Government grants and publicly funded projects have been a boon to climate tech and clean energy businesses. But while companies are landing these funds, the payments often trickle in slowly or sometimes there’s a need for cash up-front to make purchases to get the work going.
A startup with roots in the Pacific Northwest is helping bridge that cash-flow gap.
Enduring Planet launched in 2021 offering loans against government grants, and more recently expanded its offerings to provide loans to companies with government contracts. It also added chief financial officer services on a part-time or fractional basis.
“Our overarching mission for Enduring Planet is to ensure that climate entrepreneurs have the capital they need to be successful,” said Dimitry Gershenson, the startup’s Portland, Ore.-based co-founder and CEO.
The fintech company has raised $9 million to loan out to climate tech startups in amounts from $100,000 to $500,000.
The cash still comes at price, with annual interest rates of up to 18.5%. But additional fees are limited to a 1.5% origination fee.
“We are one of the cheapest providers on an all-in cost basis, if you account for all fees,” Gershenson said. He emphasized that other lenders might require a personal guarantee or asset liens, while his company secures the loan only against the government grants and contracts.
Enduring Planet works with a network of venture capitalists, and will also help connect its customers to investors if they decide to pursue additional funding.
“[We’re] unsticking the climate finance ecosystem where we see these inefficiencies,” said Erin Davis, co-founder and chief operating officer. Davis is based in Washington, D.C.
The startup’s third co-founder and chief technology officer is Joshua Krafchin, who resides in Oakland, Calif. The company has 17 employees.
Enduring Planet recently closed its own round of funding, and has taken nearly $4.9 million from investors. Backers include Green Spark Ventures, ImpactAssets, the Toniic impact investor network, and clients of Figure 8 Investment Strategies.
The team finds its loan customers through partnerships with startup accelerators and working with investors. It also tracks grant and contract awards and reaches out to recipients.
While Enduring Planet has raised $9 million for loans, it has deployed $13 million thanks to its returns. More than 90% of the startups receiving loans are led by an underrepresented founder or has a diverse team, or is serving a marginalized community with its products and services, Gershenson said.
There are a few groups providing financial services and support for early-stage climate tech startups. That includes the Los Angeles Cleantech Incubator, Ezra, Spring Lane Capital and others.
Gershenson and Davis said working with passionate, committed entrepreneurs in this sector is inspiring and makes them hopeful about the prospects for tackling global warming. And it helps drive the field’s successes.
“Most of the people building in this space are not in it just because there’s a financial opportunity,” Gershenson said. “That’s not their first thing, which means they are infinitely more motivated to power through the difficulties of being an entrepreneur. They stick to it because they care so deeply.”
https://ift.tt/b2WsiXj June 24, 2024 at 07:25PM GeekWire
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