Many cleantech entrepreneurs are in the tough place we commonly
call the Valley of Death.  Stable, but underfunded, which they
need for growth.  If this describes your company, find out
what you should do.

Is your cleantech startup falling short of your 2011 funding
goals? The answer is most likely “yes.” But the reality is this
doesn’t make you different from the vast majority of startups, both
in the cleantech sector and beyond.

Many cleantech entrepreneurs I speak with are in the tough place
we commonly call the Valley of Death.  [See href=”http://greeneconomypost.com/can%E2%80%99t-developers-cleantech-co%E2%80%99s-funded-plenty-private-equity-capital-renewable-energy-11969.htm”
target=”_blank”>Why Can’t Cleantech Companies Get Funded When
There is Plenty of Capital for Them]

What is the Valley of Death? On the near side of the valley of
death is safety: Your company is small, but relatively stable. You
haven’t taken on a lot of debt, so there’s less risk.

You’ve probably invested some of your own money into the
project, but most of your savings are still safe. Of course,
there’s a downside to this safety: Your prospects for growth are
much smaller because you need funding to reach a critical mass and
gain some momentum.

When you look across the Valley of Death, what do you see?

Stability is there, also.

This is the oasis that companies find after they’ve hit their
funding goals, and they can focus on the blocking-and-tackling
execution of creating a successful business. I can’t tell you how
many cleantech entrepreneurs have told me that if they could just
get funding, there’s no doubt in their mind they have a product
that will find a market, scale, and turn a profit.

The Valley of Death lies between these two comfortable places,
and it’s a place where you’re exposed and at risk. You can’t stay
on the safe side of the valley forever: You’ll need to grow to
survive. And to achieve this growth, you’ll need funding.

In this economic climate, very few startup companies get
sufficient funding while they’re still on the safe side of the
valley. Investors want to see that the company can scale, that
there’s a market for the product, and that the company has the
ability to execute its business plan. It’s hard to prove that when
you’re playing it safe.

Here’s the Catch-22 of the Valley of
Death: You need funding to grow, but you need to grow to get
funding.

Once you’re across the Valley, you’ll be far less risky to
investors, because you’ve provided them with evidence you can
deliver what they need to see. But can you get there? Can you make
it across? And if you don’t get funded in the second half of this
year, what should you be doing?

You should invest the rest of 2011 in relationships. When the
money comes back into the market in a bigger way, you’re going to
want investors to know who you are, and what you do. Go to
conferences. Network. Understand that it’s a long game and make
sure you can last.

Proterra, a Colorado-based electric bus manufacturer, announced
this month a $30 million venture capital investment. The money is
starting to loosen up for good companies, even if you think you’ve
heard that before in the last couple of years. In Colorado, the
cleantech industry grew 33 percent in the last five years, and it
was the only sector that showed growth last year.

The Valley of Death is a dark, lonely place. But it can be
crossed. Realize that it won’t happen all at once, and start
planning your crossing today.  

This article first appeared in the href=”http://greeneconomypost.com/funding-cleantech-startup-17821.htm”
target=”_blank”>Green Economy Post  and is reprinted here
with the kind permisson of the author.