State of Cleantech Startups

While the last few years have been volatile ones for the cleantech and advanced energy industries, I’m pleased to see that successes like Tesla, Bloom Energy, Clean Energy Fuels, and Solar City are taking their turn in the media spotlight. You’ve likely heard of the Gartner hype cycle and how cleantech is rising from the “trough of disillusionment” to the “slope of enlightenment.” This resonates with my observations.

Key participants in the cleantech investment bubble were venture funds that attempted to apply New Tech investment philosophies to cleantech. Energy is a huge market with clear customer needs but, even so, new entrants often require capex and infrastructure investment, qualities that are often less critical in software startups. Compared to typical VC exit expectations of 5-7 years, cleantech market adoption often takes 10-15 years. Cleantech and advanced energy business models are challenging, but massive market opportunity remains.

Today’s energy startups have learned to be durable. They incubate their businesses through bootstrapping, research funding, and seed capital. They focus on capital efficient business models that can scale with modest investment. Startups get to a product with customer revenue before raising a Series A. To me, these are key attributes for long term success and we will all benefit from the impact. Our electricity grid needs to be more flexible and resilient. Transportation needs to adapt to a variety of fuels. Water needs to be used more effectively and efficiently. At the Energy Fellows Institute we accelerate talent that can solve these challenges with successful businesses.

Jeff Lints,
Managing Director,
Energy Fellows Institute