The a16z for Climate Tech

Jason Jacobs, host of the excellent new podcast My Climate Journey, wondered aloud on Twitter this weekend what the Climate Tech version of an a16z or First Round would look like. Two caveats before I give my answer

  • Existing climate investors are playing this role today because they have no other choice.
  • There is certainly room for a $10B firm to put even more resources behind this.

What’s so special about a16z?

Startup investing today is so much more than just writing a check. Every firm pitches founders on the value they’ll add. (There are even twitter parodies calling into question how serious those offers to help are.) There’s a reason for this focus on value-add. There are three ways a VC can be successful (let’s ignore luck for a second):

  • See more good companies (deal flow)
  • Pick more good companies (selection)
  • Help companies succeed (value-add)

** for more on this see the academic research like “How Do Venture Capitalists Make Decisions” by Gompers and others.

But Andreessen Horowitz made its mark by defining what a “value-add” investor is. The firm’s founders understood that many of the next greatest tech companies were going to be built by product and technology people - founders who understood technology and markets, but maybe weren’t expert storytellers, didn’t yet have media and PR experience, and didn’t have the network that Marc and Ben had. They understood that they could accelerate those new companies by providing bench strength - partners at a16z that could be called on to help recruit a great head of sales, or someone who could get the company featured on the front page of the New York Times. In short, in addition to providing sound advice from their board seat, a16z would put people to work every day solving their portfolio companies’ problems. Today, all firms understand that the bar has moved and they can’t just provide a check and some occasional advice.

What are the current Climate Tech funders doing?

Jason’s question wasn’t really “why isn’t there an a16z today” but rather, if what software companies need is better PR or better access to recruiting than they could get on their own, what could an analog in climate tech provide?

One answer is that each and every of the active climate funders are doing this every day. [The following list will not be comprehensive, so please let me know what I’ve missed!]

At Clean Energy Trust, we take an active role with the 31 companies we’ve invested in. We work with our companies to hire their next set of leaders, we work with them to find their next early market, we connect them to grant and funding programs, we spend tons of time helping them craft their pitches for the next funding round, connecting them with other investors, and finding pilot opportunities for them. Activate/Cyclotron Road has built excellent free content libraries (http://playbooks.cyclotronroad.org). Greentown Labs and the Los Angeles Cleantech Incubator regularly bring in experts to mentor their companies and connect them with early customers. Elemental Excelerator pairs great companies with test and demonstration opportunities. On the fund side, just to name a few, Breakthrough Energy Ventures, Energy Impact Partners, and Energize Ventures have dedicated staff to match portfolio companies with relevant customers.

Photo by Sebastian Unrau on Unsplash

So, what could we do with $10B?

Today a16z manages around $10B. If you assumed a standard 2% management fee, that would mean the firm has $200m per year to spend on people to support portfolio companies. If we had those resources (or even a fraction) applied to climate tech, here’s what my wishlist would be:

  1. Turbocharged industrial marketing support. So many companies in the space have a great technology that could be used in hundreds of different applications, but haven’t found the perfect fit. Unfortunately, this process takes a combination of experience and luck. By pairing companies with experienced industry experts, we could accelerate their time to first revenue and prove that the company is an attractive follow-on investment. To cover the broad range of industries within Climate Tech, you’d need to have a relatively deep bench.
  2. Top recruiting. Finding the next perfect team member to add sales, marketing, or manufacturing experience to the founding team is expensive. Unlike the market for experienced software talent in Silicon Valley, there isn’t a deep pool of these people and they’re spread all around the country. For the kinds of companies we’re talking about, hiring a recruiter could cost several months of runway. A fund that could bring this in house would put companies on the fast track.
  3. Policy, regulatory, and lobbying help. All startups need to “eat their policy vegetables” and this is especially true in climate tech. Imagine offering what Tusk Ventures does for its highly regulated startups like Uber. And while many entrepreneurs might feel uncomfortable with lobbying, the reality is your competitors (incumbents and other startups) are doing it. (As my colleague Paul says “If you’re not at the table, you’re on the menu.”) One example - a solar company discovered that one of their competitors was on the verge of changing state building codes to require all panels to be a certain size, a move that would have completely blocked the company from any new sales.
  4. Grant writers. Jason’s suggestion of a grant writer or two would be hugely helpful. Like with the industrial marketing experts, you need a broad pool of talent here. Instead of having these writers on staff, the fund could provide access to a network of expert grant writers with expertise across energy, materials, agriculture, water, etc.
  5. PR and advertising. This one feels like a cop-out, because of course this isn’t unique to climate tech. But, many of the companies we’re thinking about aren’t selling to consumers or giving away free software. And those that sell into the enterprise often aren’t general-purpose technologies that can be used across industries. Specialized PR and ad firms who can find out which trade publications and which conferences truly matter for each industry.
  6. IP strategy. This role (different from a company’s patent counsel who files the patents) would focus more broadly on the company’s long-term strategy for developing new IP and protecting what it invents. There’s often more that can be patented than founding teams realize and companies at the earliest stages likely don’t have anyone on their team dedicated to this important role.
  7. Manufacturing & Scale Up. Access to experts who understand design for manufacturing, who have worked with contract manufacturers in the US and abroad, and who have taken a hardware product from concept to full scale would help startups avoid the kinds of costly mistakes that have doomed many a company.

