Entrepreneurs for Impact (EFI) Podcast: Transcripts
#209:
Arun Gupta, CEO of Skyven Technologies — $300M+ for Zero CapEx Industrial Decarbonization. 20% of Global GHG Emissions. Water Refrigerants. Screaming at the Top of Your Lungs for Founder Sanity.
Podcast Introduction
Chris Wedding:
My guest today is Arun Gupta, Founder and CEO of Skyven Technologies. Skyven is an industrial decarbonization company that designs, funds, installs, and maintains a unique steam generating heat pump with zero downtime and no capex cost to its customers. They have hundreds of millions of dollars of financing to provide their steam as a service model. Arun is a mission-driven PhD engineer turned entrepreneur with prior roles at Texas Instruments and Medtronic. In this episode, you will learn four important takeaways. Number one, why they are well positioned to serve the trillion-dollar global industrial process heat market. Number two, how they price long-term steam contracts with their customers in chemicals, pulp and paper, food and beverage, ethanol, textiles, and metals. Number three, why building for the end goal today is a bad idea in entrepreneurship and what you should do instead.
And number four, how screaming at the top of your lungs while cycling can help manage the roller coaster of startups. Please give Skyven and Arun a shout out on LinkedIn, Slack, or X by sharing this podcast with your people.
All right, before we hop in, I've got a challenge and I guess an invitation for you all. First, the background. My goal is to empower 250,000 entrepreneurs, investors, and university students to tackle climate change through startups, finance, and personal growth. Is that enough? I don't know. It's a lot. Maybe it'll grow. Anyway, the podcast is one way to do that. To that end, the sector needs more inspiration, tools, and tips from CEOs and investors in this space. Conveniently, as you may guess, these folks are precisely my guests on this podcast. So here is the challenge.
If you and five of your friends rate, review, and follow this podcast on Apple and Spotify and share your efforts with me on LinkedIn or in response to my newsletter on Substack, I'll hop on Zoom and brainstorm a climate tech business or investment challenge or opportunity with you.
Now, is that a reward? Is that punishment? I don't know. There it is.
This is the best way for new folks to learn from the CEOs and investors on this podcast. If the process is unclear, as it was to me, in the show notes, you will find a link explaining how to do this. I read every single review. So please tell me and all of us which guest insights you like the most. Thanks so much. Hope you enjoy it.
Podcast Introduction
Chris Wedding:
Arun Gupta, Founder and CEO of Skyven, welcome to the podcast.
Arun Gupta:
Thank you so much, Chris. Really, really appreciate the opportunity.
Chris Wedding:
Well, it was great to hang out a bit at the Verge conference and happy to continue the conversation. I didn't really know much about your all's business, but you all have figured out a lot of the essential parts over the last, you know, 10, 12 years in making industrial heat work for customers. I think a lot of folks don't think much about industrial heat. But per your website, you talk about 20% of greenhouse gas emissions come from industrial heat. What does that mean? And why do you think folks don't think about it enough, Arun?
Arun Gupta:
Yeah, it's kind of mind-blowing to really look at the overall spread of where greenhouse gas emissions come from. When we think of greenhouse gas emissions, we typically think of transportation and electric power—big coal-burning power plants. Electric power is actually something a little bit less than industrial heat, but they're roughly one-third each. So transportation, industrial emissions, and electric power are sort of like the three legs of the stool when it comes to carbon emissions. And so 20% of global carbon emissions are from industrial heat—that's about as much globally as the entire transportation sector. And half of it is a result of burning fossil fuels to produce steam for industrial processing. So that makes steam about the carbon equivalent to all the cars and trucks on the road in the entire world.
So you can think about all the investment, you know, that's gone into electric cars. That's what similar type of investment or more is needed in the industrial sector to electrify the industrial sector. And we're probably about a thousand times lower than that level right now. So it's a huge challenge and a huge opportunity.
Chris Wedding:
And why do you think industrial heat gets far less love, capital, versus something like, you know, EVs?
Arun Gupta:
Well, I think the first reason for that is sort of the most basic, and it's out of sight, out of mind. You know, everyone jumps in their cars every day. You know, we all turn on the lights every day—think of electricity. But industrial manufacturing happens, you know, on the edge of town, in industrial neighborhoods that a lot of folks don't really venture into. So it's, there's the out of sight, out of mind. But then, on top of that, industrial emissions have been considered hard to abate—and for good reason. In many cases, we haven't had the technology. Where we've had the technology, it hasn't been economically attractive. And then additionally, industrial manufacturers have been through decades—decades—of cost-cutting.
