Bridging the funding gap with national labs

Technological innovation is key to tackling climate change. But even the most promising clean technologies can fail at finding a path to market, with many founders struggling to transform a groundbreaking idea into a product that actually sells. The Department of Energy’s Lab-Embedded Entrepreneurship Programs (LEEP) aim to help founders clear these hurdles, and turn scientists and engineers into fully-fledged entrepreneurs.

By participating in these programs, you’ll be provided with critical support you need to develop and de-risk your technology, accelerate its commercialization, and boost your chances of securing venture capital or other follow-on sources of funding. Situated across four national labs, these two-year fellowships include supervision from a lab scientist, access to first-class resources, opportunities for financing, commercial validation, and co-founder matchmaking, as well as offering connections with local universities and businesses. 

In this piece, co-produced with Hugo Mkhize, we’ll look at why these programs are so valuable for budding entrepreneurs, what you need to know before applying, and how you can boost your chances of being selected. This is the second of 5 pieces produced in partnership between Enduring Planet and Hugo, building on his research: A Financial Guidebook for U.S. Startups: Crossing Climate’s Valleys of Death and Achieving Scale.

The benefits of national lab programs

1. Access to top-tier resources
Each national lab involved in the program is equipped with state-of-the-art equipment and facilities, and staffed with scientists at the cutting edge of new research. Having access to the unique capabilities of these spaces will significantly accelerate the research and validation of your technology, reducing development timelines and costs.

2. Excellent networking opportunities 
Because each lab placement is situated with its own research and manufacturing hub within the wider LEEP program, it offers the opportunity to connect with people from across the local, regional, and national tech ecosystem, including industry experts, investors, fellow entrepreneurs, and potential business partners. The program also culminates in an Annual Demo Day, providing startups with introductions to potential commercial partners and investors. 

3. Mentorship from leading scientists
As part of the program, you’ll be paired with a scientist who specializes in your field, allowing you to tap into their expertise. They’ll provide insights, tailored support, and guidance to overcome any problems you’re facing as you mature your technology. This early access to R&D tools and technical guidance helps in pivoting development tracks based on early results, improving technology performance and market acceptance. 

4. Financial support 
When you’re working on an innovative technology, you won’t see any immediate financial return on your efforts, and you likely won’t be able to pay yourself a salary without outside funding. To support your personal financial stability for the duration of the fellowship, the programs pay participants up to $120,000 each year - plus healthcare benefits and an annual travel allowance - and provides entrepreneurs with up to $220,000 in funding for technology development. All in all, over the course of the fellowship, the monetary assistance provided to your startup can reach close to $500,000, allowing innovators to focus full-time on developing their technology for two years. 

5. Entrepreneurship training
You might have created a game-changing product to revolutionize your climate vertical, but this in no way guarantees your business will be profitable. Running a thriving company takes a keen understanding of all aspects of entrepreneurship, including marketing, finance, and intellectual property (IP), thus training across these areas is a critical component of these programs. Having this foundation will maximize the chances you’ll be able to overcome the barriers that cripple many climate startups, and that your technology will be successfully deployed at scale.

Potential drawbacks to a national lab program

1. It might hamper your intellectual property rights
The intellectual property landscape can be a minefield. Make sure you fully understand how the ownership and commercialization rights around your research and technology will be affected by your enrollment in the program, and be prepared for the possibility you’ll need to negotiate with the lab, who’re likely to have their own IP policies. Failing to do so could have a far-reaching impact on your long-term business prospects. 

Try to understand the incentives from your respective licensing officer at the transfer office. Their need to protect taxpayer dollars or university resources can lead to stringent IP regulations, with royalties being a common element of any IP agreement. You may want to speak to LEEP alumni and an experienced IP lawyer to get a sense of what a fair deal looks like.  

2. The selection process is intensely competitive
Competition for places on the lab program is tough, so you’ll need to dedicate a fair amount of time to making sure you knock your application out of the park. The majority of these programs select less than ten participants per year. Decide in advance whether this time investment is worth it - how strong your chances are will depend on the potential impact and viability of your technology.