The cynic’s view on why there isn’t already a16z in Climate Tech

By disrupting the VC industry and staffing up in each of these areas, a16z was able to offer startups something they couldn’t get anywhere else. They showed companies an unfakeable signal that they were going to help them succeed. In turn, they knew, this would lead the best founders to look to them for investment.
In climate tech, I’m sorry to say, we’re not at the point where we have such cutthroat competition for deal flow. The amazing (but growing!) funding in this space can’t keep up with the number of great ideas, so VC firms don’t yet have to compete with added services.

Founders and funders: what else would you add to the list? What would you tell the people building a $10B climate fund?

Impact Capitalism on “The Pitch”

At CET, we love listening to the podcast “The Pitch”. It’s always exciting to hear about new businesses and to hear how other investors think. This week, the episode featured Jonathan Kumar, the founder of Samaritan. Kumar’s company wants to provide a better way for cities and non-profits to take care of homeless people. This post isn’t so much about the business itself, but rather about the way the investors on the show think about “Impact Investing.”

But to give some context, it may help to understand how Samaritan works. In brief, when a homeless person enrolls in the program (typically through a city or a non-profit) they get a bluetooth-enabled beacon and a digital wallet. People who want to help the homeless download the Samaritan app and get notified whenever they’re near someone with a beacon. The app tells them a little bit about the person and gives them the chance to donate through the app. When the homeless person checks in at their local non profit (like a Red Cross, shelter, etc.) they can cash out their wallet or they can spend against the account at participating local stores.

The Ethics of Making Money off a big Social Problem

Some of the investors in the room didn’t invest because they couldn’t see Samaritan turning into a big enough business to garner the financial returns required by the VC model. That’s totally understandable and not what we’re talking about today.

What I’m more interested in something investor Michael Hyatt said: “I don’t know if I want to capitalize on this.”

Michael explained what he was thinking:

“I had a real moral struggle with what this was. Think about me saying ‘Hey, I’m making a ton of money off of this app that is built to make money for the homeless.’ I don’t feel comfortable with that. And it didn’t make any sense to me. At the end of the day, I don’t really want to be in the business of profiting off of people’s difficulties. Isn’t the profit off this — shouldn’t that be going to those people? I don’t need that money, they should [get it]. I can’t reconcile that in my head. Just step back and think about it. You’re looking for a 3–5x your number [as a financial return on your invested capital]. I don’t see any VC wanting to say to their investors that they made all this money off of this type of program. I don’t see it.”

I suspect we all feel some understanding for what Michael is saying. There’s something unsettling about feeling like we’re making money off of someone else’s misfortune. There’s a feeling that the business requires suffering in order to keep making money. After all, if Samaritan really worked, there would be no more homeless people and—therefore—no more profits for investors.

But while this feeling is understandable, I don’t think it makes sense. Think about the alternative. A VC invests money in, say, a dating app instead. This delivers the 3–5x returns the investors asked for but no homeless people were helped along the way. Is Michael donating all of his financial returns to the homeless? Doesn’t he still think they need the money more than he does? If that’s his metric, shouldn’t he think it is strictly better to deliver returns while helping people? It is really interesting to see how the moral discomfort leads him to make a socially sub-optimal decision.

On the other side was Gillian Manus, who, before becoming an investor was homeless for a time. She did invest in Samaritan through her angel fund and didn’t see any ethical issues with it.

