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Summary:

Will the popular incubator program for young web and mobile start-ups, Y Combinator, work for cleantech? That’s what a group of entrepreneurial investors, including Mitch Lowe, Dave Graham, and Dillon McDonald, are looking to find out.

Y Combinator

Will the popular incubator program for young web and mobile start-ups, Y Combinator, work for cleantech? That’s what a group of entrepreneurial investors including Mitch Lowe, Dave Graham, and Dillon McDonald, are looking to find out. On Tuesday morning, the team is launching Greenstart, an incubator and investment project that is looking to give seed funding and mentorship to the most promising young cleantech startups as they try to perfect their business plans and gain customers.

Lowe explained to me in an interview last week that Greenstart is looking to do four things for the young teams it selects to join its group:

  1. Provide $25,000 in seed funding to innovative early stage cleantech teams for a small stake (3-10 percent) in their companies.
  2. Offer mentorship and guidance around their business models, and help them figure out their target customers, products, and pricing. While the investors themselves don’t have an extensive cleantech background, they plan to bring in a group of advisors (they say they have 20 or so already signed up) that have had success in cleantech (investors, founders, entrepreneurs).
  3. Help the teams raise the next round of Series A financing, and help them cultivate their financing pitch.
  4. Provide networking, through their own Rolodex and mentor program.

Greenstart plans to operate out of a 7,000-square-foot office space in San Francisco,which can offer an open and collaborative experience, and is available to their teams for about three months. Greenstart is calling for all budding entrepreneurs to pitch them for the upcoming program, which will start Sept. 12, 2011.

On the surface, I like the idea. As Lowe put it to me: “We are cognizant of how difficult it is to start a greentech company … We just really want to help entrepreneurs who are starting cleantech companies be more successful.” It has become particularly hard to be an early stage cleantech startup in recent months as venture capitalists seem to be shifting towards later-stage and follow-on investments. Lowe says this new incubator model could help fill that gap.

However, there are a couple of hurdles I see for the program. I just don’t know if the incubator web model fits into the cleantech model. Unless the projects are only going to produce cleantech lite or cleanweb products (basically software and web-based cleantech projects), $25,000 won’t go far for a more science or materials based project (biofuels, clean power, etc). The Department of Energy’s ARPA-E program commits about the smallest grants I think are possible for chemicals, materials and biology innovations, at around a couple million dollars each.

The investing team doesn’t have that much cleantech experience, which they say will be made up by the mentor group. But if a group is bringing you mentors, why not just skip the middle man and go straight to the mentors? Also, if the Y Combinator model would work for cleantech, why wouldn’t Paul Graham (Mr. Y Combinator) just bring in more cleantech companies, or launch his own cleantech version? Food for thought?

Image courtesy of Al Albut.

  1. Jason Hanna Tuesday, May 24, 2011

    Like the effort but the $$$ provided are far too small. The SBIR programs run by the federal agencies are great opportunities for smaller teams to fund a clean energy innovation – and they start around $150K.

    Out here on the other coast we’re taking a different direction – provide the facilities and resources that seed-stage clean energy start-ups typically can’t afford and offer it to them at a very attractive price. The productivity and organic collaboration that can result is astounding. We’ve done it 3.5 blocks from downtown Boston and are now home to nine budding clean energy ventures. A link to a recent article about our incubator: http://bit.ly/kDdV45

    More info on Twitter @GreentownLabs

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  2. Samer Zureikat Tuesday, May 24, 2011

    Great follow-up piece to “Has Cleantech Moved Beyond VC”, Katie. I have to agree with you re: Y-Combinator model and Cleantech. It’s difficult to launch a Cleantech company with “angel-sized” investments. The equipment needed to further R&D on a lab-scale could cost 10x Greenstart’s proposed seed investment.

    The best Cleantech incubators may be science labs at post-graduate universities and government-funded research institutes where the research infrastructure is already in place. Unfortunately, these environments lack the pace and pressure that come with having VC’s on a company’s board.

    Khosla Ventures’ $275m “science experiments” fund is probably the most promising in terms of Cleantech incubators.

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  3. @Jason Hanna, @Samer Zureikat, Tend to agree with you guys. But maybe cleantech web/mobile will get some good ideas out of this.

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  4. $25,000 for 3-10% ownership for a cleantech company feels outrageous! The cornerstone of cleantech companies is the ability to self-generate IP. You can’t do that with $25,000 and office space. These guys clearly don’t know what it takes to launch a “heavy” cleantech.

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  5. It’s A Great Opportunity! I’m All In! For those innovators and entrepreneurs like myself, who have great renewable energy innovations, but don’t get the support from federal, state, county, local governments or institutions, this is just the opportunity we need. If Mitch, Dave and Dillon are serious, then I’d be open to providing an even higher percentage, because the opportunity to connect with mentors and build relationships will be invaluable.

    Charles E. Campbell, Founder & CEO
    Allen Hydro Energy Corporation (AHEC)
    http://www.ahecEnergy.com
    ahecgreen@live.com

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  6. Some of you think this is a good/bad idea. I say it doesn’t matter, its a step in the right direction and I applaud it! Way to go GreenStart!

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  7. Hi Katie,

    I spent quite some time to check out GreenStart and must say I like this concept a lot. The team and mentors they have are second to none and highly relevant. Even a highly experienced entrepreneur like myself will learn by sound-boarding and given the versatility of their mentors very specific issues where I have no experience such as “how best to approach chain stores” will be answered. I look very much forward to working with Greenstart.

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