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

Kathleen M. Kennedy (), Morgan R. Edwards, Claudia Doblinger, Zachary H. Thomas, Maria A. Borrero, Ellen D. Williams, Nathan E. Hultman and Kavita Surana ()
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Kathleen M. Kennedy: University of Maryland College Park
Morgan R. Edwards: University of Wisconsin-Madison
Claudia Doblinger: Technical University of Munich
Zachary H. Thomas: University of Wisconsin-Madison
Maria A. Borrero: University of Maryland College Park
Ellen D. Williams: University of Maryland College Park
Nathan E. Hultman: University of Maryland College Park
Kavita Surana: University of Maryland College Park

Nature Energy, 2024, vol. 9, issue 7, 883-893

Abstract: 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).

Date: 2024
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DOI: 10.1038/s41560-024-01530-w

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