Gillian’s view was that “we’re making money helping people get off the street [which is one of the biggest problems in cities] and this is a solution. Aren’t we investing in solutions? Isn’t elevating society the end game? Isn’t this one of the most dynamic returns that we could get—to help families living in their cars, to help provide a roof over people’s heads? What, we should be ashamed that we’re making a profit off of that? The profit goes back into society. Isn’t that what we’re all doing with every company?”

Impact Investing in the Future

I expect that we’ll see the continued growth of impact investing across social causes, education, healthcare, and the environment. As we do, I think discussions like these will become increasingly common. The question will be whether perceptions of immorality around profiting from social causes will change in the future.

Jonathan, the founder of Samaritan, was steadfast in his view that VC can and should be used to support double-bottom-line businesses. “If we’re able to scale quicker because we took this VC money, and if that helps us get people off the streets in 5 years instead of 10, and the result is that we returned a lot of money to these investors to use on their yachts or their vacations, I am glad about getting to people in 5 years instead of 10.”

Energy Vampires and how to slay them

Last week on GTM’s Interchange podcast, Shayle Kann and Stephen Lacey sat down to talk about energy vampires—the devices in your home that stay on 24/7, costing you energy and money.

They led with some powerful figures—fixing these devices could save you 85,000 cups of coffee per year! Even at Folger’s prices, that’s like $3,500 a year, something doesn’t add up… They go on to clarify that the total energy saved is enough to *brew* 85,000 cups of coffee per year. An NRDC study found that these always-on devices consumed 1/4 of all the energy in homes, and put the average cost at $165/year.

Top-line: Does this matter?

I think this falls into the same category as a lot of energy efficiency programs. When you add it all up, it matters a lot! If we could eliminate or at least reduce 1/4 of all residential energy use by focusing on these devices, that’s a big deal!

But on the other hand… $165/year, $14/month. That’s certainly not an insignificant amount of money for a family, and who wouldn’t like a little extra cash in their pocket? But when it comes down to it, consumers care so little about their energy bills they’re just not likely to change their behavior based on these cost savings.

Lots of little things, one big problem

An even bigger issue here is that there’s no one “quick fix” that solves this issue. The load isn’t coming from any one device, but all the smart speakers, IoT enabled refrigerators and door bells, and some electronics chargers.

The episode goes on to focus on DVRs as one egregious example. I certainly remember having a DVR in my apartment in grad school, and that thing was 1) always on and 2) really hot. Hot electronics means lots of power.

I summed up my thoughts in a little tweetstorm this week:

Click through to see the rest of the tweets

As I discussed in the tweet thread, with the help of a seasoned hardware engineer we found that you might be able to squeeze some efficiencies out of the device when it’s in use — maybe reduce power consumption by half. Bigger gains can be had by enabling true power-save modes. This might bring average consumption down to 5 or 6 W, compared to the current 25 W load. But ultimately all of these gains together might save a customer $20/year, and would require relatively significant engineering and design changes to the device. Consumers simply don’t have the time or will to care about small changes like that. And, ultimately the cable companies and device manufacturers just aren’t incentivized to care.

My colleague Paul responded that, hey, this doesn’t matter in the long run because no one is going to be using DVRs in a while anyway.

Paul is almost certainly right about our online viewing trends. (The energy consumption of streaming vs. cable needs a whole new post.)

But for me, the real story here isn’t about the DVR or any one specific device, but more on “whack-a-mole” scenario we’re facing.

The Solutions

In cases like these, it’s hard to see any solution for reducing the energy waste other than better regulations like Energy Star, which sets limits for how much power these devices can consume and provides at least some information to consumers about that consumption. (DVRs are of course a little different since most consumers don’t have a choice about which one their cable company ships.) Energy Star isn’t a perfect solution, but we can look to other devices like refrigerators and air conditioners for clear examples where the program has worked.

How about a price on carbon?

A functioning system of pricing carbon most likely won’t fix the split incentives and low household-level payoffs for vampire devices, but it would at least make sure that the energy being wasted is less likely to be polluting.

Ample: A Better Better Place?

Ample: A Better Better Place?

August is supposed to be the doldrums in VC land, a time when everyone goes on vacation and companies shouldn’t expect to see any new term sheets. So it was a welcome surprise to see a cleantech funding round announced — and a big one at that: Ample raised a $31m Series A round. That’s a lot of money! Wait. Who are they? What do they do?