They run extremely efficient operations, which means they don't have a lot of extra resources and a lot of extra budget to do new, potentially more expensive things. They can't spend the extra money to decarbonize because they have to run very efficiently to be competitive in the marketplace. And, and so that makes the whole sector hard to decarbonize.
Chris Wedding:
Yeah, I'm with you. Let's go from there—big picture—to what exactly does Skyven do?
Arun Gupta:
Yeah, so we at Skyven are decarbonizing industrial manufacturing with a proprietary steam-generating heat pump called Arcturus that we deliver on site. We install it at manufacturing facilities on an as-a-service basis. That means we bring the capital, we bring the money, and we don't charge the manufacturing site any capital to install the system. And then, the system produces steam over a long period of time—decades. We charge the site, and the site pays us for its steam produced. So they're producing, they're paying for actual value that they're receiving—the actual steam that they need to run their operations. And that allows us to provide a return on the investment we made installing the system. So that's how it works at a high level.
And then, we bring in grants and incentives, utility funding, and other sorts of unique mechanisms in order to make these systems as financially attractive to the manufacturers as possible.
Chris Wedding:
Okay, let's go to the technology first and then to kind of the finance business model side of things. So you said steam-generating heat pump. Pretend the whole audience is not engineers—break that down into layman's terms. What does that mean exactly?
Arun Gupta:
Yeah, so the Skyven Arcturus steam-generating heat pump is a giant piece of industrial equipment. So it's concrete and steel that we install on site. And what the equipment does is it electrifies steam production, so it produces steam. But instead of burning fossil fuels to boil water—the way a traditional steam boiler works—our heat pump takes two inputs. One is electricity, and the other input is waste heat.
So, we take waste heat that is otherwise thrown away and, you know, it's rejected into the atmosphere by most manufacturing facilities. So, instead of tossing it away, we grab this waste heat. It's pretty low in temperature typically. So, we use the heat pump to upgrade or increase the temperature of that heat.
And we can increase heat from temperatures starting as low as 85 Fahrenheit to steam temperatures as high as 420 Fahrenheit using the heat pump.
Chris Wedding:
And really silly question here. If you're producing steam, why does it matter that you get to 420 since boiling is whatever, 210 or something?
Arun Gupta:
Yeah, yeah, that's a great question. So, industrial manufacturers need high-pressure steam. And so, they need steam at temperatures well above 212°F—the standard boiling point of water—in order to do the processing they need to do. And so, that's been a challenge: existing heat pumps haven't traditionally been able to get to those high temperatures of, you know, 300, 400-degree temperatures. And our heat pump is uniquely able to do that.
Chris Wedding:
And is capturing waste heat the key part—or a key part—of doing what power heat pumps couldn't do?
Arun Gupta:
It is a key part, but it is not the only key. So, capturing waste heat is a unique opportunity in the industrial sector because so much heat is thrown away. Industrial—think about your home or office—there's not one place where heat is just thrown away. You know, I guess heat sort of leaks through the windows. Maybe if you have a drafty door or something like that, you lose heat. But in industry, heat is actually thrown away in huge quantities through exhaust stacks. The heat just goes out the smokestack, out the chimney, and we're able to capture that heat and utilize it very efficiently.
The other key is a unique technological process called open cycle mechanical vapor recompression—that's the technical term behind the guts of our heat pump.
It's different than most of the heat pumps out there, different than the heat pump in my home. It uses, essentially, a steam turbine running in reverse, and it utilizes water as a refrigerant. So it doesn't utilize other refrigerants like CFCs or HFCs. Only fluid in our heat pump is water—that's another unique and interesting aspect.
Chris Wedding:
And for all the nerds out there, including myself, can you say the name of your heat pump? No? It was the Open Cycle Mechanical Vapor. Okay, okay, I got it. Now everyone else has it as well. Let's see. And what was the origin of the technology, Arun?
Arun Gupta:
Yeah, so Skyven came about this technology in a bit of a different way than most. Most technology companies start in the lab, develop technology, and then bring it out into the world. We went the opposite way. Prior to the heat pump, Skyven was a developer of early-of-a-kind technologies or early-of-a-kind industrial decarbonization projects using cutting-edge technologies.
