Guest author: Gayle Jennings-O’Byrne, Founder, WOCSTAR Capital
Entrepreneurs chasing small, niche markets are overlooking an incredible opportunity in the form of billions of dollars in green technology funding just waiting to be claimed. But to benefit from these funding streams, today’s innovators—and investors—need to think bigger.
Too often, entrepreneurs focus their business acumen on resolving minor, personal challenges and then tack on a big number to describe the market size and potential. They create a clever solution for a common inconvenience or try to fill a regional gap with needed retail or service ventures. Both are entirely viable business ideas, but these businesses often fail to reach the scale that would entice investments from many major venture capitalists. The business model may not allow for scale, or the product offering is simply too niche. Entrepreneurs of color especially fall into this trap, pursuing business opportunities that bring their cultural product to the mass market rather than those that can shift the trajectory of the market itself.
It’s time for entrepreneurs to follow the money, focusing on large-scale, commercially viable products that attract serious investment. Rather than thinking of what is, we need to encourage entrepreneurs to think of what could be — especially as it relates to sustainability and the green economy.
Without debating the merits or realities of climate change, there is real momentum and innovation taking place in the green economy. Reducing carbon emissions, pollution and waste; harnessing solar, wind, water and scaling green technology will benefit everyone’s future. It is the new frontier that’s going to shape the way we work and interact together — with the same transformative thrust we saw after the dot-com boom or as we’re currently seeing from the AI revolution.
The green economy is where the smart investors are putting their money — and that includes the federal government. Right now, there is a surge in funding for green tech — including $27 billion in EPA grants made available this year through the Greenhouse Gas Reduction Fund — that’s meant to pave the way for game-changing innovations like new battery technologies, smart energy systems, and renewable infrastructure.
Rather than looking at the short-term or dare I say backwards, entrepreneurs should be building “where the billions are”—which right now means focusing their energy on scalable, impactful solutions that impact our planet. Building the next AI solution can generate wealth, but let’s be honest: the boat for getting ahead of AI has sailed. Sam Altman has locked that avenue up, just as Jeff Bezos, Larry Page, and Sergey Brin locked up the dot-com boom, or as Mark Zuckerberg dominated the social media age.
The next transformative business idea is going to come from the green economy and there’s never been a better time for founders looking to access capital. There are literally billions of dollars out there for the entrepreneurs who have the right businesses.
As part of President Joe Biden’s Inflation Reduction Act, the EPA has already awarded grants through the GGRF, which consists of three programs: the $14 billion National Clean Investment Fund, the $6 billion Clean Communities Investment Accelerator, and the $7 billion Solar For All. Now, the recipients of those grants, mostly climate and green-tech-focused non-profits, are open for business and actively looking for startups and innovations to finance.
But government investment is only the first part of this equation. These public-private partnerships are critical to scaling up funding and accelerating innovation, leveraging the strengths of both sectors: the agility and creativity of private companies combined with the stability and long-term vision of public institutions.
When governments provide incentives, regulatory support, and initial funding, private entities can leverage their expertise and resources to develop and deploy innovative solutions. This synergy can help address gaps in funding, streamline processes and ensure that sustainability initiatives are effectively executed.
As the venture community, we can create a more resilient and sustainable future by fostering these partnerships, driving investment into the billions required to tackle the climate crisis. If we harness this private investment alongside our taxpayer dollars, the EPA’s $27 billion could multiply to $270 billion—or even reach a trillion dollars.
This is where the investment community needs to get on board and change its thinking. We need investors willing to take risks on innovative green technologies without proven business models. Not every breakthrough will come pre-packaged with a million subscribers or a proven track record.
Maybe we’ll have to consider investing in non-revenue-generating startups, something many of us got away from as we chased cashflow and later funding rounds. We might have to get more comfortable with the unknown and be more willing to test-pilot beta versions of new technologies.
We can already see this in artificial intelligence, where many initiatives operate at a loss but still lay the groundwork for future success. We need to think like that to create more opportunities for innovators and entrepreneurs working on sustainable solutions to the world’s biggest problems.
As an industry, we in venture capital are slowly regaining the muscle memory of investing in promising ideas, even if their viability is still in question. It’s time to focus on the potential that lies in the unknown.
Both entrepreneurs and investors must shift their mindsets to combat the climate crisis. Entrepreneurs must broaden their horizons and seek scalable solutions that align with the vast funding opportunities.
Meanwhile, investors must embrace a more adventurous approach, recognizing that breakthrough innovations often come from unproven concepts. By fostering public-private partnerships and daring to invest in the unknown, we can unleash the potential for massive funding growth. It’s time to think bigger, invest more boldly, and collaborate more deeply to secure a sustainable future for all.