According to Fortune’s Term Sheet, they make “a platform that delivers a full charge to electric cars.” Neat! A full charge is way better than not-a-full-charge. Axios’s Pro Rata says they are “solving the energy delivery challenge for electric cars.” What are we talking about here: supercapacitors? ultracapacitors? ultra-fast charging? wireless charging? ultrasonic charging? The suspense is killing me!

Off to their website: a picture of a cold day in Chicago (hey, I live in Chicago, cool!) and a simple tag line: “Electric Cars for Everyone.”

Lots of non-electric taxis in the picture! (From Ample’s website and originally from Molly Porter on Unsplash)

To get some real answers, we need to head to the press release. The company offers an “alternative to traditional charging” using proprietary “autonomous robotics.”

If you’re using robots, delivering a full charge all at once, and calling it an alternative to traditional charging, in my mind there’s only one thing this could be: battery swapping. Drive your EV up to the station and a robot pops out the dead battery, switches it for a fresh one. In a few minutes you’re off to the races again.

That might sound familiar.

Back in 2013, Tesla built a battery swapping station before shuttering the program in 2016. Tesla’s pilot implementation was a little kludgy — it was designed as a temporary fix where car owners were required to come back and get their original battery back later (and pay $80 for the privilege).

Well before that, Shai Agassi launched Better Place in 2005 to build a network of swapping stations in Israel before expanding world-wide. There’s little question that the technology works. Here it is in action:

Battery swapping in action

Better Place has gotten plenty of ink through the years, both as it was growing, as it imploded, and in a recent book “Totaled: The Billion-Dollar Crash of the Startup that Took on Big Auto” by Brian Blum. Brian was recently a featured guest on Greentech Media’s Energy Gang Podcast where he recounted his own experience as the owner of a Better Place-compatible Renault. Regular listeners of the podcast know that Stephen, Katherine, and Jigar don’t pull punches, so it’s interesting to go back and listen to that episode with fresh ears.

Can this be a business? Can Ample succeed where Tesla and Better Place stumbled?

First, let’s take a look at the backers. This round was led by Shell Ventures and Moore Strategic Ventures, with Repsol Energy Ventures, Hemi Ventures, and TRIREC also participating.

Shell has a long history of making investments in cleantech and transportation deals and has lots of experience making early-stage venture investments. It’s easy to imagine Shell seeing battery swapping stations as the natural future of the filling station.

The other corporate strategic investor, perhaps not as well known here in the US is Repsol, a major Spanish oil and gas company. Repsol has increased its VC activity over the last few years. This is their second electric mobility investment this summer, following Silence, an electric scooter company.

Moore Strategic Ventures is an arm of Moore Capital Management, a Hedge Fund that makes some direct early-stage investments, including several in energy, electricity, and agriculture.

Hemi Ventures, a relatively new firm, has been very active in early stage deals across robotics, artificial intelligence, and automation.

Trirec is a relatively new cleantech-focused firm based in Singapore that doesn’t shy away from infrastructure-heavy deals.

What about the founding team?

Ample founders John de Souza and Khaled Hassounah are experienced executives, and both have undergraduate degrees in Electrical Engineering. According to their LinkedIn profiles, they founded and led MedHelp, an online portal and community for medical advice. The details here aren’t exactly clear: MedHelp was founded in 1994, long before the duo joined, and sometime around 2006, de Souza became CEO and led the company to an acquisition by a unit of Merck in 2014.

Back to the business at hand — the business

First, we can’t ignore the similarities. Better Place founder Shai Agassi made a fortune when he sold his previous company, and decided to enter the electric vehicles space. (And, for what it’s worth, that sounds a lot like Elon Musk too.) The initial pitch for Better Place was “an inexpensive car that anyone could buy.” It would be so cheap, it might even be free. (Of course, not actually free, but at least zero-money-down and a monthly subscription after that.) When Better Place was conceived, the best technology in the market was a Nissan Leaf that could get roughly 70 miles before recharging, so you couldn’t take a long road trip.

Better Place’s Stumbling Blocks

Better Place had huge issues with its swapping stations — it couldn’t co-locate them with service stations in Israel, they ended up being way more expensive ($3m each) than originally planned, required huge cooling infrastructure to charge the batteries without degrading them. The company also grew much more quickly than any revenues could support — they had around 1000 customers but were burning $1m per day on salaries.

At the very least, with Shell and Repsol on board, Ample should be able to secure locations at filling stations.

Better Place also had a hard time getting manufacturing partners on board. Renault joined because they didn’t have any plans for a Hybrid vehicle and saw this as their path towards an EV.

