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Phil Covington headshot

Cleantech Accelerator Greenstart Evolves into Venture Company

A little over a year ago, we reported that cleantech accelerator Greenstart was distinguishing itself from other firms by specifically working with startups operating at the intersection of cleantech and IT, while the launch of their in-house design practice came from the recognition that great design wins. Twelve months later, rapidly iterating Greenstart is further distinguishing itself by leaving the accelerator model behind altogether.

Earlier this month, the firm confidently announced via email, "we killed our accelerator," which, far from being a negative, instead represents a process of fine-tuning their model in order to capitalize on what was working best for them, and best for the startups they were working with.

The typical accelerator model of 90-day intensive mentorships has run its course for Greenstart, allowing them to instead re-brand as an early stage venture firm. I asked founding and managing partner, Mitch Lowe, what was behind this latest step in their evolution.

Lowe told me that Greenstart attracts businesses that already have a deliverable product along with early stage customers, and when working with such entities, by the time 90 days are up, things are just starting to get interesting, adding, "We realized fundamentally, we wanted to be a lifetime partner; there is no one-size-fits all approach...so let's stay with them for the long run." Accelerators, he said, are great and are still valuable for startups at the idea, or "napkin-stage", but such entities were never Greenstart's focus.

The switch to an early stage venture capital firm has, however, not changed Greenstart's fundamental belief in the importance of placing design - both product and user experience - front and center. Design, Lowe asserts, "is having its moment in the sun right now." Over the last twelve months, they have expanded their design team to ten people, under chief designer David Merkoski, formerly with Frog Design, with plans to add yet more talent in this area in the coming year. Their design focus was an important factor in deciding to change their business model too, as 90 days became a limiting factor for the amount of important design work that could be achieved.

Companies at the intersection of cleantech and IT are still in the spotlight too, though the type of target startups they want to work has been further refined to those operating where, "IT meets energy and resource markets,"  which Greenstart categorizes succinctly as "clean-web" businesses. Though cleantech has come in for some negative press over the last couple of years, Lowe says that clean-web, being capital-light and software-driven, looks more like a regular technology investment, subsequently allowing follow-on investment to come from regular technology investors.

Despite abandoning the accelerator model, far from backing away from promising young businesses, Greenstart plans to make investments in 10 to 12 such clean-web companies this year, making them one of the most active investment entities operating in this space.  The firm sees massive growth potential in energy and resource markets going forward.

Greenstart itself is only a two-year-old entity, and has proven to be a nimble organization willing to rapidly iterate its own business model. At this point, though, Lowe says, "I think we've found our groove." They will continue to invest in their design studio and continue to add great people. And since they are a company founded by entrepreneurs, their guiding principle is to reflect on what kind of investor they would have wanted in the past, and strive to occupy that role for the innovative startups they will be partnering with.

Phil Covington headshotPhil Covington

Phil Covington holds an MBA in Sustainable Management from Presidio Graduate School. In the past, he spent 16 years in the freight transportation and logistics industry. Today, Phil's writing focuses on transportation, forestry, technology and matters of sustainability in business.

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