3. You’ll be bound by geographic constraints
There are currently four participating labs, in Colorado, California, Illinois and Tennessee. If you don’t currently live within commutable distance of the lab you apply to, you’ll be required to relocate for the duration of the fellowship.

4. The money won’t take you all the way 
The funding you’ll receive from the program will cover the beginnings of research and development of your visionary technology, but it won’t be enough to build and scale your climate startup. You’ll need to explore other avenues of funding - such as applying for grants, raising debt, or chasing venture capital - to move your business forward after the program, and these can be incredibly difficult to obtain. 

Tips for securing a spot on the program
 

1. Show your passion
Of course it’s important that your technology is feasible and has commercial potential, but the reviewers will also be looking at your personal qualities, such as how passionate you are about what you do. Maturing a new innovation can be grueling work, so being committed and excited is a must. Combine this passion with a clear sense of the technical area match with a specific lab. 

2. Demonstrate that you’re resourceful
Running a successful climate startup takes grit and determination - there’s no shortcuts or leeway. To a large extent, whether you succeed depends on how intrinsically motivated you are to keep going when things aren’t working out, and whether you have the drive to chart completely new territory - so show that you have these traits and convince the reviewers that you’re up to the task. It is crucial that you can demonstrate that you have the ability to mobilize resources, lead teams, and operate in ambiguous situations.

3. Know where the lab can help you (and where it can’t)
To prove you’re a good match for the lab program, your application should laser in on a specific, science-related problem you’re facing in developing your technology. Explain how the supervision and support of the lab personnel, as well as the resources on hand, will help you overcome this issue - and that the program is therefore invaluable for enabling you to get this critical technology to market. Clear and organized plans with well-reasoned technical milestones, risk mitigation plans, and a credible path to scale enhance the chances of acceptance. Moreover, projects with high potential impact, differentiation from existing solutions, and alignment with the mission of fellowship sponsors are favored.

An Overview of the Four LEEP Nodes

The LEEP program currently consists of four national labs:

Chain Reaction Innovations (Argonne National Lab)

• Located at Argonne National Laboratory in Lemont, Illinois.
• Provides financial support, access to world-class R&D tools, and connections to the Chicago business and research ecosystem.
• Preferred technical areas: clean energy and advanced manufacturing products and processes.

Cyclotron Road (Lawrence Berkeley National Lab)

• Operates in partnership with Activate, an independent non-profit, at Lawrence Berkeley National Laboratory in Berkeley, California.
• Focuses on entrepreneurship training, connections with scientists, faculty, and industry partners, and unencumbered access to collaborations.
• Preferred technical areas: advanced manufacturing, clean power, and electronics.

Innovation Crossroads (Oak Ridge National Lab)

• Located at Oak Ridge National Laboratory in Oak Ridge, Tennessee.
• Features a startup curriculum, accounting, legal advice, an advisory network, and connections to industry experts and investors.
• Preferred technical areas: energy, advanced manufacturing technologies, building efficiency, and advanced scientific computing.

West Gate (National Renewable Energy Lab)

• Operated by the National Renewable Energy Laboratory (NREL) in Golden, Colorado.
• Supports innovators with technology concepts in at least a proof-of-concept stage aiming to move innovations into deployment at scale quickly and efficiently within the NREL research and development areas.
• Preferred technical areas: energy efficiency, sustainable transportation, and renewable power.

Hugo Mkhize is currently an MBA candidate at Judge Business School at the University of Cambridge with a concentration on Energy & the Environment. Prior to that, he completed the Master of Advanced Studies in Climate Science & Policy (MAS CSP) program at UC San Diego's Scripps Institution of Oceanography. During this time, he compiled a financial strategy manual titled “A Financial Guidebook for U.S. Startups: Crossing Climate’s Valleys of Death and Achieving Scale.” As part of this body of work, intended for academic founders, he conducted interviews with 44 industry practitioners, Climate Tech founders and CEOs, and funding organizations.

Professionally, he previously spent 5 years at Morgan Stanley, a global Investment Bank. Across both Johannesburg and London, he worked on M&A and capital markets transactions in the renewable energy, environmental services, and infrastructure spaces.