The future for the inefficient use of nonrenewable sources like coal, oil, and natural gas is bleak. If we’re fortunate enough not to kill ourselves with the pollution they generate, we’ll eventually run out of them anyway. And many people realize this. That’s why clean technology grants and investment has taken off since the turn of the century. And that’s probably why you’re into cleantech and researching how to fund a cleantech company.
If that’s the case, then this article is for you. We’ll take a look at two outstanding funding opportunities for your cleantech business.
Funding your cleantech business
Two, really valuable sources of funding for cleantech businesses are the government and private cleantech venture capital firms. Here’s what you need to know in order to get funding from one of these two sources.
Government funding with clean technology grants
Many small, innovative cleantech businesses can find funding either through the federal government’s Small Business Innovation Research (SBIR) program or through its sister program on Small Business Technology Transfer (STTR). For better or worse, these competitive programs are linked to the needs and missions of various government agencies. Your job is to demonstrate that the development and commercialization of a new and innovative idea will aid the environment in a way some agency wants. If they buy the idea, they fund you.
What kind of funding can you receive from SBIR and STTR? The length and size of the grants these programs are legally permitted to give depends on the phase of research. There are four phases where grant money is awarded. According to energy.gov:
- Phase I (Proof of Concept): In order to explore the feasibility of an innovative idea, you can be awarded up to $225,000 over a period of 9 months. The exact amount you’re eligible for in phase I depends on the topic you are researching. Note: To compete for Phase II funding, you must have been awarded a Phase I grant.
- Phase II (Full Research and Development): Phase II funding is a significant sum used for the complete R&D effort. Awards max out at $1,500,000 over a two year period. If you need more time and money, you compete for a Phase II sequential grant.
- Phase II sequential grants: Up to two years and $1 million, these allow you to continue research. These sequential grants come in two varieties: Phase IIA and Phase IIB. The IIA grants are for continuing current research, while the IIB grants help you scale up R&D. Some cleantech sequential grant awardees are even eligible for additional Phase II sequential grants. So that is something to look out for.
- Phase III (not-set-aside funded – only for STTR): Up to $4.5 million more to pursue commercial applications of the R&D you have already completed. These are follow-on awards that can include sole-source grants or contracts for a variety of things, including further R&D, or mission-related products or processes.
What cleantech topics get funded with SBIR and STTR grants? A lot, and yours may be one of them. SBIR and STTR has announced an interest in providing clean technology grants for a wide range of research, including research on topics like hydrocarbon fuels, products, or chemicals from biomass-derived intermediates, non-platinum group metal catalysts for fuel cells, membranes and materials for energy efficiency, advanced fossil technology, advanced fossil energy separations and analysis, wind energy, solar energy, hydrogen fuel energy, and more.
Like I said, if you’re in cleantech, there’s a good chance there’ll be a grant your topic is eligible for. With that in mind, for some topics of research, the Department of Energy’s (DOE’s) Office of Energy Efficiency & Renewable Energy (EERE) makes Fast-Track grants available. These combine Phase I and Phase II awards.
Additionally, you can also find out if your small business is eligible for any grants by visiting this page on the DOE’s website, and, if you are eligible, I recommend that you take a look at the EERE’s Small Business Research All-in-One Application Tool to see what you need to do to apply. Don’t forget, your business may also qualify for grants at the state level. I also post a regularly updated list of the best federal grants here on RonFlavin.
Of course, government funding isn’t the only good option for a cleantech business. You should also keep an eye on what’s private cleantech venture capital firms are investing in.
There are dozens of private cleantech venture capital firms that are committed to investing in cleantech. The funding they make available and the areas of cleantech they invest in vary from firm to firm — as do the strings attached. So it is important that you do your due diligence when investigating private sources of funding. (Of course, that applies to everything — federal funding, too.) Still, here are a few venture capital firms that have funded cleantech businesses and research over the years.
Surge Ventures has also repeatedly demonstrated that they are committed to funding cleantech companies. The firm’s website claims that Surge Ventures is “the leading seed-stage venture fund and resource for energy technology entrepreneurs.” To prove it, they have funded a wide range of cleantech companies, including Gnosys, CleanNG, Vert Solar Finance, Guard 1 Services, NeoTreks, Terrabotics, and Forerunner Research.
Entec Ventures LLC embraces a “proactive-team style” in which the lead investor and the management team are required to maintain a working relationship — that’s something most of us could benefit from. Entec Ventures also seeks investments in a few areas, and clean energy technologies are one of them. Their preference is to invest in seed-stage companies with a “below-the-radar” pre-launch profile. So it is hard to know what they are currently investing in. In the past, however, we know that they have invested in solar cell systems and ultra-capacitors.
Foundation Capital has a reputation for funding cleantech businesses. Among others companies, it has recently invested in Aquion Energy, a company that is producing a new generation of AHI batteries, and Sunrun, the largest company dedicated to residential solar power in the U.S. They have an excellent, information-filled website, and it may be worth your time to see what they have that is available for your business.
Cleantech Ventures describes itself as a firm committed to supporting “companies and ventures that promote adoption of Clean Technology into everyday life.” This firm is open to entertaining any cleantech business idea, and everyone is invited to reach out to them with their ideas. It may be worth reaching out to them to see if they want to invest in your cleantech idea.
Of course, there are many other private venture capital firms that have demonstrated a willingness to invest in cleantech companies. Depending on your area of research or interest in cleantech, some firms will be more likely to fund your startup than others. It is worth your time to research what is available for you.
One last thing
One more thing to consider: Cleantech has had its ups and downs since it took off at the turn of the century. On occasion, you’ll hear that it is dying or that it is a failed project. But the problems it seeks to solve are not going away, and the continued availability of funding for cleantech startups is evidence that the movement to find more efficient and cleaner ways to maintain a high quality of life aren’t close to ending. There is definitely a future in cleantech, and you are the person who helps make it possible. I welcome you to share your best ideas at making the world a cleaner, more efficient place in the comments below, or to post your story about getting your cleantech business funded for other readers. And if this is a path you’re going to head down, read my article on tips for getting funded with renewable energy grants.