Q&A

Sustainability investor addresses startup challenges, Houston's capital shortages, and more

Josh Posamentier, co-founder and managing partner at Congruent Ventures, will join Venture Houston as a speaker this year. Photo via congruentvc.com

It's been a challenging year for venture capital, but how are climatetech startups doing specifically? One Bay Area investor shares his point of view on this this topic ahead of Venture Houston next week.

Joshua Posamentier, co-founder and managing partner of Congruent Ventures, a San Francisco-based firm that invests in early-stage sustainable companies, is taking the stage at Venture Houston on September 7. Among others, Posamentier will be in conversation with the founder of one of his firm's portfolio companies, Fervo Energy, discussing seed and early-stage funding for sustainability-focused startups.

Venture Houston is presented by HX Venture Fund, a fund of funds that deploys capital into non-Houston firms to encourage investment in local startups. This year's theme is "Spotlighting the path for decarbonization in a digital world."

Posamentier, who has worked over a decade in this space, shares some of his thoughts on Houston as an energy transition leader, the challenges climate-tech startups face, and more in an interview with EnergyCapital.

EnergyCapital: How do you see Houston and its role in this energy transition, its challenges, its opportunities, etc.?

Josh Posamentier: I actually tend to disagree with the people that say Houston is too far down the oil and gas path. I mean, it's it's capitalism at the end of the day. There's money to be made in in climate mitigation technologies. People are going to go chase it, and I think Houston, of all places, is a pretty capitalistic city. And people are definitely not shy about chasing the next big opportunity. I mean, it was oil and natural gas before, and now it's now it's alternative energy. And so I think from that perspective, it's fine. There's a lot of money.

I think the biggest challenge is honestly, especially on a perception basis, a lot of the policy and social stuff that's endemic to Texas, which is a bummer. I mean, especially for younger talent. Austin had a shine, but I think that's largely gone and Houston never had it. So, I think it's something that needs to be overcome and needs to be thought about at a state level basis, especially if you're going to want to attract young entrepreneurial talent.

EC: What are some of the challenges energy transition startups are facing these days? How is your fund kind of supporting your portfolio companies through these challenges?

JP: There's some normalization that's had to happen over the last 9 to 12 months. As you know, corrections have come down the pipe in the venture ecosystem. By all accounts, it has been really frothy for the last few years, especially so in parts of climate. Some of that's due to the the proliferation of investment from non climate-specific firms. And it's, in many ways, decoupled from the ups and downs of different parts of the venture ecosystem, but it also has different timelines. I think not everyone always appreciates what that means and what that implies for for startups. So there's a lot of frustration and a lot of missed expectations in the early stage part of the ecosystem that are slowly getting fixed. I think getting expectations more in line with reality is going to help immensely.

The other thing is just figuring out how to talk more in a language that venture investors understand. I think that's a little bit of a challenge. There's there's actually a pretty big gap between if you're an oil and gas developer and thinking about how you fund that kind of a business versus how you fund a technology-enabling business. Fervo Energy is an interesting example. It's a tech company, but now it's really a tech enabled developer because they have no choice but to do that full stack. They went to school out here. They understand the ecosystem. They've really taken the effort to really understand all the capital players. And so we're waiting to see how that ultimately plays out.

But there's just different capital. I think it is a little challenging. And this is a good thing. There does need to be a way, I think, to just get people more exposure to to the market there — in the Houston market specifically. If you're spinning at Stanford, there are hundreds of VCs within walking distance. In Houston, the ones I know I can count on one hand.

EC: Has that pace of commercialization changed over the years or have founders found ways to survive that valley of death?

JP: I don't think anything's really changed fundamentally. I think people have gotten a little more clever about understanding how the adoption occurs, and figuring out how to phase into those processes that that comes with experience. But there's only so much acceleration you can do when you're dealing with critical infrastructure. You know, people are not going to want to just jump right in, rip out, and replace things that keep the lights on. And so you just have to figure out how to how to capitalize a business in such a way that you can you can live with those kinds of timelines. Venture capital is a fantastic tool, and it is far from the right tool for every problem. And so there are plenty of opportunities to deploy other tools that are more appropriate to different kinds of different kinds of challenges.

