My Fave 3 Ways to Fund Climate Startups. Without VCs
Read time: 5 mins
Many VCs would like you to think VC is the only way to get your startup off the ground. That’s not true! ❌
There are plenty of alternatives, but here are my climate-specific faves 👇
#1 Angel investing 🪽
Bringing way more to the table than just capital
Angel investing is my top pick for early-stage climate tech startups that are looking for more than just funding 💡 It’s ideal for those at the pioneering stage, working hard to validate their technology or business model and in need of both financial backing and seasoned advice.
👍 Pros of going this route
Flexible to the ups and downs of startup life
A ton of experience, contacts, and insights
Quite casual, meaning quick decision-making
Generally less risk-averse than VC firms
👎 Cons of going this route
Less capital than VC firms
Rarely have capacity to participate in later rounds
Difficult to match your needs with angel interests/expertise
🚀 Quick tip
In your search for an angel investor, aim for alignment. It’s essential that your mission resonates with their investment philosophy.
🏃 Resources to get you started
💁♀️ 600 US female angels
👼 399 Angels with LinkedIn profiles and check sizes by Trace Cohen
🌱 Climate Insiders — we have 300+ ambassadors, 98% of our projects get oversubscribed, and we’re not afraid of deep tech 💪
#2 Grants 🏦
A risk-tolerant safety net for big, bold ideas
Grants are a particularly fantastic resource for heavy financial lifting if your startup is still in the R&D stage ⚙️
👍 Pros of going this route
Open to high-risk tech
Key technical validation
No equity given up = lower dilution
👎 Cons of going this route
Very competitive and time-consuming to apply
Requires lots of research into the landscape and each individual grant
Complex to manage (reporting, compliance, etc.)
🚀 Quick tip
Do your homework on which grants are available in your part of the world — there’s plenty out there, from government programs to private foundations.
🏃 Resources to get you started
#3 Strategic partnerships/corporate venturing 🧑💼
Unlocking doors to game-changing resources and connections
The climate space is riddled with complex regulation, R&D hold-ups, and difficulties finding the right market 😵💫 Strategic partnerships can help with all of the above to fast-track your development.
Think Pfizer x BioNTech on the Covid-19 vaccine, or Toyota x Aurora on self-driving cars — both of these partnerships put insane resources at the startups’ disposal, while also bringing accelerated innovation to the corporate company.
👍 Pros of going this route
Access to resources (tech, customer bases, funds)
Credibility by association
Potential to integrate into larger ecosystems
👎 Cons of going this route
Complex corporate structures (red tape)
Risk of misalignment with the goals/expectations
Risk of becoming too dependent on them and closing yourself off to other opportunities
🚀 Quick tip
Check out this podcast from McKinsey — it’s a couple of years old, but it’s packed with useful context around the hows and whys of corporate collabs.
🏃 Organizations to get you started
Conclusion
Did you see yourself in any of the three scenarios above? If yes, then perhaps schedule some time next week to dive into the resources provided above.
And if you find any other amazing investors, grants, or corporate collab organizations, please share them with your fellow readers in the comments!
Want to join our Climate Investor community?
👉 Join the Climate Insiders investor community 🚀 Whether you are looking for unique deal flow, wanting to develop your Angel track, or simply seeking exposure to the best projects in the space, join us here.
And if you are enjoying this newsletter, the best support would be to recommend it to a Climate friend or colleague 🙏 Let’s grow this movement together.
Until next Saturday,
As always fully packed with great resources 🙌🏻 thanks Yoann