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Clean Tech Fundraising

May 4, 2021

There is an ever developing landscape of funding for startup companies. Especially in cleantech, where there is a mix of established and developing technologies and stakeholders. When fundraising it is important to put together a goal oriented plan for your companies developement. You want to know what will the cost be for the development and deliverables when you are asking for money. Knowing that through and through is key to identifying quality sources of funding. If a startup is trying to prove a new battery design if viable, it will need funding accepting the risk and timeline. If you are trying to install a microgrid with market available technology, we are seeing more traditional project based capital become available or at least people advocating for it. When surveying the funding landscape, companies need to consider where they fit in.

With clean technologies maturing, there are more opportunities for funding mirroring other industries. Funding doesn’t consider the technology the risk but evaluates the investment based on having a high probability of making a realistic market return. Instead of looking for a unicorn, they are looking for a horse. They aren’t looking for the high risk billion dollar potential, but a low risk guarantee to make a return on investment. Alternative models are being developed to articulate the return on investing in Clean Energy, that identify returns older financial models haven’t. This is good for the movement to clean energy, but doesn’t really apply to many innovative startups. 

Looking at IEA reports and CleanEdge Indexs, we can see an increasing amount of investment going into later stage clean technologies. These are technologies in generation, electric grids, mobility, and buildings.

finviz dynamic chart for  QCLN

The Startup space has a lot more complex options opening up. One of our favorite is grant funding like CalSEED . Grants provide funding that doesn’t have requirements similar to lquity or loans.

Here are some grant resources you should check out:

  1. CalSEED
  2. OpenGrants.io
  3. ARB grant wizard
  4. Dept of Energy
  5. Momentum

 

The benefit of many of these is they put you into an ecosystem that will help you advance your technology and company. You can jump into the ecosystem in California without applying by going to EmpowerInnovation.org. Not all grants are perfect and there is competition for them. If you want to learn more about working on grants, contact us.

Friends and Family, Angel Investors, and Venture Capital are still a route all startups need to prepare for BUT they now have additional tools that can leverage more funding. Like Crowdfunding Equity. We have seen Crowdfunding support local companies in clean tech like Wind Harvest International who raised nearly 1.5 million. In the past there has been a lot of skepticism in this method, because of regulation and the quantity of small investors, but there are more professionals that can guide you through it. Because of this acceptance, companies can leverage Angel Investors and VCs to be “first in”, signaling to others on the crowdfunding platform the investment has potential.

The past year there has been a lot of fundraising through Special Purpose Acquisition Company or SPACs. A SPAC is another way to take a company public so it can raise funds on the market. SPACs are not giant slush funds magically dropping money on cool technology. They are much more like large institutional investors who have an existing channel to acquire companies. With a bull market we will probably see more of them because it represents and easier way to fundraise, but being listed on the market has setbacks and early-stage companies should focus on getting to a minimal viable product.

Creating a minimal viable product and selling it is the best way to raise money. It is proof a company can build a product or service someone will give them money for. So, if you are that early stage startup, find out how you can get to that point. Interview 100 potential customers before you build anything. Build the simplest thing and show it to them, say, is this what you want? Repeat until one says, “Can I buy that now”.  

Generating Sales supporting your early stage growth is the best way to fund your company. Since investors are always risk adverse and want to be the last money in, it is companies that seem not to need funding that often get it. So keep your focus on generating revenue and connect with CleanStart events like our discussion with Moneta Ventures and Spotlight Company Pitches.

Check out some past pitches:

ABOUT THE AUTHOR

Thomas is the Executive Director of CleanStart. Thomas has a strong background in supporting small businesses, leadership, financial management and is proficient in working with nonprofits. He has a BS in Finance and a BA in Economics from California State University, Chico. Thomas has a passion for sustainability and a commitment to supporting non-profits in the region.

CleanStart Sponsors

Weintraub | Tobin, EYBlueTech Valley, GT Law

Moss AdamsPowerSoft.biz, Revrnt, Momentum

College of Engineering & Computer Science at Sacramento State


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