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The effects of corporate investment and public grants on climate and energy startup outcomes

Nature Energy volume 9, pages 883–893 (2024)Cite this article

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An Author Correction to this article was published on 30 May 2024

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Abstract

Climate and energy (climate-tech) startups can accelerate the commercialization of innovative technologies but face low investment and high failure rates. Here we analyse the effects of recent growth in corporate investments, combined with public grants and other private investments, on startup outcomes. We apply the Cox Proportional Hazards model to a dataset of 2,910 US climate-tech startups founded 2005–2020. We find that corporate and other private investments are significantly associated with both exits (initial public offerings, mergers/acquisitions) and failures (bankruptcy, going out of business). While public grants are not significantly associated with these outcomes, they fill important funding gaps in high-risk sectors. Publicly funded startups also exit at a higher rate with the addition of corporate investment (155% increase) compared with other private investment (78% increase). These findings highlight the roles of different investors in scaling startup technologies to meet climate goals and are robust across sectors, timelines and types of public funding (national, subnational).

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Fig. 1: Interplay between public, corporate and other private investors in climate-tech startups.
Fig. 2: Investment breakdown by climate-tech sector and investor type.
Fig. 3: Corporate climate-tech investment by corporate and startup sectors.
Fig. 4: Survival curves for exit and failure outcomes for the six largest sectors with and without public grants or corporate investment.

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Data availability

The main startup and investment dataset is proprietary and available for purchase from the Cleantech Group at https://www.cleantech.com/. Additional data on patents were obtained from the publicly available PatentsView API, and data on public grants were obtained from the publicly available datasets at https://www.usaspending.gov/. With the available code and access to the i3 database and spreadsheets, our analysis could be fully replicated.

Code availability

All data-processing steps are outlined here, and the associated code is publicly available at https://github.com/Climate-tech-Team/startup-outcomes. Code is also provided to generate all figures in the main text and Supplementary Information and to obtain patent data through the PatentsView API. With the available code and access to the i3 database and spreadsheets, our analysis could be fully replicated.

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Acknowledgements

Funding for this research was provided by the Energy and Environment Program at the Alfred P. Sloan Foundation under grant number G-2021-14177 (K.M.K., K.S., M.R.E., M.A.B., Z.H.T., N.E.H., E.D.W.). K.S. acknowledges support from the BMK (Austrian Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology) under the BMK endowed professorship for data-driven knowledge generation: climate action. We thank R. Fedorchak and R. Lucas for their assistance with data cleaning.

Author information

Authors and Affiliations

  1. Center for Global Sustainability, School of Public Policy, University of Maryland College Park, College Park, MD, USA

    Kathleen M. Kennedy, Maria A. Borrero, Nathan E. Hultman & Kavita Surana

  2. La Follette School of Public Affairs, University of Wisconsin-Madison, Madison, WI, USA

    Morgan R. Edwards

  3. Nelson Institute Center for Sustainability and the Global Environment, University of Wisconsin-Madison, Madison, WI, USA

    Morgan R. Edwards & Zachary H. Thomas

  4. Campus Straubing for Biotechnology and Sustainability and School of Management, Technical University of Munich, Straubing, Germany

    Claudia Doblinger

  5. Earth System Science Interdisciplinary Center, University of Maryland College Park, College Park, MD, USA

    Ellen D. Williams

  6. Department of Physics, University of Maryland College Park, College Park, MD, USA

    Ellen D. Williams

  7. Institute for Data, Energy and Sustainability, Vienna University of Economics and Business, Vienna, Austria

    Kavita Surana

  8. Complexity Science Hub, Vienna, Austria

    Kavita Surana

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  1. Kathleen M. Kennedy
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Contributions

Conceptualization: K.S., M.R.E., K.M.K. Data curation: K.M.K., K.S., Z.H.T., M.A.B. Formal analysis: K.M.K. Funding acquisition: K.S., M.R.E., N.E.H. Methodology: K.M.K., K.S., C.D. Project administration: K.S., M.R.E., K.M.K., N.E.H. Software: K.M.K., K.S., Z.H.T. Supervision: K.S., K.M.K. Visualization: K.M.K. Writing–original draft: K.M.K. Writing–review and editing: K.M.K., K.S., C.D., M.R.E., E.D.W., N.E.H.

Corresponding authors

Correspondence to Kathleen M. Kennedy or Kavita Surana.

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Nature Energy thanks Hans Lööf and the other, anonymous, reviewer(s) for their contribution to the peer review of this work.

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Supplementary Notes 1–3, Tables 1–19, Figs. 1–5 and references.

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Kennedy, K.M., Edwards, M.R., Doblinger, C. et al. The effects of corporate investment and public grants on climate and energy startup outcomes. Nat Energy 9, 883–893 (2024). https://doi.org/10.1038/s41560-024-01530-w

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