US platform seeks to plug philanthropy cash into clean energy

Prime Coalition, a two-year-old nonprofit, says the initiative's success could eventually "eclipse the traditional venture capital community in cleantech".

Prime Coalition, a US nonprofit organisation helping philanthropies find clean energy investment opportunities, has matched its first group of investors with two early-stage companies.

Prime has helped a consortium of philanthropies, family offices and investment funds commit $5.5 million of series B financing to RedWave Energy, a company developing film technology that converts unused waste heat into electricity. The group of investors include The Blue Haven Initiative, Will and Jada Smith Family Foundation, JUST Water, Ellis Family Fund at The Boston Foundation, Energy Foundry, Enertech Holding Company and Northwater Intellectual Property Fund.

In addition, the investment in RedWave unlocked a $3.8 million US Department of Energy grant to help scale up the company. Prime also enabled Clean Energy Venture Group, a venture capital firm, to invest an undisclosed amount in Quidnet Energy, which is developing an energy storage system using turbine generators.

There is both an “acute” shortage of capital to support early-stage clean energy companies like RedWave and Quidnet and barriers that keep philanthropists from providing that capital, according to Prime’s executive director Sarah Kearney. “Most philanthropic organisations are not organisationally supported to behave like a for-profit investor,” she said in a statement.

Kearney said this is where Prime can help. It’s worked with pipeline partners, business incubators and accelerators and government granting agencies to find early-stage US companies in the energy, agriculture, waste and water sectors in need of funding. Prime then connects these companies with philanthropies seeking to commit money to help reduce greenhouse gas emissions.

Prime must know “with confidence,” Kearney said, that these companies are qualified to receive philanthropic capital, are viable enough to attract follow-on investors and can eventually contribute to at least one gigaton of CO2 emissions reductions annually.

According to Kearney, Prime, which launched in 2014, is a “two-sided marketplace” that makes interaction between philanthropies and promising clean energy companies possible. It received praise from the Obama administration in June 2014 as a key initiative to help bridge the gap between the private sector and climate change solutions.

“The value that we add is in absorbing some of the painful, lengthy sales cycle that entrepreneurs would need to go through to get in the door and persuade philanthropic investors to actually place capital at the earliest stages of the company’s formation. And we could help them qualify themselves for philanthropic capital,” Kearney said.

There are six other companies Prime is currently working to help find philanthropic growth capital, comprising Anfiro, Capacitor Sciences, ConnectDER, EAN, EMC and OKLO. The technologies they are producing range from energy efficient wastewater treatment to low-cost energy storage units for transportation.

With its first round of investments complete, Prime will focus the rest of the year on matching six other companies with philanthropic capital, Kearney said.

“This community controls a very large pool of capital in the US and around the world,” Kearney said. “And if we can unlock even a very small percentage of it, we could eclipse the traditional venture capital community in cleantech altogether.”