We used to go to technology companies, take their techs that had been proven only at smaller scales, and say, "Hey, we will help you deploy this at large industrial manufacturers." In doing this, we gained a lot of experience about what it actually takes to do early-of-a-kind projects in brownfield, existing industrial facilities.
And one of the technologies we found, discovered, and worked on is this open cycle mechanical vapor recompression. But we ran into a huge roadblock. That roadblock is that it has historically only been used in highly bespoke, custom, ground-up, one-off projects. We did a one-off project with this technology and thought, "Well, wait a minute, we did this once, we should be able to do it again." But everything was done custom. Why don't we use this old trick in the book—standardization—and figure out how to package this technology into something that can be replicated? We found a huge opportunity and demand for that.
In doing so, we pivoted the business from being a tech-agnostic developer of first-of-a-kind or early-of-a-kind industrial decarbonization projects to becoming tech-specific. We built an internal team to develop and package this technology, create a product, and a product line that we are now deploying around the country and the world.
Chris Wedding:
Yeah, I think that's great advice for lots of listeners. I was on a panel about nuclear small modular reactors at Duke recently, and just making this distinction between a highly engineered, bespoke, large nuclear project—kind of historically, even today—and a productized widget that is sent off a factory line by the thousands, not a project versus a product. And in theory, this leads to lower unit costs over time. We'll see. But yeah, what you've done makes a lot of sense. Let's go from the tech back to the business model, which I'm sure was a not-too-distant next step beyond standardizing the tech. You talked about the cost-cutting trends over decades for industrial heat users.
When did you realize that the go-to-market had to be a steam-as-a-service model versus selling this standardized product, if you will?
Arun Gupta:
That's another thing we sort of came into backwards compared to how it's typically done. Instead of coming up with a technology first and then a business model afterward, we started with the business model. When I said we were previously a developer of early-of-a-kind industrial decarbonization projects, we offered those projects on an as-a-service basis where we covered the CapEx and charged only for the energy benefit the system would produce.
I can tell you the exact moment that led to that. I was sitting inside one of the largest dairy manufacturing facilities in the U.S., with a plant engineer, and he was telling me about some really great decarbonization projects he had led at the plant.
We toured the facility, looked at the projects—they looked really awesome. I noticed an opportunity to repeat those projects not just at other facilities but within that same facility. Like, "Hey, you did it over here. Why not do the same project on the other side of the plant?" His response was, "Yeah, well, it's more of a capital issue. The projects I did, I was able to get some one-off funding, but I haven't been able to get more funding for it."
And I said, "Okay, wait a minute, we got a capital problem here." The energy industry has figured out how to solve capital problems. Solar—and before solar, power purchase agreements (PPAs)—were used to deploy solar without CapEx. We figured out how to adapt a solar PPA for industrial decarbonization projects. That's how we delivered these tech-agnostic projects on a service basis. Then we realized a particular technology would benefit from someone focusing on replicating it. We shifted from being broad to more narrow.
Chris Wedding:
Well, you took the words right out of my mouth regarding the PPA model and learning from solar and other energy technologies. Steam is not electricity. So, talk to us about the duration of these PPAs, and then maybe how transparent or easy it is to price steam so the plant operator knows they're saving, compared to power markets, which are generally easier to estimate. How would you approach those two?
Arun Gupta:
Those are tricky—making this as easy as copying and pasting a solar PPA. The term length for our heat pump is about 30 years, but we typically do steam-as-a-service agreements at 10 or 15 years. Longer durations tend to improve monthly economics, but industrial manufacturers are often hesitant to sign long-term agreements, so there’s a balance.
Chris Wedding:
And the second part—pricing steam versus power, and how transparent or easy it is to price—is that right?
Arun Gupta:
Yes. Transparency is super critical. We offer two pricing models. One is a shared savings model—where we measure the actual benefit produced by the system, based on meter readings. We calculate how much natural gas would have been needed to produce that steam without our system, multiply it by the natural gas price in that month, and get the economic benefit. We share that benefit—dividing the savings between us and the customer. The other is a tolling model—a straightforward price per pound of steam, where Skyven handles all the behind-the-scenes costs.
It's a super transparent model—everything's out on the table. The other is a simple fixed price for steam—let the customer choose.
Chris Wedding:
Which of those two models tends to be most popular with your customers?
Arun Gupta:
The shared savings model, mainly because of its transparency.
