In the innovation ecosystem, a “valley of death” is the period of time in which a nascent company has begun burning through its capital on operations, but is not yet generating revenue. When startups fail, it’s almost always during this stressful and precarious stage. Death valleys are, unfortunately, unavoidable. The only way out is through.
It’s never an easy task to take an innovation to market, but it can be particularly challenging in the case of climatetech. Where death valleys for direct-to-consumer companies typically follow a one-and-done J-curve, climatetech founders must be prepared to pass through at least four distinct valleys of death, some of which can take several years to cross. These hazards are mapped out in brief below.
Valley One: Space
The first challenge is practical. Most climate technology involves physical hardware that requires extensive lab space and equipment to prototype. Laboratory equipment, and the technical expertise to use it, can be a debilitating entry barrier in the climatetech ecosystem because best-in-class technologies require best-in-class facilities to create. If you’re a first-time founder, these resources are seldom within reach.
MFN’s recent profile of Greentown Labs, a large climatetech incubator with campuses in Massachusetts and Texas, delved into this challenge, highlighting the critical role that organizations like Greentown can play in offering otherwise inaccessible facilities to get your early-stage climatetech startup off the ground.
Valley Two: Synergy
Armed with your new prototype, your technology is now at the mercy of the market, where reception can be frosty. Unlike direct-to-consumer enterprises, climate innovations usually need to be adopted by hesitant corporate giants (who sometimes have built their empires on the bedrock of the very practices your venture seeks to change). The online resource Climate Drift describes climatetech startups as “a single piece of a gigantic, interlocked puzzle.” Founders must navigate a complex minefield of regulatory standards, political scrutiny, and dissonant incumbent practices. The harsh intensity of this spotlight brews investor apprehension, stretching the go-to-market process beyond what many early-stage companies can afford.
This is where strategic networking becomes essential, and it’s another area where ESOs can offer critical support. Organizations like Greentown Labs (which boasts relationships with 80 corporate partners ranging from United Airlines to Microsoft to Shell) serve as a bridge for connecting groundbreaking innovations to the stubborn status quo.
Valley Three: Scalability
Speakers at the 2024 Climate Business & Investment Conference in New York City asserted that a dozen or so existing technologies could abate 90 percent of the world’s excess carbon. “The world-saving climate technologies we need already exist,” they noted. And yet, climate change persists as a threat to humanity. The problem isn’t insufficient innovation in the climatetech space, it’s that too many climatetech innovations fail to scale. Regulatory barriers, infrastructure needs, supply chain complexities, and enormous capital requirements create a vast web of scalability challenges that can cripple novel innovations.
This is the area in which the government most actively plays a role. The Inflation Reduction Act of 2022 was America’s most significant legislative climate achievement to date. Its $500 billion in investments and incentives helped countless new and existing cleantech startups to scale. However, continued pro-growth climate legislation will be required to integrate costly novel technologies into the market chains.
Valley Four: Stability
If you make it through the first three valleys of death, you might encounter a paradox: your enterprise can’t keep pace with the problem it’s designed to solve. As earlier barriers elongated your timeline, the pace of climate change itself may have compressed it. In this industry, it’s not uncommon for the circumstances in which a given innovation is conceived to transform at a faster rate than the innovation can be developed and deployed. Over time, this cycle stunts the adoption of beneficial technologies, resulting in graveyards of buried breakthroughs.
Prescient business models, robust evaluation systems, consistent monitoring measures, and healthy cross-sector partnerships are all key building blocks for sturdy, sustainable climatetech ventures.
Beneath all of these, however, you need a solid foundation of collaboration. In climatetech, perhaps more so than any other sector, no one founder can go it alone.
The support of your network can make a considerable difference in how you traverse these four valleys of death.
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