use our R&D and how can we monetize it? And so our ethanol technology that we were commercializing as our first technology was exactly that, right? We looked at the industries where the price per liter of product is the highest and the volumes required is the lowest. And if you look at the beverage industry or the fragrance industry, or even some of the cleaning industries, you know, the price per liter of ethanol in these really high margin products is really, really high. And the volumes that you need is relatively low. Comparatively, right? Comparatively to, you know, things like aviation fuel. And so we entered into these markets for that exact reason, right? We're producing relatively small volumes and we want to generate revenue. And at a time, you know, in, you know, 2017, 2018, and 2019, kind of pre-pandemic, a lot of it was about education. Yeah. You know, how can we educate people and really show people that you can use carbon dioxide carbon dioxide as a feedstock in order to produce an end product and, and generate revenue from that product as well, which every business, which is the staple of any business. And so we put out, um, you know, a vodka product, a beverage product, a fragrance product, which all did really, really well in their own right. You know, the, the vodka product won Time Magazine's Invention of the Year. Um, you know, we were selling in every Michelin-star restaurant in New York that sold beverages and throughout San Francisco and California and Florida and Miami. And it, part of our strategy did exactly what we had set out to do, which is create awareness, generate revenue for our business, and allow us to work on our technology in the background so that we could help get to the transitional point that we're at today and have been at for the last couple of years, which is transitioning from these B2C low volume products to these really large TAM B2B industrial markets where we can have the most amount of impact and create the most amount of value as well.

It's so much easier said than done, but amazingly, you guys have been able to make this transition from, like you mentioned, you know, a pretty D2C focus in the beginning, now to some of these big, big enterprise sales. So kudos to you, and it's pretty exciting to just be like, you know, along for the journey. Transitioning to that enterprise side, would love to hear how you guys think about tackling commercial and business aviation, because of course, That is kind of the big goal here. And it's a difficult nut to crack. So would love to hear about kind of your go-to-market motion, how you guys sign offtake agreements with these providers, and maybe even explain for our audience what an offtake agreement is because it's pretty core to the story here.

Absolutely. So our commercial business is, you know, we operate in both the public and the private sector, right? We have a, you know, commercial aviation and business aviation business that's really focused on massive scale and lowest cost to produce fuel. And we have a separate line of business, which is focused on government and defense, which is still very much focused on producing fuel at as cheap as possible cost, but also trying to produce in very small insulated environments so that you can deploy modularly and anywhere. And so we have these really 2 distinct and unique commercial revenue streams for our business. I'll speak first about commercial aviation and trying to reach scale and really decrease your cost to produce because ultimately that's what it really comes down to, right? When you think about the aviation industry as a whole, you're talking billions and billions and billions of tons of jet fuel that's procured annually, not just in the US, but globally as well. And so it's a massive, massive market where demand is far outpacing supply when it comes to the synthetic or sustainable aviation fuel market as well. And so for a business like ours, it really comes down to How much you have the ability to produce and how cheap that you can produce it as well. And so, you know, we know from a business perspective that we have kind of several competitive advantages from a cost perspective, just by virtue of our process, right? We create a fully formulated fuel in a single step from carbon dioxide. So there are some key advantages there, but you can't be successful if you don't have customers. And it always comes down to the customer in the end. So We've spent a lot of time working with both investors of ours that are in airlines themselves and also non-investors that we're working with from an offtake perspective, from a customer agreement perspective. And so to kind of dovetail into your question about maybe explaining what an offtake agreement is, you know, it's really an agreement to sell a product, right? And so for us, that product is our fuel, is our aviation fuel. And so You know, when you are going and producing a fuel and thinking about the scale-up that you want to get to, having customers to then help alleviate the challenges of fundraising is really, really important. Not just for our business, but for any business. You know, I was sitting with another founder yesterday who's in the aviation space as well, thinking about raising a round of funding. And, you know, what he had come to the conclusion of, which, you know, I think any founder or CEO should definitely understand is that, you know, when raising money, if you can prove that your customer is there through binding, you know, financeable agreements, then you will have hopefully more success in going out and raising your capital because you know that the customer's there, which ultimately leads to revenue. And so same thing for us as well. You know, it's really around, you know, showcasing that there is a customer and, you know, fortunately for us, not just in the US, there is significant demand, but also in other global locations as well, like, you know, like the UK and the EU that have not just SAF mandates to procure fuel, but power-to-liquid-based SAF mandates as well. And so there's a lot of demand for the fuel, not enough supply, and we're fortunate that we're one of the leaders in the space and hopefully we'll continue to be.