Chris Wedding:
Makes sense. And what happens at the end of, say, 10 or 15 years for the first PPA?
Arun Gupta:
The customer can take ownership of the equipment. Under our shared savings model, we have a "make-whole" provision—if Skyven has made the profit it wants, the plant can buy the heat pump for a dollar. Alternatively, they can tell us they don't want it, and Skyven will remove it at our cost. The third option is to extend or renew the contract for another five years.
Chris Wedding:
Got it. You just referenced Skyven hitting a certain profit per project, which is understandable given your role. But profit also involves investors—those financing these projects. Can you talk about the investors, equity or debt, total capital, and how you finance projects?
Arun Gupta:
Sure. We finance each project through a combination of third-party project finance, grants, and incentives. We've been successful in securing approximately $200 million in grants and incentives—federal, state, utility funding across five states. There’s more out there than most realize, but you need to know where to look. These rarely cover the entire project cost, but they help. The rest is covered with third-party project finance—debt or equity. We determine the best source of financing per project, based on the details. Currently, Skyven has about $300 million in total funding to deploy our Arcturus heat pumps, including a $145 million DOE grant and a large project finance facility we’ll announce soon.
Chris Wedding:
I'm with you. If only our podcast was just a bit delayed—just kidding. What's the typical installation cost? What's the total capital per project?
Arun Gupta:
Total capital varies a lot. It’s a multimillion-dollar investment, generally ranging from a few million up to around 60 or 70 million dollars. For comparison, BASF recently announced a €310 million grant in Germany for a large steam heat pump installation. Skyven's systems are generally a fraction of that.
Chris Wedding:
Got it. And where are you in the deployment phase?
Arun Gupta:
The technology is past the lab and pilot stages. It’s been demonstrated at full scale with projects operating reliably for years, expected to last decades. We're now packaging it into a repeatable product. The $300 million portfolio will fund projects in chemicals, pulp and paper, food and beverage, ethanol, across the U.S. We’re still in early stages of engineering and building this portfolio.
Chris Wedding:
Great. Who are your ideal customers? Why don't you clarify for the audience—if they fit, they should reach out to be part of this?
Arun Gupta:
Large-scale chemicals, pulp and paper, food and beverage, ethanol—these are prevalent in the U.S. and internationally. Textiles and certain primary metals like copper and aluminum are also good fits.
Chris Wedding:
And regarding the portfolio, are you or your third-party financiers looking for a diversified mix across different industries, or does that matter less?
Arun Gupta:
We aim for diversification—showing that our heat pump works across disparate facilities, whether manufacturing yogurt, potato chips, chemicals, or paper. The goal is industry-spanning applicability.
Chris Wedding:
And BASF's multi-hundred-million-dollar project—what’s the ideal size for your facilities? What's the sweet spot?
Arun Gupta:
In units of steam production, we target facilities with at least 20,000 pounds an hour—or 10 tons—of steam demand, year-round, 24/7. To translate that, if you're a beer drinker, think of large-scale producers like Budweiser or Miller. Those manufacturing facilities are big enough for our systems. Smaller breweries wouldn’t be suitable.
Chris Wedding:
First time a beer analogy has been used on the podcast—kudos, Arun. So, size and customer type are clear. How about market size? How big is the opportunity? How competitive? How do investors view this?
Arun Gupta:
From an investor perspective, the market size is enormous. The global industrial heat market is valued at about a trillion dollars—penetration of renewables or clean energy into that is very low, under 1%. Especially if biomass isn't considered clean, which is debated. Electrification—meaning electric heating—has very low market share. That’s a huge opportunity. Decarbonizing industrial heat cost-effectively and with minimal operational impact—no risk of excursions or quality issues—is key. If we can do that without CapEx, we unlock this trillion-dollar market. But that market size is total; the addressable market today is smaller, depending on energy prices. Power and gas prices heavily influence economics. Today, maybe 20%—around $200 billion—of that market is economically viable for our solutions. That’s still a very large, exciting opportunity.
Chris Wedding:
What power or gas prices need to be in a region for your solution to work best? I assume high gas prices and low power prices are ideal, but can you elaborate?
Arun Gupta:
That’s a complex question. The economics depend on the temperature lift—the difference between waste heat temperature and steam temperature—scale, and energy prices. Larger systems—say, 100 tons per hour—are more cost-effective than smaller ones. The key is to consider all factors. Sometimes, low energy prices with a low lift and large system work well; other times, high lift and smaller systems might be challenging.
