In the fast-evolving cleantech sector, securing funding is both crucial and challenging. Public funding and soft-funding sources, such as grants and philanthropic investments, are lifelines for startups. However, the key to unlocking these funds lies in robust impact data and quantification.
Why Impact Data Matters
Impact data refers to the measurable effects of a company’s operations on the environment and society. For cleantech startups, this means quantifying reductions in carbon emissions, energy efficiency improvements, and contributions to renewable energy production. Clear, quantifiable data is essential to demonstrate the value of cleantech solutions to potential funders.
The Public Funding Landscape
Public funding, including government grants and subsidies, often prioritizes projects with significant environmental and societal benefits. In Europe, for instance, the EU has allocated €1 trillion through the European Green Deal Investment Plan to support sustainable projects. Cleantech startups must provide compelling impact data to show how their innovations align with these objectives. For instance, a startup developing a new solar technology should present data on potential carbon reductions compared to traditional energy sources.
The Role of Soft-Funding
Soft-funding, which includes grants and philanthropic funding, is particularly appealing as it does not require giving up equity. Funders in this space prioritize projects with clear, measurable impacts. For example, the Breakthrough Energy Ventures, backed by Bill Gates, focuses on funding innovations that can reduce greenhouse gas emissions by at least half a gigaton annually. Detailed impact data can help startups stand out. A startup working on water purification can attract funding by quantifying its impact on water quality and availability, addressing both environmental and social issues.
Overcoming Challenges in Impact Quantification
Quantifying impact data is challenging. Startups often lack the resources and expertise to build models that funders need to release capital. But, if you are attempting to build some foundation in house before reaching out for help, here are some best practices to adopt:
-
Prioritize Key Metrics: Focus on a few critical metrics or key processes that align with your climate value proposition. For example, measuring carbon emissions reductions or energy savings can be more impactful than tracking numerous minor indicators.
-
Start Small: Begin with straightforward data collection methods. Use basic energy meters or simple logbooks to gather initial impact data. Gradually improve your data collection processes as you grow.
-
Engage Stakeholders Early: Involve customers, investors, key suppliers, or local communities early in the data collection process. Their input can provide valuable insights and enhance the credibility of your impact data. This also helps you identify what data they need.
-
Transparency in Reporting: Maintain transparency by regularly updating your numbers, especially after significant changes like new raw materials, product expansion, or market entry. Highlight both successes and areas for improvement to build trust. It's better to start somewhere than not at all.
-
Develop a Strong Narrative: Complement quantitative data with a compelling narrative. Use case studies, testimonials, and real-world examples to illustrate how your technology benefits the environment and society. A strong narrative makes impact data more relatable and easily understandable.
Impact data and quantification are essential for cleantech startups to secure public and soft-funding. By effectively measuring and communicating their environmental and social benefits, startups can align with funder priorities and contribute to a sustainable future. As demand for transparency grows, the ability to provide robust impact data will be a critical factor in the success of cleantech innovations.
The future of cleantech depends not only on groundbreaking technologies but also on the ability to convincingly demonstrate their positive impact. With the right data, cleantech startups can clear the path to a greener future and turbocharge those funding timelines.
At ClimatePoint, we offer a variety of services tailored to different stages of startup maturity. Talk to our experts to learn more about how we can support your soft-funding or grant application.