This excerpt from the podcast says it all:

Brian Blum:

“When he [Agassi] went to GM and tried to convince them to make a battery-swappable version of the Chevy Volt and they said ‘No, we’re not doing that, we’ve already got our version of the vehicle and we’re well along the way, but we would be interested if Better Place would be the infrastructure provider for the electricity [presumably referring to the traditional charging infrastructure] here in the United States and then we’ll see what happens.’”
 “Maybe if there was more money, and the company hadn’t spent so much, and the company hadn’t gone out of business, maybe other manufacturers would have come on board.”

Jigar:

“But they would have never come on board. This is what people don’t understand, even today, no one has used Tesla’s charging infrastructure and protocol. Car companies don’t work together, and the reason they don’t work together is because they believe they’re the smartest people in their industry. Every one of them believes they’re in the hardware industry. They don’t wanna all make the same thing. They don’t wanna follow a standard. They love being different from everyone else. Right, so the fact that everyone would have adopted the same battery swapping technology was ludicrous, so for him to think otherwise was equally ludicrous.”

Is Jigar right here? If he is, Ample must be doing something else—they must have a business model that doesn’t require signing up a bunch of manufacturers to conform to a new swapping standard.

What does the future for battery swapping hold?

Brian Blum has certainly made up his mind:

“[Switching] big batteries, you know consumers switching them out in expensive infrastructure, that’s not going to happen, we’re not going to see that again.”

And my guess is Ample won’t be getting project finance from Jigar for a Better Place clone any time soon:

“The thing that I always found so fascinating is how awful [Shai and team] were as entrepreneurs. The thing I want to make sure people understand is that these things are entirely avoidable through due diligence. Like, it’s not a foregone conclusion that people have to make these ridiculous mistakes. I want to make sure that its clear that like as we try to change the world and the infrastructure that powers us because we want to decarbonize the world, there are good ideas and bad ideas, and this was a really bad idea.”

Is this the next cleantech success story?

Of course, only time will tell and with limited information on a stealth-mode startup, it’s hard to predict what will happen.

We don’t know what the proprietary technology is, but Ample definitely isn’t building its own EV. Frankly it wouldn’t surprise me if they’ve licensed the Better Place patent portfolio, which is now largely owned by Renault.

I hope I’m safe in saying that Shell and Repsol wouldn’t invest in a new Better Place. If they wanted to do that, they could have bought the assets back in 2014 at fire-sale prices.

So, maybe it’s the business model that’s different. Is Ample promising individually owned cars on a monthly payment plan? Or are they offering a battery-swapped electric taxi fleet? Busses? Or an on-demand, electric car network like Car2Go?

We don’t see $30m Series A rounds in this space all that often, so there’s reason to be excited. Until they come out of stealth, here’s hoping Ample has figured out a better way to make the Better Place dream of cheap electric cars for everyone come true.

VCs abandoned cleantech—here’s why we shouldn’t worry

This article was originally published on June 22, 2017 on the Clean Energy Trust blog.

Last month, the Brookings Institution released a new report on the state of venture capital funding for cleantech companies in the U.S. The piece was a follow-up to an article in April that examined declining patent activity in the sector. Devashree Saha and Mark Muro of Brookings’ Metropolitan Policy Center look at how cities and states are taking advantage of cleantech innovation to power their local economies, especially in light of waning support for R&D and commercialization from Washington.

Their conclusions — that cleantech VC funding contracted after 2008 and has hit early-stage companies especially hard — are in line with the papers my colleagues and I published last summer through the MIT Energy Initiative and in the journal Energy Policy. I suggest you read both of their pieces if you haven’t already. Here, my intention is to dig a little deeper on some of their results and focus on what it means for cleantech entrepreneurs.

The Bad News

First, let’s take a look at the downturn in funding. The chart below, which is an extension of the paper we wrote last year with data updated through 2016 compares what happened in cleantech VC to similar investments in software and biotech startups. There’s no question the financial crisis in 2008 hit cleantech startups hard, but it’s interesting to compare that to the other sectors, where the crisis was just a blip on an upward trajectory.

Cleantech funding dropped after the financial crisis, and unlike Software and Biotech, it never recovered.

