Winning the Climate Race by Fueling Innovation
We are losing the race against climate change. So we must accelerate new technology innovations that can attack the root causes of climate disruption. Unfortunately, there is choke point for new innovations due to a lack of early-stage investment capital. But we can’t afford to let innovations that can help win the race against climate change die on the vine before they can make it to market.
VertueLab is filling this investment gap via the VertueLab Climate Impact Fund. The fund invests in startup companies that can deliver scalable climate impact through the commercial success of their innovations. As these innovations are adopted, the impact is multiplied many times over. And, by reinvesting financial returns from the fund into more investments, the impact is further multiplied. This powerful compounded impact means that small, catalytic impact investments can result in more impact “bang” for every philanthropic “buck.”
At VertueLab, we use tailored impact forecasting tools to select investments that have high-impact potential. And, we perform due diligence on the key indicators for commercial success. Our impact investing approach combines the impact orientation of a nonprofit with the financial strategies of a venture capital fund. After making investments, we measure real-world impact of the innovations we support to tune our investment model and to give funders a direct line-of-sight between their dollars and their climate impact.
The Investment Gap that is Choking Climate Solutions
During the past 10 years, greenhouse gas emissions have continued their relentless rise, but investments in new climate innovations have plunged. New cleantech innovations often struggle to attract investment capital due to a combination of factors:
inherently higher technology risk
more validation and scale-up steps
longer gestation cycles
Because of this, these innovations require more capital to make it from lab to market. And once they do reach the marketplace, many climate solutions sell into slow-moving, regulated, and complex markets, resulting in long sales cycles and slowed implementation.
All of this adds up to an “investment gap” – a lack of funding that chokes advancement of promising cleantech climate solutions. Because governments and conventional investors are not filling this persistent gap, VertueLab is partnering with individuals and philanthropies to build a capital bridge to unblock the innovation choke point.
Our strategy to fill this investment gap is at the core of our mission and offers a powerful way for funders to take climate action to speed the transition to a low-carbon economy.
Leveraging our Impact Investments with other Capital
To move climate innovations from lab to market requires a ladder of capital sources at different stages. Government grants can help with basic research and development early-on, and market-rate cleantech venture capital and corporate investors can fuel company growth later, but only after the technologies are proven and startups have customer traction. The VertueLab Climate Impact Fund fills the capital gap for commercializing new innovations.
To ensure that climate innovations successfully reach the market, VertueLab builds a capital ecosystem that has no missing rungs on the capital ladder. We deliver a suite of expert support services to assist companies in acquiring federal and state research and development grants. This non-dilutive capital compliments our impact investments from the VertueLab Climate Impact Fund and helps eliminate the technology risk that is a barrier for conventional investors. We also collaborate with market-rate cleantech venture funds to help companies obtain follow-on investments after our funding has bridged the early-stage investment gap.
“Our VertueLab investment of $210,000 has enabled us to attract other investors.
We raised an additional $400,000 in 30 days.”
— Eric Steinmeyer, CEO of Focal Technologies