The private sector commits over $4 billion for risky energy tech
President Obama and his administration have brought together commitments of more than $4 billion from hundreds of organizations, foundations, universities, and incubators to invest in early stage energy tech and technologies that can fight climate change. That level of funding is double what the President previously announced he wanted to catalyze through his new private sector-focused “Clean Energy Investment Initiative.”
Along with the funding, the administration is also announcing a variety of new projects focused on clean energy and climate change. These include a new communications center that will make the Department of Energy’s programs and investments easier to understand for the public (including investors), and clarification by the Treasury Department that philanthropists and foundations can, in fact, invest in for-profit energy tech startups.
The administration made the announcement at a day long event on Tuesday. Vice President Joe Biden plans to speak about the new funding commitments in the afternoon.
In a time when the Department of Energy’s budget for early stage energy research appears to be relatively capped and the venture capitalists of Silicon Valley have moved away from early energy tech investing, there’s been a lack of funding for new energy startups. This has particularly affected those concepts that are trying to move from the lab to commercial deployment. The initiatives announced on Tuesday are focused on tapping funds from a third source: philanthropists, family offices, and foundations.
Over the past couple of years, family offices have continued this type of higher-risk early stage energy investing that other, more traditional investors haven’t been able to do. For more on these groups read Fortune‘s excellent Billionaires vs Big Oil feature.
For example, the Clean Tech Syndicate is a Chicago-based investment group that pools 11 family offices— who together have a net worth of $60 billion— that wish to invest in the clean-tech space. On Tuesday, the Clean Tech Syndicate announced that it is merging with another family office group, the CREO Network, to create a sort of super syndicate called “the CREO Syndicate” that will support 100 family offices with $50 billion of capital to invest.
The CREO Syndicate says it will also work with another group of 200 foundations, called Confluence Philanthropy, to boost those foundations’ investments in cleantech. Another group of 90 foundations called Divest Invest Philanthropy, which represent $4.8 billion in total assets, are separately committing funding for new energy tech over the next five years.
Two new non-profits were announced at the event that are looking to pool the funds of foundations and other groups. The Prime Coalition, founded by Sarah Kearney, has made its first investment in an energy storage startup and is working with Will and Jada Smith’s Foundation. Another new non-profit is using an initial $1.2 billion to invest in energy tech, gathering funds from the University of California’s Office of the Chief Investment Officer ($500 million), the New Zealand Superannuation Fund ($350 million), the Alaska Permanent Fund ($200 million), and others.
More traditional investors announced pledges, too. Goldman Sachs, for example, says it will commit another $500 million to clean energy tech.
Then there are the accelerators for cleantech, which are relatively small, but valuable in that they’re on the front lines of finding and cultivating tomorrow’s energy entrepreneurs. Groups like Cyclotron Road, Hawaii-based Energy Excelerator and the Chicago Clean Energy Trust, announced more commitments to their programs.
Perhaps with the influx of investment from a variety of exciting new sources, the stymied cleantech industry may have another chance at its time in the sun.