Venture capital is the fuel powering most technology startups. Behind every future Google or Uber or Snapchat is a syndicate of venture firms hoping for outsize financial returns. But the vast majority of venture money goes into Internet, mobile, and software companies where consumer demand and the path to market are plain. So what happens to entrepreneurs with risky, unproven, but potentially world-changing ideas in areas like zero-carbon energy or growing replacement human organs? If it weren't for an MIT-born venture firm called The Engine and a tiny handful of other venture firms tackling "Tough Tech," they'd probably never get their ideas to market.

VCs love to cultivate an image of themselves as risk-taking cowboys with a nose for great ideas and the ability to help book-smart inventors and programmers grow into savvy entrepreneurs. But in reality, the industry has spent a quarter century chasing Google-sized returns in the relatively safe, efficient, and low-cost markets such as consumer and enterprise software, mobile apps, and to some extent healthcare and drug development. Sure, smartphones and apps are fun—but how much is the next new video-sharing app or gaming platform going to contribute to human welfare?

The Engine, created by MIT in 2016,  is one of the visionary counterexamples. Among the startups it backs is Commonwealth Fusion Systems, which is building a new kind of "tokamak" reactor and believes it can demonstrate the feasibility net-positive-energy fusion to power the grid within the next few years. Other portfolio companies at The Engine are tackling thorny problems like reducing food waste, replacing silicon chips with faster photonic ones, and building better batteries for grid storage of power from wind and solar installations.

Such ideas have come to be known as Tough Tech because they often need more capital, more time, and more expert input to get to market. In this week's episode you'll meet Katie Rae, CEO and managing partner at The Engine, who leads us on a wide-ranging discussion of topics such as

• the ways Tough Tech companies could change the world
• the causes of government and private underinvestment in these areas
• the challenges of evaluating and managing Tough Tech startups
• the prospect of growing government support for high-risk innovation
• the reasons why institutional investors who could just as easily put their millions into software-focused venture funds might want to consider Tough Tech instead.

Rae thinks The Engine can outperform traditional software-focused VC firms—even though its companies face higher hurdles—because their chosen markets are more wide-open and the payoffs could be so enormous. "I don't think there's any reason that I should say to my investors, 'You should expect less of me.' In fact, maybe they should expect more of me," Rae says. "And they should also expect that what we invest into, they feel incredibly proud of as well—that they backed a company like that that had impact on the world."

Notes

The Soonish opening theme is by Graham Gordon Ramsay. All additional music by Titlecard Music and Sound.

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