Good News for everyone seeking clean tech funding.  The number of available programs in 2020 and beyond is getting better and the opportunities to get that critical first funding are improving.  As we have often said, if you are looking for funding as a new startup, the place to look first is not the Venture Capital firms and not even wealthy individuals.  Instead, one should apply for various grants and contracts that do not involve your surrendering any shares in your company. Fortunately, those opportunities have been on the upswing.  Then you can climb up the ladder to VCs and wealthy investors with a much better pitch.

The place to start is with sources that are specifically focused on clean tech.  Many of the early stage grant-awarding sources favor IT, even if they include cleantech in their list of target areas.  The California Energy Commission (CEC) is clearly top of the list. They have multiple programs funded from funding by the Electric Program Investment Charge or EPIC.  This is a surcharge on the electric bills of all investor-owned utility customers which brings in about $130 million per year which pays for a number of programs. The CEC sets priorities every three years for the use of this money and those priorities are summarized here.

The program of most interest is CalSEED.  It provides $150,000 in funding for proof of concept to about two dozen companies each year, 25% of which are supposed to be from the Central Valley.  Since its inception, CalSEED has funded 109 companies. Typically over 100 companies apply each year, so it is very competitive. Applications for 2020 will open soon, so get ready.  Of the two dozen getting the initial grants, about 6 are advanced to the prototype or customer demo stage with a $450,000 grant. In neither case is matching money required. This is almost unique in the clean tech funding world.  The application is fairly simple, but it is important to provide clear answers. If you are ready to apply, let us help you with the application.

The second most interesting CEC program is Bringing Rapid Innovation to Green Energy or BRIDGE.  This program targets companies that are a bit farther along. It awards follow-on funding to companies that have already been funded by the CEC, the Department of Energy, DARPA, and NASA and met their technical goals.   BRIDGE does require significant matching money from private investment. In 2019, the CEC awarded $9 million to three battery development companies under this program.  

Third at the CEC has been the funding to provide support for production scale up at in-state manufacturing of promising technologies.  The CEC awarded $22.4 million to ten companies in this category in 2019, with two getting the largest awards of $4 million and the smallest an award of $1.1 million.  A minimum 20% match is required. The summary presentation package from the 2019 solicitation round is here.  The 2020 solicitation will likely be made before the end of January, so be on the lookout for it.

Other EPIC funding is available for specific solicitations of demo projects that are issued throughout the year.  These also require matching funds, from 20% up to 50%. They are appropriate for more established companies seeking to support an important pilot project or technology demonstration.  Watch the CEC website for notifications of these solicitations.

Beyond the CEC funding, there are a number of other opportunities for tech-based startups.  However, these do not have the focus on just clean tech companies like the CEC. The Big Bang! Business Plan Competition at UC Davis comes close and offers prize money to winners and has a clean tech prize ($3,000) and an energy prize ($10,000) available in addition to a first prize overall of $20,000.  The final deadline for entry is January 24. Look here for the details.

The Small Business Administration provides a number of opportunities.  One is the workshop series presented by local firm Momentum on how to apply for and win Small Business Innovation Research or SBIR grants.   The next workshop is January 7 and you can get info to register here.  Various federal agencies put out SBIR solicitations, so some times it is a matter of keeping a close lookout for the right one for you.  These usually seek technology development on specific topic areas. 

Another is the program funded by SBA’s Small Business Development Center for the CoWo Campus in downtown Sacramento to put on a startup accelerator for 15 companies with 3 receiving up to $20,000 in funding.  To apply go to the CoWo website.  The deadline is January 31.

The City of Sacramento Urban Technology Lab (SUTL) offers grants to transform Sacramento into a “living laboratory” for entrepreneurs, advanced technology businesses, and academic institutions to test, develop, and scale their ideas, products, and services.  However, for the next three years (2020-2022), SUTL will focus on three areas: The Internet of Things (IoT) and Cybersecurity, Mobility, and Health IT and Life Sciences. If your clean tech idea fits one of these categories, give it a try. Grants will likely be in the $25-100,000 range.  The 2020 program is still being created, so keep an eye on http://www.innovatesac.org for announcements.  

Finally, the Sacramento Angels are open to funding clean tech ventures, usually in the $25-50,000 range.  They have funded them in the past and are actively looking now. However, clean tech is probably a secondary focus.  You can apply to the Angels through http://www.sacangels.com.

These are all stepping stones to get over the funding gap while startups are getting ready to approach VC firms.  Eventually you will need to go to them. But here the news is good too. Lokesh Sikaria and Moneta Ventures has seen success in investing in local firms and is creating a new and larger fund to take advantage of more opportunities, with the door open for clean tech.  Impact Venture Capital is looking to invest in companies with an AI focus with its second fund. Kevin Nagle, one of the Sacramento Kings investors, has expressed interest in creating a $250 million Sacramento-focused fund as well. In all, there may be $500 million in accessible VC capital in our region.  But only for companies that have been put through their paces in these other programs and can demonstrate compelling customer interest and revenue of $500,000+.  

Understanding how this ecosystem of funding is developing and what you need to do to access it can be a key to your success.  This is just a brief overview. If you are seeking funding, come talk with us. And especially sign up for our classes in preparing your company to be fundable by using the Business Model Canvas.  We will be announcing the first classes soon.