How States Can Build a Cleantech Funding Pipeline

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of money—only tens of thousands of dollars in for the early-stage grants. Yet for entrepreneurs or scientists with promising technology, a state-funded program may be their best option to grow a business or build a proof of concept. The first demonstration projects for Ambri are in Massachusetts, New York, and Hawaii, states that are actively fostering innovation in the electric grid.

Other states have long had policies to promote the use of renewable energy. In fact, more than 20 states have a renewable portfolio standard, which mandates that utilities use a certain percentage of renewable energy. Those laws and net-metering regulations for residential solar, have helped drive rapid growth of solar and wind in states, such as Iowa, Colorado, Texas, and Minnesota.

The difference between those state policies and Massachusetts is the focus on accelerating clean-energy innovation, says Galen Nelson, the director of market development at the MassCEC. “We have colleges and universities spinning out companies all the time and a rich VC community that’s totally dialed into clean energy—that’s the recipe,” he says.

Other states that don’t have the same innovation ecosystem in place work with the local resources, Barton notes. Wisconsin, for example, has a number of large businesses based in the state, which are central to its planned Energy Innovation Center, she says.

At the national level, no significant energy legislation—cleantech- or fossil fuel- related—has passed since President Obama’s first term, and that is unlikely to change with a Republican-led Congress. That means many clean energy companies are focusing on growing their businesses in specific states.

In Massachusetts, meanwhile, a new Republican governor, Charlie Baker, will be taking over from cleantech advocate Patrick next year. In statements provided to The Boston Globe, Baker says that the state will continue to participate in a program to lower greenhouse gas emissions from utilities and “will also strongly encourage the clean energy innovation sector, which will have a positive benefit both for our economy and our environment.”

Whether that momentum continues remains to be seen. But for other regions in the country looking to encourage cleantech innovation, Massachusetts shows that developing alternatives to venture capitalist funding is likely part of the plan.

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One response to “How States Can Build a Cleantech Funding Pipeline”

  1. Les Fritzemeier says:

    Great and timely article Martin – thank you. I attended both the CleanTech Open and Forum 20/20 events in Boston last week. The enthusiasm in this sector has not ebbed, despite the VC pullback. Entrepreneurs being what they are, startups have found ever more inventive ways to bootstrap. I have participated in both the MACEC and NYSERDA programs and agree that they and incubators such as Greentown Labs are essential.

    Hardware development is especially difficult without financial support. Traditional equity financing and, frankly, even federal grant and contract monies have moved to the financial and information technology “cleantech” sectors. So, support from forward looking state governments, angel investors and, for some technologies, social impact funds will be the foundation of startup support until the VC tide turns, as it inevitably will.