Powering Up: How Non-Dilutive Funding is Revolutionizing the Energy Tech Landscape

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As the world’s population continues to grow, so does global energy demand. However, the energy industry is one of the biggest contributors to greenhouse gas emissions, which is causing climate change. The energy sector contributes about 40% of global emissions of CO2.

This is when the startups come for help.

Startups are often at the forefront of innovation, and they can use this creativity to develop new technologies that can help reduce emissions.

Overall, startups can have a significant impact on tackling global emissions by developing new technologies, changing the way we live, educating and raising awareness, and advocating for policy change. For example, startups are developing new ways to generate clean energy, such as solar and wind power, and they are also developing more efficient ways to use energy.

But developing these solutions requires funding.

In this article I’ll try to unpack the benefits of federal funding programs that many energy-tech companies can take advantage of.

Introduction to Non-Dilutive Funding in the Energy Tech Industry

Non-dilutive funding is revolutionizing the energy tech landscape by providing companies with the capital they need to grow without giving up equity.

This type of funding is particularly attractive to early-stage companies that are looking to scale quickly.

There are several different types of non-dilutive funding, including grants, loans, and government subsidies. Grants are typically awarded by government agencies to companies that are working on innovative energy technologies. Loans can be provided by banks or venture capitalists, and they are typically repaid with interest. Government subsidies are available to companies that are developing energy technologies that have the potential to reduce greenhouse gas emissions.

But, what are the some of the advatanges of non-dilutive capital.

First, it does not require companies to give up any equity, which can be helpful for companies that are trying to maintain control of their technology. Second, non-dilutive funding can be used to finance a wider range of activities than equity funding, such as research and development, marketing, and sales. Third, non-dilutive funding can be more affordable than equity funding, as companies do not have to pay interest on loans or repay grants.

The federal government is more interested in investing in early-stage startups with high-risk technology solutions than VCs and angel investors because:

• By providing startups with the capital they need, non-dilutive funding allows them to continue researching and developing innovative solutions without having to worry about giving up equity in their company. This means that energy startups can focus on developing solutions that will have a positive impact on the environment, rather than worrying about meeting the demands of venture capitalists.
• The government has a longer-term investment horizon than VCs and angel investors, who are typically looking for quick returns. This allows the government to take on more risk in the hope of achieving larger returns in the long run.
• The government is more willing to invest in high-risk technologies that have the potential to revolutionize industries or create new markets. VCs and angel investors are typically more risk-averse and prefer to invest in more established technologies.
• The government can provide startups with access to a wider range of resources than VCs and angel investors, such as government labs, research grants, and tax breaks. This can help startups to overcome the challenges of early-stage development and commercialization.

What are the federal funding trends to tackle the energy crisis

In recent years, there has been a significant increase in the amount of federal funding available to energy tech companies. This is due in part to the growing awareness of the need to develop clean energy technologies, as well as the energy policy of government to accelerate energy transition.

There are a number of funding trends that are emerging in the energy sector. One trend is the increasing focus on clean energy technologies. This is being driven by the need to reduce greenhouse gas emissions and address climate change. Another trend is the growing interest in energy efficiency. This is due to the rising cost of energy and the need to reduce our energy consumption.

These funding trends are essential to help us tackle the energy crisis and build a more sustainable future.

- The Office of Energy Efficiency and Renewable Energy (EERE), U.S. Department of Energy which is the largest investor in clean energy technology development in the U.S. Government, has published funding opportunities totaling over $3.8 billion

-The President’s Budget invests a total of $44.9 billion in discretionary budget authority to tackle the climate crisis

-A new Solar Manufacturing Accelerator at the U.S. Department of Energy (DOE) invests ~ $15 billion in supercharge clean energy innovation and infrastructure.

-~$5 billion in new lending authority for the U.S. Department of Energy (DOE) XVII Innovative Technology Loan Guarantee Program to support loans for eligible projects that avoid, reduce, or sequester greenhouse gas emissions, which includes support for domestic critical mineral supply chains.

-$1 billion for a new mandatory Clean Energy Manufacturing program at DOE to build resilient supply chains for climate and clean energy equipment through engagement with allies.

-$291 million at the U.S. Department of the Interior (DOI) to accelerate and expand clean energy deployment on public lands and offshore waters.

-$200 million for a new Solar Manufacturing Accelerator at DOE that will help create a robust domestic manufacturing sector capable of meeting the Administration’s solar deployment goals without relying on imported components that were manufactured using unacceptable labor and environmental practices.

-$150 million in new funding for DOE’s Office of Clean Energy Demonstrations to scale renewable and distributed energy resource technologies.

• $90 million for a new DOE Grid Deployment Office to build the grid of the future by planning for and assisting in the development of new and upgraded high-capacity electric transmission lines nationwide, connecting more communities to clean energy across the country.

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Types of Non-Dilutive Funding Available for Energy Startups

Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Programs — The SBIR and STTR programs are federal programs that are the largest source of non-dilutive capital for startups and small businesses that provides up to $2 million in capital for research and development projects. In the energy tech industry, these programs can be a great way for startups to secure funding for innovative solutions.

Advanced Research Projects Agency-Energy (ARPA-E) — ARPA-E is a federal agency that provides funding for high-risk, high-reward energy projects. — agency focuses on funding projects that have the potential to significantly impact the energy industry.

Department of Energy (DOE) — The DOE offers a variety of funding opportunities for energy startups, including grants, loans, and tax incentives. The agency also provides technical assistance and expertise to help startups develop their solutions.

Despite these challenges, non-dilutive funding is likely to continue playing an increasingly important role in the energy tech industry. As the world continues to grapple with the climate crisis, there will be a growing need for innovative solutions to reduce our carbon footprint and transition to a more sustainable future. Non-dilutive funding will be crucial in supporting the development of these solutions

Interested in applying for federal funding? Schedule a call with me today to learn more about available grants and eligibility criteria. Send a call request at funding@ifundlab.com