Beyond the usual entrepreneurial growing pains, early-stage cleantech startups have numerous challenges. Not only do they have to innovate and compete with entrenched legacy technologies, funding is another big hurdle.
“We kept seeing this investment gap,” says Shelly Curtiss, executive director of the Colorado Cleantech Industries Association (CCIA). “They have some early-stage funding in the form of a grant, loan or friends-and-family money, but they’re too small to be looking for funding at the venture level.”
For early-stage cleantech businesses, “The angel community is stepping more and more into this space to fill that gap,” she adds.
That’s where the Rockies Venture Club (RVC) enters the picture. Founded in 1985, RVC is the oldest angel investor group in the country. Since 2014, 215 club members have invested more than $40 million in 41 companies.
As RVC executive director, Peter Adams has heard his fair share of pitches from cleantech startups over the years. “We’ve looked at a bunch of cleantech deals over the years,” he says.
He highlights RVC investments in Golden-based Vartega and Silverthorne-based Sulas Industries, and notes that cleantech has emerged as a more viable sector for angel investors, who are likewise increasingly interested in funding its startups.
“Cleantech has had its ups and downs, and it’s gotten some black eyes in the past,” he says. But a key rubicon has been crossed as renewable energy has sailed past grid parity without much fanfare in a number of markets, he adds. “Now, even without tax breaks, we’ve crossed that break-even point — or crossed over it. I think a lot of people don’t realize that.”
Even with more big companies making major moves in cleantech and renewables, Adams adds, “There is still a place for startups to get in.”
RVC wants to help catalyze those startups with its new Rockies Impact Fund starting in 2020. The club won a $470,000 grant from the Colorado Office of Economic Development and International Trade earlier in 2019 to “expand our reach into some verticals,” says Adams. “The first one we did was cleantech, because we’ve seen a lot of interest in that space, and Colorado coming up with some great concepts.”
Rather than go it alone, the Rockies Venture Club has partnered with the Colorado Cleantech Industries Association on the new group, Cleantech Angels. “It’s mutually beneficial,” says Adams of the partnership. “It’s a win/win for these two nonprofits.”
As RVC has five chapters of angel investors on the Front Range, the decision was made to “not reinvent the wheel” with a standalone cleantech investor group, adds Curtiss. “Peter has a network set up, he has all the back-end operations set up, he and his team know what they’re doing. It just made perfect sense to partner with them.”
“We consider it to be one angel group with long hallways,” says Adams. “This [Cleantech Angels] is just an offshoot of that.”
He adds, “There are several ways that investment might end up going into a Colorado cleantech company.” Angels can make individual decisions to invest in companies or else they can invest in “a mini-cleantech fund” seeded by the OEDIT grant that will support multiple companies in the sector, he adds. “I’m really excited about elevating cleantech in the state.”
Co-presented by incubator Traxion, the Golden RVC chapter will host the initial Cleantech Angels events.
Bud Rockhill, managing partner of Traxion, helped launch the Golden RVC group in 2017 and sees Cleantech Angels as a great fit for the chapter. “I think most of our investors will be very interested in cleantech companies,” he says. “It really provides a great marketplace for people who are competent and ready and need capital.”
Only two to three companies pitch at each meeting, which typically attract about 40 angel investors. “This is about telling your story,” says Rockhill. “They have to present it in a way that makes people care.”
After a friends-and-family seed round, cleantech startups need another raise of $300,000 to $700,000 to get off the ground as a business. “Some of them are pretty expensive and capital-intensive,” says Rockhill. “It takes a little while, unless you’re really lucky, to get to a Series A.”
The first Cleantech Angels meeting is scheduled for October 17 at the Colorado School of Mines in Golden. Cleantech companies are encouraged to apply to pitch at the first or subsequent events, which Rockhill says will take over a Golden Angels meeting every two or three months. Those interested in becoming an Angel should reach out to RVC.