From a pool of 600 applicants across 60 countries, almost 50 climate innovation startups were recently selected to join a non-exclusive, 18-month clean technology accelerator. Having chosen the most investable, scalable and impactful solutions, Third Derivative (D3) aims to fund, hone and scale these companies to introduce more innovative technologies into the climate action sphere and thus feasibly achieve global carbon reductions goals.
Rocky Mountain Institute (RMI), a leading clean energy think-and-do tank, and New Energy Nexus, a nonprofit that supports clean energy entrepreneurs and accelerators across 30 countries, created D3 earlier in 2020 as a vertically integrated engine for climate innovation. Perceiving a dearth in clean technology innovation, the founders say they created D3 to help overcome resource and network barriers that can be otherwise insurmountable for such industry startups.
“I have started eight companies, and I know that this is the financial opportunity of our lifetime," Bryan Hassin, co-founder and CEO of D3, said in a press statement. "But to be successful, we have to get all the people in the game at the same time — we need the entrepreneurs with great ideas, venture capital to get them going, corporate partners to help them scale, and the market experts and mentors to ensure their success.”
“It will take investing trillions of dollars a year in technology, for many years, if we are going to solve the world’s climate challenges," Hassin continued. "We think we can unlock these trillions of dollars if we go after the big innovations that then de-risk the entire category of climate technology.”
The startups driving Cohort 417 — named after this year’s peak atmospheric carbon dioxide concentration of 417.1 parts per million — represent the sectors creating the greatest global greenhouse gas emissions: electricity, industry and transportation being at the top of the list.
Participating in D3 means joining a well-resourced accelerator; accessing committed venture capital, including an optional $100,000 up front; gaining the financial and technical support of global corporations; and tapping into RMI’s cutting-edge market, regulatory and policy insights. The clean technology accelerator aims to support its clean technology enterprises through their lifecycle, even past 18 months, as well as on-board additional companies on an ongoing basis, with applications reopening this month, Hassin told GreenBiz.
Thus far, the supportive ecosystem Third Derivative has brought together for these startups includes nine venture capital firms — such as Imperative Ventures, Chrysalix and Tsing Capital — with a total of $2 billion in assets under management. In addition, 10 corporate partners — including AT&T, BP Ventures and Microsoft — represent $3 trillion in market capitalization. They are joined by more than 300 clean technology market experts.
RMI and New Energy Nexus created a unique environment from the start, where global investors, corporations and startups make connections, form partnerships, and share insights. In a press release, D3 writes that the ecosystem “creates the foundation for what it takes to address global climate challenges at the scale and speed that is needed.”
While partner corporations and investors provide significant amounts of resources to the startups, they also gain holistic and lasting benefits to their businesses, D3 explains in a press release. Investors find gains by participating in due diligence, selection and coaching of startups, D3 said, adding that, as corporate partners show interest in the market solutions, investments become more secure.
In buying into D3’s well-supported startup technologies, corporations find opportunities for operational savings, revenue growth, market disruption and achieving carbon neutrality goals, the accelerator details. As opposed to the more toilsome and uncertain process of finding carbon neutrality solutions in the current market, D3 enables corporations to source, validate and scale climate solutions with greater ease.
“This vertical integrated process of selecting startups in close partnership with investors and corporates aligns all parties and provides them with the support they need to progress faster,” D3 writes in a press release.
Startups, especially those pursuing developments in next-gen clean technology, face significant hurdles — which is why scaling is a rarity, and why companies like Tesla are few and far between, D3 says.
Some of the challenges D3 cites include: significant capital needs, needing to partner with slow-moving and risk-averse companies in selling products and scaling, and confronting the biases that markets, regulations and policies have against disruptors.
In an article, RMI identifies four “valleys of death” that the average clean technology entrepreneur faces from research through deployment: At the beginning, lack of startup funding stymies many good ideas. During product development, it’s often hard to find the perfect entry-point in the market. Products that do come to fruition may lack the money or time to get buy-in from incumbents. Finally, scaling most clean technologies requires much more capital than software does, and securing that capital involves hard-won proof of stability, profitability and scalability.
D3 and its partners aim to flatten these valleys as much as they can. The accelerator says it aims to enable selected startups to achieve commercialization and scale within five to 10 years — a process that normally takes 20 to 40 years, the program claims. These scaled technologies, as well as partner investors and corporations that are supported in the process, should ultimately help create a rising tide that lifts the ever-changing clean technology sector to greater viability.
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