EC: What attracted you to investing in Fervo Energy?

JP: So, it's how we think about portfolio construction. Fervo has an amazing team, which we will bend a lot of rules for, and we saw this opportunity as something they could build a ton of value by validating the tech, establishing a huge land position, and then raising different kinds of capital for the out years and for the project development. A bunch of our companies took venture capital to develop a technology, and then they know that venture is not the right class of capital to then scale that throughout the world and whatever. So they would basically raise other forms of capital in the out years to deploy the technologies.

EC: And one of those options is government funding. How do your portfolio companies utilize that?

JP: A big chunk of our portfolio has some government money, even if it's very early stage research grants or something like that. I see government money being the most effective in a couple of ways. One way obviously is to get the core research out of it versus just spin it into something more commercial that we can all then look at.

The other place that is really exciting is in is getting technologies to scale where they're then cost effective without further subsidies. When we underwrite companies, we are very explicitly underwriting them in the absence of subsidies at scale. The assumption is those are just there to basically bridge the gap between "this is totally uneconomic because it's a tiny, tiny little factory or something" versus "it would be plenty economic if it were a big factory." So, if they can just bridge that gap with a little bit of government money.

We've been through this this cycle a couple of times, and we can't in good faith underwrite anything assuming that government subsidies are going to continue. We very much believe it's a bridge — it's got to be a bridge to something. It can't be a bridge to nowhere. And I think there are a lot of companies out there today that are almost designed to just pump the government incentives, and that's not a recipe for a business that can grow on its own over time.

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This conversation has been edited for brevity and clarity.

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A View From HETI

Exxon Mobil and Chevron made big profits in spring 2026. Photo via Chevron

American oil and gas giants raked in massive spring profits while fighting between Iran and the U.S. impeded petroleum shipments and consumers around the world paid more for fuel and confronted shortages.

The conflict, now in its sixth month, halted most shipping through the Strait of Hormuz, a narrow waterway that previously served as a delivery route for a fifth of the world's oil and natural gas. With global supplies constrained, prices for Brent crude, the international standard, soared from about $70 to above $100 a barrel for much of March, April and May, and at one point reached $126.

The money that oil companies accrued between the beginning of April and the end of June could receive extra scrutiny this year. Gasoline, diesel and jet fuel prices climbed sharply during that period, increasing costs for drivers and airline passengers. Supplies ran low in some countries, leading to sporadic fuel rationing in Australia and government office closures in Nepal and Sri Lanka.

Spring, Texas-based Exxon Mobil reported that its second quarter profits doubled to $14.53 billion, boosted by record diesel production. The oil giant brought in $116.02 billion in revenue, up 42%.

Chevron, based in Houston, nearly quadrupled its profits to $12.07 billion and revenue jumped 56% to $70.06 billion.

Six of Europe’s largest oil companies posted combined first-quarter profits of $22 billion, more than 40% higher than last year.

“There are constituencies around the world who are having a very good crisis, and the oil producers are one of them,” said Patrick Galey, fossil fuels lead at Global Witness, a nonprofit organization that investigates environmental issues. “When you compare that to the hundreds of millions of people who are struggling with rolling blackouts, with electricity curbs, rationing, waiting in line for food queues, or the disruption to fertilizers and the potential impact that that has on food prices, we don’t think that it’s a justifiable price for the rest of the world to be paying.”

Lawmakers propose taxing major oil producers for war windfalls

Energy companies such as Exxon and Chevron do not set the price of American oil, which ricocheted from $68 to $115 a barrel during the quarter. It’s driven by supply and demand, and what traders, refiners and other buyers are willing to pay.

Nevertheless, Democrats in Congress introduced bills in March to tax major oil producers for profits they show from 2026 onward and have the tax proceeds redistributed to consumers.