Exceptional value creation comes from solving hard things. Alumni Ventures Deep Tech Fund is a portfolio of 20 to 30 ventures run by exceptional teams who are tackling huge opportunities in AI, space, energy, transportation, cybersecurity, and more. These game-changing ventures have strong lead venture investors and practical approaches to creating shareholder value. If you are interested in investing in the future of deep tech, visit av.vc/deep-tech to learn more.

Yeah, and I think you touched on a great point, which is Some of the regulations that are being put in place in the EU are actually just like totally leading the way in this space in some really exciting ways that I think we all believe, whether it's over the next couple years or the next decade, will make their way over to the United States. An example is, you know, the EU has mandated that 2% of aviation fuel must be SAF. by 2025, and then they have an even more ambitious target of 63% by 2050. So essentially what that means is that any aircraft traveling to or from a European destination must adhere to these standards regardless of the aircraft or the airline's home country, which opens up an enormous market opportunity for you guys. Would love to hear a little bit about your vision For riding this, this tailwind that kind of the EU is setting the stage for. And we'd love to hear about, you know, what you see aviation looking like if we fast forward the clock 10, 20 years in the future, which frankly, you know, might feel like a long time, but really isn't that long of a time in this industry. It kind of goes by with a snap of the finger.

It does go by quick, that's for sure. Look, I think it's important for sure to follow where the customers are, right? And so, you know, tracking with the UK and EU is definitely important. But also knowing that, you know, your business, or at least in our sense, you know, it hasn't been built and wouldn't necessarily be built around, you know, incentives, credits, and always legislation, right? We're very, very focused on the product as a standalone, having the ability to be successful on its own, right? And just competitive on volume and price and striving to be. And so it's important that our strategy definitely has a European and UK angle to it as well. But it's a global business at the end of the day. And so there are benefits to producing and selling in the US. There are also benefits to producing and selling in other markets outside of the UK and EU as well. So I think you just have to understand that if you want to get to that end goal of success, which is mass scale, you have to take all the steps necessary to get there. And that starts with here in the US first, and then obviously following suit with the UK, EU, and other locations around the world as well.

Makes perfect sense to me. Now, maybe turning the page and focusing on that dual-use application. And for the audience, when we talk about dual-use, essentially what that means is a product or a service that has a commercial application, but also a military or national security application. You guys, you briefly touched on it, have some pretty enormous DOD Department of Defense and intelligence community excitement and traction. One that, like, I think is just super cool is you recently partnered with the Air Force to complete the first ever flight using 100% sustainable aviation fuel made from CO2. Maybe talk to us a little bit about how you guys play in this space, why the Department of Defense and intelligence community is so excited about Aeroco.

Yeah, so interestingly enough, the The United States Department of Defense is actually the largest consumer or user of jet fuel on planet Earth, you know, number one. And so fantastic customer to have. Absolutely. And, you know, we've been really fortunate to be working with them along our entire journey. And so, you know, when we first set out on our kind of aviation fuel pathway, you know, they were our first customer and have been, you know, since day one, right? You know, we worked together to produce those first gallons of fuel. You know, as you mentioned, you know, we put it in an unmanned manned plane and fueled that plane. You know, since then we've won multiple subsequent contracts with the Department of Defense essentially to continue to work on the R&D and eventually produce fuel as well. And so, you know, one of the really interesting aspects I would say to the dual use is, you know, the DOD is really interested in creating these synthetic-based fuels that can be produced in modular locations. And because our feedstocks are abundant, meaning that they're readily available everywhere. We just need carbon dioxide and power. We have the ability to produce in really remote locations, not only around the country, but also around the world. And that provides a really interesting angle for the US military and for the Department of Defense essentially. And has been an interesting thing for our business to work on that allows us to really not only work on R&D, but But really spur that innovation into scale as well. And so they're our biggest customer and it's been a really great journey working with them on a technology like this.

You mentioned drop-in, which is probably worth touching upon. I know we've talked a little bit about this concept in the past. Can you explain for our audience what that means and why it's so important to the value add that you guys provide for your customers?

