Building Rewarding Partnerships With State Government Agencies

Tackling climate change requires collaboration between the public and private sectors on an unprecedented scale, and immense government spending - which presents a huge opportunity for climate startups who initiate partnerships with the state. But because government structures can seem opaque and complex, founders are often missing out on this huge avenue for funding and other support.

Derrick Tang is the deputy director of venture capital at IBank California, which has launched the state’s first public venture fund. We spoke to him to find out about the many tangible benefits businesses can reap from reaching out to government agencies, how founders can begin to navigate the world of public meetings, and the value of exchanging knowledge with government stakeholders.

What the state can offer startups

The opportunities that state governments offer for investment and collaboration are often overlooked by the private sector. To understand how much the state government can offer startups, don’t think of it as just one entity or stakeholder. It’s hugely diverse, made up of many different stakeholders and agencies, with distinct areas of expertise, priorities, and ways of supporting your business.

Even if you don’t believe your work intersects with the government in any capacity, it may do so indirectly through influencing your buyers or investors, so forming just a basic relationship with government agencies will keep you ahead of any pertinent changes. Think of networking and collaborating in the public sector in the same way you would in the private sector - you might not gain anything of value today, but the seeds you plant could pay off immensely at a later date.

The business benefits of collaborating with government

Funding

State governments have the potential to help startups access much of the capital they need, including through:

• Grants - Establishing and maintaining relationships with the state can put you ahead of the curve when it comes to securing grant funding.
• Venture funding - California and dozens of other states, territories, and tribes have programs for funding startups. The scope of these programs can include matching funds, direct investment, or covering the costs associated with raising capital.
• Debt financing - Direct loan offerings and loan guarantee programs to catalyze private lending exist at the federal level and state level. Two examples specifically targeting climate startups include the Climate Catalyst Revolving Loan Fund and the Climate Tech Finance loan guarantee program.

Support with running your business

Government agencies exist whose entire job is to make it easier for businesses in their state to run successfully - one example is the Governor's Office of Business and Economic Development in California. These agencies can help your startup get tax credits or exemptions, support you with finding a site if you’re planning to build a factory, and give you hands-on technical assistance in areas such as navigating permits and meeting regulations.

Market knowledge and industry connections

Government agencies make a conscious effort to co-create markets through grant programs and other initiatives. In developing these programs, they undertake a great deal of research, which means agencies generally possess an in-depth knowledge of the policy landscape and broader market that will be immensely valuable to your company. The sooner you start building a relationship with these agencies, the sooner you’ll gain insights you can leverage about the future direction of the market you’re working in, and the more opportunities you’ll have to be connected with other key stakeholders.

Forming fruitful relationships with government agencies

1. Don’t be afraid of cold emailing

Public servants often have a responsibility to be communicative with the general public, which means they tend to be more accessible and willing to help than people in the private sector. Getting their attention can be as easy as sending an email, and most people’s addresses are either publicly available or easy to figure out. If you’re not sure who’s best to contact, look for any blogs or press releases the agency has published online, which may mention who the program manager is. The person you email might not be able to help you themselves, but will likely be able to introduce you to someone who can.

2. Go to public meetings and events

Do some research to identify which government agencies are most applicable to your business, and start going to their public meetings and other events that are posted on their website. These meetings will be rife with networking opportunities, and in some meetings, like workshops hosted by the California Energy Commission, the list of attendees is published, which can give you a way in when contacting people. Members of the government will also attend broader industry events, where prominent figures and leaders will be far more approachable than their private market counterparts.

3. Don’t wait for an RFP to inquire about grants

If you open a line of communication before a grant solicitation is released, you can play a pivotal role in shaping the design of these programs. Hearing about entrepreneurs’ on-the-ground experience helps the government create grant programs that are actually useful, allocate funding properly, and complement private markets. Feedback from founders is so valuable that even very small players can make a substantial impact on how capital is allocated if they make this effort.

4. Make public comments

Writing a public comment is an effective, low effort first step for getting your voice heard in public sector channels. You can use the space to highlight your existing knowledge, and a government reader will view it as a significant piece of engagement in terms of assessing public opinion to decide the next policy step.

5. Remember that building relationships is a virtuous cycle

People in public sector jobs often stay in their roles for a longer time than people in the private sector stay in theirs, and because it’s their responsibility to support you as a constituent, you can show up more earnestly in the knowledge that they’re operating in good faith. As a result, the benefits of establishing a relationship can compound over time, with both parties developing a closer understanding of the challenges on both sides and where they can help.

6. Don’t discount smaller agencies

When you’re looking for funding, don’t assume that smaller agencies lack the cash of their larger counterparts. They’ll often handle a surprisingly large amount of capital for their size - even as much as big companies in the private sector - and shouldn’t be overlooked.

Derrick was appointed by Governor Gavin Newsom as IBank’s first Deputy Director of Venture Capital, leading California’s public venture fund for underrepresented fund managers, entrepreneurs, and climate justice investments.’ Before joining IBank, Derrick founded and led the Climate Investments team at the Bay Area Air Quality Management District, where he launched the agency's first loan program. Derrick previously launched and managed the CalSEED initiative, an early-stage grant and economic development program for clean energy entrepreneurs. He also has experience as an investment associate at Horsley Bridge Partners, a venture capital fund-of-funds; an energy consultant developing carbon capture technologies; and a lecturer on entrepreneurship at the Instituto Tecnologico de Buenos Aires.