This Welsh founder is taking on carbon capture – but warns industry can't rely on 'impatient' VCs

When Stephen Milburn built his first photobioreactor, he wasn’t planning on using it for carbon capture. Milburn had the idea of making biofuels from microalgae, before realising that the technology needed to turn that into a business just doesn’t exist.

So he repurposed his prototype and turned it into a direct air capture (DAC) system that uses the photosynthesis of microalgae to capture CO2 and then grow biomass that can be turned into biochar – which can store the carbon for a thousand years.

World's most expensive biochar producer

Nellie’s modular units are already being deployed on the company’s own sites in Wales, and have the potential to be used at industrial sites for point-source capture. The company was one of the finalists in the Spectator’s Economic Innovator of the Year Awards and also nominated for the Earthshot Prize in 2024.

"We call ourselves the world's most expensive biochar producer but the world's cheapest DAC operation," Milburn tells Impact Loop. "And that's something that luckily our customers understand."

Not be too quick in bringing in VC

Carbon capture and storage is one of the key frontiers in the battle to reach net zero, with scientists and innovators around the world trying to find cost-efficient ways of sucking CO2 out of the air. Nellie Technologies is one of many British startups who are developing various approaches to carbon capture, at a time when the UK government has pledged to invest £20b (€24b) in driving the industry forward.

But Milburn is adamant that carbon dioxide removal companies like his should not be too quick in bringing on board "impatient" venture capitalists who are expecting a quick return on their money.

“The assumption that every CDR company should be looking for diluted funding at the pre-operation stage is dangerous. And from a commercial point of view, it doesn’t make sense," says Milburn.

The assumption that every CDR company should be looking for diluted funding at the pre-operation stage is dangerous

He argues that from an environmental perspective, real viable technologies are not seeing the light of day, because the capital isn’t patient enough.

"We know that what we have (at Nellie) is a really good operational technology that can solve a problem right now. What we will never have is a Nobel Prize. But there are ideas in the ecosystem that probably could win a Nobel Prize, and that in 10-15 years could be far more efficient than what we’re doing at Nellie. But they’ll never see the light of day because they’re being overvalued and underfunded at the start. And they’ll end up being wound down, and the patent will be owned by the investor who wounded it down.”

And they’ll end up being wound down, and the patent will be owned by the investor who wounded it down

"Don't delute until you have to"

Nellie Technologies is already bringing in revenue by selling carbon credits to companies on advance market commitment – a way for many carbon capture companies to guarantee future demand for their solutions.

The goal is to remove 10,000 metric tons of CO2 from the atmosphere by the end of the 2025-26 financial year, and reach 500,000 metric tons by 2032.

And the way Nellie’s modular units are designed means it is easy for the company to scale up to precisely meet demand.

"You can think of them as a set of Lego blocks that we just plug together," Milburn says.

Milburn isn’t ruling out seeking VC investment in the future, but would only agree to a deal that allows the company to maintain its three core principles of "competence, credibility and control."

"Because we are revenue generating, we’re now at the level where the dynamic of the conversations with funders changes,” Milburn says. “But whenever I get asked about how to grow a business as a startup, I always say don’t dilute until you absolutely have to."