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cleantech insights

Looking for Cleantech Angel Investors

Sheeraz Haji

I have been getting more calls from early-stage cleantech entrepreneurs looking for seed funding. Many of these startup CEO’s have already met with a number of the focused VCs and figured out that their venture is too early for them.  A few have tried to pitch the Band of Angels or the Keiretsu Forum unsuccessfully. Yet they appear to be strong entrepreneurs with a great idea. I struggle with where to send them. I know of a few angels investing in the space but they are limited by the number of deals they can do as well as the size of their investments. Where’s the Reid Hoffman for cleantech?

A number of family offices have organized themselves to share dealflow and form investing syndicates. This is terrific news for the sector, and has significantly increased the number of investors who can invest directly into cleantech startups. However, this does not solve the early-stage fundraising challenge. Most family offices prefer not to lead deals and hesitate to participate in deals that are deemed too risky.

Many venture firms claim to invest in seed cleantech deals, but few have done so in the past year or two. Khosla Ventures is the exception. KV continues to proactively seek out and invest in early stage disruptive technology bets and is in the process of raising a second seed fund (Khosla Venture Seed B).  KV funds have a clever structure that allow its main fund to invest in maturing deals from its sister seed fund – this unique ability to invest across funds directly addresses the “exit” challenge that keeps most VCs away from the very early stage. More investors should consider this model, even though they may get a bit of “push back” from their limited partners.

But isn’t there tremendous activity with incubators, you might ask? For digital media companies, there’s increasingly stiff competition among incubators and accelerators like Y Combinator and 500 Startups. However, there are only a few strong options for cleantech startups. New York City’s Accelerator for a Clean and Renewable Economy (NYC ACRE) and San Francisco’s Greenstart come to mind as excellent options for early startups looking for co-location. But the programs are narrow and come with limited funding. Also, not all startups want or need a structured incubation program – many just need seed funding.

So, I come back to my search: are you an angel investor looking for early stage cleantech deals? If so, we want to hear from you!

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  • http://twitter.com/mason13a Michael Caruso

    Why not encourage these entrepreneurs to utilize crowdfunding through the JOBS Act to secure seed funding? There are sites such as WeFunder and Crowdfunder that would be perfect for raising funds through the crowdfunding model. In fact, I would love to fund some truly innovative companies using this method.

  • Allen Kruse

    At least speaking from the solar side, as an entrepreneur trying to startup a company – there is only so far you can get with a little bit of money before you need to take a much bigger leap into it from a financing position. At the point of seed round funding (in my opinion less than $2 million) it is extremely risky for an investor, in a market that has had some very negative press the last year and a half.

    But that sort of thing will only take you so far in a lot of instances – and once you have to get into traditionally full panel size equipment, you have quite a considerable capital cost hurdle to overcome. There is still a sizable amount of risk to the investor at this stage, and once again, we still have to deal with the perception of the market.

    Aside from a few markets that fall under cleantech – you just can’t bootstrap these things – and the amount of money needed to be raised outstrips the limits in which crowdfunding is going to take you. And with the minimal results that you would get out of what you could raise from crowdfunding I just don’t think will ever be enough to convince enough people to invest.

    I may be wrong – and sound a bit of a downer – but it unfortunately is where we are at right now, and I think Mr. Haji has absolutely hit the nail on the head by pointing out the issue with this range of funding for new innovative technologies. Not only in the $2 million or less range – but I think also in the $5-15 million range as well. The $5-15 million becomes less of an issue for some of the sectors, but still is a hurdle for quite a few again due to equipment, and the price tag that it holds.

  • Elizabeth Kraus

    I am an angel with particular interest in clean tech investments and I am also the co-founder of the Impact Angel Group, a group of angel investors equally dedicated to making a difference and realizing a return. We are accepting applications from clean tech entrepreneurs who meet this criteria:

    http://impactangelgroup.com/entrepreneurs/investment-criteria/

  • Sheeraz Haji

    I do agree that the JOBS Act may open up the doors for entrepreneurs to use crowdfunding sites – I have not yet heard any success stories from this path but will keep my eyes and ears open. Thanks!

  • Paul

    Just visited Impact Group and here is what their site says….. this is later sage company investing…

    -We do not consider individuals or technologies, only fully-formed companies.
    -We do not consider businesses that are in idea or concept-stage, and strongly prefer companies that have achieved some degree of traction – revenue, contracts, strategic partnerships, etc.

  • Sandy Ewing

    Sheeraz- Is there any value in writing an update on this story? Or is the picture pretty much the same from your perspective? Thanks, Sandy

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