So traditionally, when you, when you put fuel into a, into a jet engine or a turbine engine, um, you know, you need several components, um, you know, several, uh, you know, components of a fuel in order to do so. Um, and so, uh, the majority or, or all of the, of the folks in the, in the, in the SAF space essentially make, you know, a portion of jet fuel. That jet fuel, that portion of jet fuel then needs to be blended, um, in order to create what's called a fully formulated jet fuel that goes into an engine. Now, um, you know, we have the ability and have proven that out through these demonstrations and through our technology of creating that fully formulated fuel, um, you know, directly from our technology. And so what that means is that, you know, you don't need to do any of the blending that's associated. And there's obviously a carbon impact for that, but also a cost implication to that as well, which makes the fuel directly from our, um, directly from our technology, um, readily drop in or readily available to be dropped into an engine. And so, um, it's It's a strong competitive advantage that we have to many folks in this space. But from a US military perspective, what it allows us to do, as I mentioned before, is produce fuel potentially locally and then drop that fuel directly into engines for use on site essentially. And so it's a really strong, Proof point that we have the ability to do and is a really strong— it gives us a big competitive advantage.

Yeah, for sure. I mean, just to harp on this for a second longer, my mind's really racing regarding the applications of that onsite production, right? Because if you think about it, it enables the DOD to create fuel for planes, for boats, for All sorts of vehicles and crafts that assist the warfighter, as in as far-flung locations as, you know, a Pacific island in the middle of nowhere or a desert equally in the middle of nowhere, which provides an extraordinary amount of logistical freedom of operation for the military and just ease for what is already a pretty difficult job that they're doing out in these remote locations. So it's really awesome. Talking about, you know, where folks might make Air Co SAF, would love to hear about where you guys are doing this now because, you know, I'm a New Yorker, live here, work here. Would love to hear a little bit about the facilities that you guys have set up here in the city.

Yeah, so our pilot, our first pilot facilities are actually based in Bushwick in Brooklyn. So like we are right here in the thick of New York City and, you know, our You know, our next demonstration facility is up in the Niagara area as well. So we get access to, you know, green, you know, really green energy coming from the hydropower of Niagara, but a New York business. And the company was, you know, definitely, you know, founded in New York City and has a strong presence here as well. I think, you know, as we continue to grow, you know, we obviously have partners, customers, investors all over the country and all over the world. So we definitely have a, like a global oversight in that sense. But yeah, it's been a very interesting journey to go from producing beverages in New York to then transitioning our facilities to be really very much focused on R&D in order to help aid in the scale-up of what we're doing today.

That's awesome. Bringing manufacturing and deep tech back to New York City is something that we're all personally passionate about. And very much applauding you guys on as you lead the way in the space. You know, before we wrap up, I always love to ask our guests, like, how can we be helpful to you? Because the work that you guys are doing, you know, as our audience have heard over the past half hour, is extraordinarily powerful for the climate. It's extraordinarily powerful for national security. It's extraordinarily powerful for the local community. So you guys have a lot of weight on your shoulders. How can we be helpful?

Yeah, I mean, look, it is a big burden, right? Like you're setting out to tackle some pretty tough challenges and just when it comes to the support, not only from a, obviously an investment perspective, but also a customer perspective, but almost largely a networking perspective. It's really important to to kind of get that message out in a lot of respect, because believe it or not, you know, there are not a lot of people outside of these communities that know that there are companies like this exist or there are technologies like this out there. And as we continue as a company to prove out what it is that we're saying that we're going to do, right? What comes with that proof point is also people understanding and hearing about what you're doing as well, because that's what then in turn starts to really move the masses in some respect. And so, Um, you know, we'll do our part, which is, you know, more results, um, you know, more demonstrations, more proof of technology and more scale. And, you know, we ask that, you know, those that come and, you know, support us along that journey as well can be, can be really pivotal and really, really helpful.

Yeah, for sure. You heard it here first, Tech Optimist fam, spread the word. This is not just science fiction. This is happening. Uh, and, uh, it's, it's coming to a future near you. Very soon. Greg, thank you so much for joining us. This has been awesome, and we're so excited to follow the rest of the journey because we know the future is extraordinarily bright.

Appreciate it, Ryan. Thanks for having me.

Take care. See ya.

Thanks again for tuning into The Tech Optimist. If you enjoyed this episode, we'd really appreciate it if you'd give us a rating on whichever podcast app you're using, and remember to subscribe to keep up with each episode. The Tech Optimist. Tech Optimist welcomes any questions, comments, or segment suggestions. So please email us at info@techoptimist.vc with any of those, and be sure to visit our website at av.vc. As always, keep building. Thank you.