After the collapse, there was still some ongoing investment in later stage cleantech, but early-stage investment fell to a trickle. In the Brookings Report, when Saha and Muro compared early stage funding (Seed rounds and Series A rounds) to later rounds (B, C, etc.) they found that investment has been biased towards late-stage deals. That’s true, and it’s interesting to compare to what we would expect to see in a healthy funding environment.

The VC model as traditionally practiced means letting many flowers bloom, knowing some will fail fast, and doubling down on winners. In a well-functioning system, we’d hope to see early rounds to comprise 75% of the number of total deals and 25% of the total dollars invested. The figure below shows that, indeed, early stage cleantech investing falls well below this benchmark.

Early-stage cleantech investing activity has fallen out of favor as more funding goes to later-stage deals and fewer early-stage deals are done.

Of course, it is possible that cleantech startups need comparatively more capital at later stages and we therefore might expect early funding to stay a bit below 25%, but the decline and relatively low levels of the absolute and relative number of early deals is frightening.

Location, Location, Location

Given the regional focus of the Metropolitan Policy Center, Saha and Muro looked at how VC dollars are allocated around the country. They found substantial geographical concentration of the location of companies that received investment:

U.S. cleantech VC investment is heavily clustered in just four metro areas — San FranciscoSan JoseBoston, and Los Angeles, which account for a massive 54 percent of all VC flows in cleantech.

They see this as bad news, but there’s another way to look at it: San Francisco, San Jose, Boston, and LA account for 64% of total VC investment. Cleantech VC is actually less concentrated than VC at large. A note on methodology here: drawing regional boundaries is tricky, and the borders have to go somewhere. The Brookings study uses Metropolitan Statistical Areas, which has the strange side effect of separating Menlo Park and neighboring Palo Alto into two different MSAs (San Francisco and San Jose). If we look at the broader San Francisco Bay Area as a whole, the concentration of cleantech VC has been slowly decreasing since the peak in 2008. Last year, the Bay Area did around 25% of cleantech deals in the US, compared to 30% of software deals.

It’s interesting to note the geographies that are relatively underrepresented in cleantech investing compared to other VC activity. San Francisco and New York, the two biggest regions for software VC over the past decade, both underinvest in Cleantech by about 10%.

What’s a founder to do?

This may seem like more bleak news for cleantech founders, but there are good reasons to be optimistic. Cleantech companies tend to raise A rounds 3–5 years after their initial founding. The crop of companies that are raising now were founded in 2012–2014 and have the advantage of a growing ecosystem that didn’t exist just a few years ago. The IncubatEnergy network of clean energy accelerators and incubators lists 35 programs founders can take advantage of (including the CET Challenge). The Department of Energy’s Cyclotron Road, Chain Reaction Innovations, and Innovation Crossroads offer funding support, lab space, and access to experts inside our amazing National Lab system.

All startups demand incredibly hard work, and cleantech is no exception. Here are a few things founders should think about as they start building their companies:

1. Don’t pack up and move just yet.

Cleantech companies aren’t as easy to uproot as other businesses. Founders often have strong scientific advisors in university research labs and sometimes already have dedicated lab space they can use. And since cleantech investing isn’t as concentrated as it once was, there’s no reason to move just yet. If anything, this trend looks like it’s accelerating. In 2016, only 20% of A-rounds went to companies in the “top 4” metros above.

2. Take advantage of local resources

Over the last 2 years, nearly 40% of companies that raised an A round came through an incubator or accelerator program, most of which were programs with a local or regional focus. These organizations exist to help companies at the earliest stages develop their pitches, business plans, and strategy. As the companies grow, the incubators plug them into the network , connecting them with customers, investors, pilot and demonstration opportunities.

The first wave of cleantech investing may have been driven by a bit of exuberance, and it is clearer than ever that traditional VC has all but fled the sector. Instead of saying “cleantech can’t be done,” founders today are finding ways to stay capital-efficient and build amazing business. The time is right for Cleantech 2.0 companies to shine.


Footnote

How much early-stage activity to we need to prime the pump for ongoing investment? Over time, successful companies move on to raise more and more money with each successive round of funding but there are fewer companies that make it to each level. For example, Anand Sanwal at CB Insights has shown that only about half of funded companies make it to the next round, but that funding for each company more than doubles in the first few rounds. In short, if we looked at each round independently, we would expect total funding to start small, grow into B and C rounds, and then gradually taper off. When we combine two early rounds (seed and A) and compare to all of the subsequent late rounds (B, C, D, and so on) we would expect 75% of all deals and 25% of all dollars to go to the early stages.