Since our founding in 2010, we have made significant efforts to provide needed capital to the best cleantech startups from across the Midwest. What began as a one-day business plan competition with small grants has evolved into a rigorous investment process that, since 2014, has deployed over $4.8 million into 27 high potential startups.
Each year we improve upon our investment program to make it more effective and we are excited to announce that we are now transitioning to an “Always Open” investment process. Startups interested in investment can now submit expressions of interest at any point in the year and, if they meet our due diligence criteria, potentially receive investments. Co_Invest Cleantech, our marquee event, will still take place in the Spring and it will continue to serve as a platform for introducing our newest investments to our stakeholders from around the country.
Apply now at https://www.cleanenergytrust.org/apply/
Why The Change?
In the past, we invited startups to signal their interest in investment only one time each year, during a six-week window that occurred in the late Fall. If an exciting company approached us in the Spring, we had no process for engaging with them until late Fall. Similarly, when we were ready to engage in the late Fall, our readiness was often out of sync with the funding needs of the startups. It was clear that we needed to better match our investment readiness with the timing of the capital needs of the startups we seek to support.
Our move to a rolling investment process is also designed to strengthen the overall openness of our investment platform. We wrote in July that the traditional venture capital industry, which prides itself on unique abilities to recognize patterns and strong networks that feed investment opportunities, has fallen short in its support of startups lead by females and minorities due to the closed and clubby nature of its processes.
At Clean Energy Trust, nearly a quarter of our portfolio companies have female founders, and more than half are led by minorities. We credit these exceptional statistics to the fact that we run an open investment process in which anybody can apply and follow a down-selection process based on technological merits, commercial potential, and environmental impact rather than first impressions of the management team or assessments of who referred the company to our attention.
So, how does moving to a rolling investment process increase the diversity of our investments? It doesn’t in-and-of-itself. However, we realized that not being able to respond to the funding needs of high-potential startups 10 months out of the year is not in keeping with being fully open and inclusive.
How Will This Work?
As we transition to this new model, we will seek to complete at least two investment cycles before Co_Invest Cleantech in the late Spring. The first cycle will take place between September — December 2018 and the second cycle will take place between January — March 2019. Presuming the new model is successful, we will then transition to the 2019/2020 investment cycles that will culminate with the Co_Invest Cleantech event in the Spring of 2020. Similar to past years, we anticipate investing a total of $1 million in 4 to 6 companies between these two 2018/2019 cycles and then reload for the 2019/2020 investment cycles.
How Can My Company Be Considered?
If you are seeking investment funding and you are a cleantech startup from the Midwest, please apply on our website at https://www.cleanenergytrust.org/apply/.
Once you provide the requested information, we will endeavor to provide an initial response within 2 to 3 weeks. If your startup passes through our initial screens, we will then reach out to you and initiate our formal due diligence process. This process takes, on average, about 8 weeks to complete. If we like what we see after our due diligence, we will then invite you to present to our Investment Committee to answer questions about your business and technology. Coming off this meeting, we will notify you whether we intend to invest or not. If we decide to invest, we will work with you to finalize the terms of the convertible note before wiring the money. If we decide not to invest, don’t despair! The process is designed to allow companies to be considered in future investment cycles after achieving certain milestones or resolving identified weaknesses.
Our ultimate goal for this “Always Open” approach is to better serve our entrepreneurs and to ensure that we are ready and positioned to support high potential cleantech startups when they need us most. We’re excited about this change and can’t wait to be working closely across the year with the inspiring cleantech entrepreneurs and startups from the Midwest!