It's about the full picture—higher gas prices, lower power prices, lots of waste heat, and big facilities.
We also integrate our heat pump with existing steam sources—hybrid systems—like existing fuel-fired boilers. Similar to a hybrid car that switches seamlessly between electric and gas power, our system can source steam from the heat pump, the boiler, or both simultaneously. Our software manages this seamlessly, optimizing economics and reliability.
This flexibility allows plants to operate reliably, even if, say, electricity prices fluctuate or renewables influence power costs. If electricity is cheap and abundant, the system can turn off the heat pump; when power is scarce or expensive, it can switch on.
Chris Wedding:
Smart. A hybrid approach offers comfort and redundancy for plant operators. If something goes wrong, they can still produce steam without disruption.
Arun Gupta:
Exactly. Reliability is crucial for them.
Chris Wedding:
Great. I have many more questions, but let’s pause here. Switching gears to the personal side—what advice would you give your younger self or emerging professionals building something like Skyven?
Arun Gupta:
A couple of pieces of advice: First, just do it. Believe in yourself, roll with the punches—there will be many. You get beat up, but if you adapt, you’ll eventually reach your goals. It’s about grit and resilience—keeping your eye on the end goal, listening, reacting, and adjusting along the way.
It takes a lot of conviction to stick with it.
Chris Wedding:
So, Nike’s advice—just do it. And action over analysis? Maybe action over excessive analysis, right? We learn by doing more than by endless spreadsheets.
Arun Gupta:
Exactly. And I’d add that building for that end goal today is a common mistake. I did it early on—trying to build for a long-term goal now. But the end goal might be years away. Building only for that future means overbuilding today and missing what’s necessary to survive tomorrow. If you focus only on long-term without short-term results, you won’t make it to that future.
The end goal is a North Star—guiding light—but you need to build for the short term, with the long term in mind. Most entrepreneurs lack loads of money, so producing short-term results to keep going is essential.
Chris Wedding:
Absolutely. Even abundant money doesn’t solve all problems—it often just wastes resources. Naval Ravikant once said, “Be impatient with actions but patient with results.” Patience takes time, but urgency is needed today.
How about two or three habits that keep you sane and focused? Or is that impossible?
Arun Gupta:
Here's something I haven't heard often—dealing with frustration by screaming at the top of my lungs. Sometimes, I go out on a bike ride or, if I can’t, just in my car, shut the door, and yell and curse loudly. It channels outward frustration, and after five or ten minutes, I feel the edge gone. It really helps.
It’s not about being angry all the time, but that outlet helps reset.
Chris Wedding:
I’d say most people wouldn’t picture you as someone who screams and curses, Arun, but I appreciate you sharing that side of the emotional roller coaster.
And lastly, what are two or three books, podcasts, tools, quotes—anything that inspires listeners?
Arun Gupta:
One that’s been helpful is the book Traction by Gina Wickman. It’s a classic framework for building a business. Not a bible, but a good source of inspiration for how to run a business. Of all the business books I’ve read, that’s been most useful.
Chris Wedding:
Great. Some listeners might be familiar with EOS—the Entrepreneurial Operating System. Many of our climate fellows at EFI use it, some officially, some unofficially, supplementing with books like Traction. It’s a solid tool for building organizations.
Arun Gupta:
Absolutely.
Chris Wedding:
Arun, we’re right on time. It’s been great learning about Skyven, your journey, and sharing that with more people. Hopefully, those industrial heat operators and sectors you mentioned will reach out and be part of this portfolio. Rooting for your success—you need to win, Arun.
Arun Gupta:
Thank you, Chris. It’s been great to be on the podcast, and I look forward to our next meeting.
Chris Wedding:
Here, here. Thanks for listening. If you’re not tired of hanging out with me yet, join over 20,000 entrepreneurs, investors, and innovators receiving our 3-minute newsletter about changing the world through startups, finance, humor, and wisdom—or at least four attempts at the last two. Subscribe on Substack or at entrepreneursforimpact.com. Also, check me out on LinkedIn, where I post 5-10 times weekly on climate tech startups, impact investing, habits, and lessons from Buddhism that may relate to our work tackling climate change.
That’s all, y’all. Make it a great week because it’s usually a choice. And P.S.—
If you're curious, that’s not my kids’ favorite thing I say most mornings before school, but it’s still true. Take care.