Funding Change: Why Clean Energy Ventures Are No Longer Uninvestable

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Venture capital funding for clean energy technology companies has declined in recent years, but one new fund is looking to buck that trend. Dan Goldman is the Co-Founder & Managing Director of Clean Energy Ventures, and he is trying to be a catalyst and change the narrative by providing those companies with the resources they need to make long-lasting positive impacts. Dan joined IT Visionaries to discuss the process Clean Energy Ventures goes through when selecting new companies. And he explains what differentiates Clean Energy Ventures from other VCs and looks into his crystal ball at the future of the clean energy industry.

Key Takeaways

    • Lack of Funding: There are not enough companies funding clean energy technologies. If you want to advance climate change solutions, successful and profitable companies need to begin investing in the space. 
    • A Proven Formula: There is less risk to investing in clean energy than people think. In the past it has been proven that clean energy technology companies that are well-supported perform better and actually produce highly-scalable technologies. 
    • Demystify the ROI: If an investor does not understand how he or she will see a return on investment, there is no chance that they will put money into a venture. To secure funding, especially in the clean energy space, it’s critical to explain clearly how those funds will be turned into goods, service, or impact that will lead to a return.

For a more in-depth look at this episode, check out the article below.

Venture capital funding for clean energy technology companies has declined in recent years, but a new fund is making a big bet that it’s possible to invest in those companies at their earliest — often riskiest —stages without sacrificing returns. Dan Goldman, Co-Founder and Managing Director of Clean Energy Ventures joined IT Visionaries and chatted about the work his company is doing to help make clean energy viable in reality. 

Founded by the trio of Dave Miller, Temple Ferrel and Goldman, Clean Energy Ventures is a $110 million fund that invests in early technologies and scalable business model innovations that can both profit on their own while addressing climate change initiatives — two things Goldman said are integral to funding clean energy technologies.

“If you want to address climate change, you need to have successful and profitable companies that can grow to scale,” he said. “Otherwise you can’t have an impact on the climate.” 

Goldman detailed that over the last three to five years, the group didn’t have the financial ability to invest in a sizable enough way to have an impact on climate change. By banding together though, he said they can make more investments to more companies addressing climate change and sustainability.

To raise the $110 million, Goldman said they needed three things. The group needed to be deeply ingrained in the market, and with more than 40 years of combined experience, they were. The second was a track record of successful companies in their portfolio. Lastly, they needed to differentiate their strategy, so they needed to leverage their existing assets and focused on a new kind of criteria. 

“There’s more strategic investment in the sector now,” he said. “There are more product services being adopted by corporations. There are higher-quality entrepreneurs and technologies achieving scale.”

To take advantage of those opportunities, Goldman said they look for organizations that have a sustainable competitive advantage, while demonstrating their plans to disrupt the market with service offerings that are differentiated.

“Technology companies that are well-supported with a successful ecosystem and investors perform better,” Goldman said. “We’re disrupting a market in such a way that hopefully has never been seen before. That results in highly-scalable technologies that are being implemented across many different sectors. “

As of 2020, Goldman said the company had invested in seven start-ups, a number he says is low for the venture capitalist industry, but continues to climb as more and more companies begin to understand the space.

“Right now, we’re at the embryonic stage of the clean energy market,” he said. “It’s getting better, but it’s very challenging for corporations to figure out how to plug into this space. Many corporations are more aligned with investing in assets. By necessity, we need more capital flowing into the technology side because unless we can bring innovative technologies to market, it’s going to be very, very challenging to meet the climate objectives that need to be met.”

So what’s next for the energy start-up ecosystem? According to Goldman, a lot of it boils down to more companies supporting the industry, while working toward better tools and techniques for advancing technologies. 

“We just look at the quality of the companies and the number of companies we’re seeing now versus 15 years ago, it’s quite dramatic,” he said. “There’s going to be a really radical change in how companies approach the market and ecosystem. It’s exciting.

To hear the entire discussion, tune into IT Visionaries here



Episode 198