“It’s fair to put a windfall profits tax on inordinate windfall profits rather than cut off children’s food programs,” Sen. Sheldon Whitehouse, a Rhode Island Democrat who introduced the Senate version of the legislation.

Whitehouse's measure and a companion bill introduced by U.S. Rep. Ro Khanna of California would amend the U.S. tax code to impose a per-barrel tax on companies that produced or imported at least 300,000 barrels of oil per day in 2025.

“We cracked $4 again per gallon last weekend in gas stations that I drove by, and that’s a big expense, particularly for families that get their income from driving around from job to job in the work van or the work truck,” Whitehouse said.

The average price for a gallon of regular gasoline in the U.S., which was below $3 before the U.S. and Israel launched attacks on Iran, reached $4.11 Friday, July 31, about $1 more than last year at this time.

The UK and other European countries implemented temporary windfall profits taxes on fossil fuel companies in 2022. The UK extended that to 2030, according to Tax Foundation Europe.

“Penalizing the businesses who stood by those countries and provided that product going forward is very short-sighted,” Exxon CEO Darren Woods said in a call with investors Friday. “We canceled investments that we had planned for Europe based on the last time they passed a windfall profits tax.”

Refineries rake in cash while consumers pay more for fuel

Outfits such as Exxon and Chevron, which also own refineries, are in the best position to profit from the current market conditions, said Tom Seng, assistant professor of energy finance at Texas Christian University.

Refineries turn oil into gasoline, diesel, jet fuel and home heating oil. Higher prices for those products meant Chevron’s quarterly refinery profit was six times as big in 2026, despite processing less crude and selling less products.

“The return on refining, on a percentage basis, has skyrocketed,” Seng said. “Oil right now is priced what it is priced because of the Iran war. But in the meantime, the refineries are making money hand over fist.”

The global refining market is under-supplied, and with countries such as Russia and China no longer exporting, companies like Exxon and Chevron have to pick it up, said Rob Thummel, senior portfolio manager at Tortoise Capital. “The world is going to be short jet fuel, diesel and gasoline, so we’ll probably continue to see higher profits there.”

Globally, not all refineries have been able to get the supply of crude oil they need to meet demand since the conflict began, said Timothy Fitzgerald, a University of Tennessee professor of business economics who studies the petroleum industry.

As a result, refineries that have ample oil to work with, including those in the U.S., are turning high profits, particularly when they make jet fuel and diesel, which is priced about 41% higher in the U.S. than before the Strait of Hormuz was blocked.

"If you’re a company that owns a bunch of refinery capacity, things look pretty good," Fitzgerald said.

American refineries are running at near-full capacity and poised to benefit because some refineries in the Middle East and Russia were damaged. And Asia can't get the amount of Middle East oil needed for refining.

“Ultimately, users of the energy services pay,” Fitzgerald said. “Consumers, people like you and me buying retail motor gasoline or diesel fuel or airplane tickets. But it also means that almost everything else we buy has an embedded energy content to it ... and this is where you start to worry about it driving increases in costs.”

Not all oil and gas companies benefit in the same way

In the present geopolitical environment, some companies are winners while others are losers, Fitzgerald said.

“If you’re a company like a U.S. (oil) producer, even a U.S.-based international company like an Exxon or Chevron who’s got lots of production outside the Gulf, things are good. You’re selling your product at a higher price,” he said.

But companies in the Middle East that are not able to benefit from higher prices because they are struggling to get their liquefied natural gas out of the Persian Gulf or have a lot of damaged oil fields or processing facilities have a very different take on recent events, Fitzgerald added.

“Your ability to sell anything and the volume that you may be getting out is so curtailed that your revenues are way down and you’re incurring higher transportation costs and security costs,” he said.

Exxon and Chevron weren’t as profitable in the first quarter due to the way oil is traded; the first real opportunity they had to take advantage of higher prices oil was in April. Companies that had a lot of oil stored in floating tankers and available for spot-market trading, including some European ones, were able to benefit from March’s higher oil prices, Seng said.

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