Energy Excelerator, a Hawaii-based accelerator program for cleantech start-ups, has received an investment of $30 million from the Navy’s Office of Naval Research under the Asia Pacific Technology Education Program. It’s a significant investment in a sector that has struggled to raise money from venture capitalists because of its large capital requirements and low, slow returns for investors.
This latest commitment from the Navy triples the funding that Energy Excelerator has operated on in the three years since its founding. The program’s seed funding came from the Department of Energy, said Dawn Lippert, Energy Excelerator’s Senior Manager.
Energy Excelerator works with seed- and growth-stage companies building energy solutions that can be applied in Hawaii. Seventeen startups have graduated from the program thus far, half of which were founded in-state. Their products, which span hardware and software, include electronic bicycles, an inverter to charge electronic vehicles using DC solar power, and a system to grow algae for biofuel.
Hawaii is in many ways the perfect environment for energy start-ups, said Lippert. Electricity costs three to four times more than it does in the continental US, meaning young energy companies can compete economically, and the government is motivated to become less oil dependent. Sun, tides, and three growing seasons provide the resources for alternative energy, while the state’s military bases provide locations to test their systems.
“The Department of Defense saw the model and liked it and decided to back it [through the Navy]. The DoD really sees the value of Hawaii as a place to roll out early innovation companies, and they’re hungry for technology that solves energy problems, specifically in Hawaii and Asia Pacific. We actually have been working with the DoD as a strategic customer. All of the different bases provide a good place to demonstrate the technology, so they’ve decided to get on board.”
Although some venture capitalists are in the cleantech game, Lippert said that it is particularly difficult for these startups to find funding.
In April, the San Jose Mercury News reported that global clean technology venture investment had dropped 33% from 2011 to 2012, from $9.61 billion to $6.46 billion, and that first quarter figures from this year were down 30% from the fourth quarter of 2012. Those figures come from the research firm Cleantech Group.
On the announcement of its second class last year, the San Francisco-based cleantech accelerator Greenstart told TechCrunch that it was aiming to “make cleantech a little sexier in the investment community.”
But as the Mercury News pointed out, the best option for cleantech companies is often to find corporate investors who understand the scope of the space.
By operating outside Silicon Valley and instead in an environment with a vested interest in finding energy solutions, Energy Excelerator could be making steps toward helping cleantech start-ups get traction. Thus far, their 17 graduates have gone on to raise over $38 million and find customers in large companies like Toshiba.
“Cleantech is struggling in the venture world. A lot of energy companies in clean tech are hungry for this program,” Lippert said. “They’re coming to Hawaii to get into a market, and that’s what we do. Working in this market with a lot of players, and we help them find early customers. In the general world of clean tech and energy, this is a really bright spot.”