Funding your Climate Journey with Grants: Key Strategies for Holistic Fundraising

When we hear the term “grant,” most of us think of traditional philanthropy. Grants are for non-profits busy feeding the hungry, eradicating diseases and educating the underserved.

But we have good news for climate entrepreneurs! The urgency of the climate crisis has changed the grant paradigm. The climate grant universe – led by governments in the developed world and multilateral agencies in the developing world – has quickly become a $100bn+ market fueled by the recognition that avoiding a climate catastrophe requires high-risk, non-dilutive capital.

For this week's Insights piece, we sat down with Joel Armin Hoiland, Founder and CEO of Climate Finance Solutions, to chat about holistic fundraising strategies for climate entrepreneurs.

Startups + Grants = 🚀

In the for-profit climate space, grants are predominantly focused on research, development, and demonstration of new technology – fundamental research, applied R&D, and pilot demonstration and deployment. If your climate tech company is anywhere on the pre-commercialization spectrum, there is probably a grant for you. If you’re later stage, don’t despair. There are often grant opportunities for established companies looking to pursue R&D that investors deem too risky or, increasingly, to begin to deploy proven technologies.

Just because you’re venture-backed doesn’t mean you can’t get grants

Raising funds through a grant – either research- or partnership-based – is not an either-or question with venture capital, but rather an important part of a holistic fundraising strategy. Grants can serve to de-risk product development at various stages of your entrepreneurial journey, and balancing fundraising across different capital sources can increase the speed of commercialization and growth.

Holistic fundraising largely boils down to awareness. Spend time learning what grant dollars are out there, consult your existing investors, connect with your peers, or talk to an expert. You may find that you can finance a large part of your business without an ounce of dilution.

Not just for hardware (anymore)

The exploding climate grant market means that startups outside of the traditional hardware-centric definition of “technology innovation” can now access grant funding. In our conversation with Joel, we identified a couple of strategies for companies who might have struggled to gain traction with grant funders in the past. Here, we present two adapted and anonymized cases based on real-world experience.

Case 1: Partnerships open new opportunities

A founder building a SaaS company focused on improving urban planning and climate resilience in cities, struggled to qualify for a federal grant to build an MVP. As an alternative, they pursued a partnership-focused approach to grant fundraising. Armed with an awareness of grant opportunities in their initial target markets, the startup approached a local city agency to form a partnership. Together they applied for a large federal climate adaptation grant program, with a carve-out in the budget to support the startup’s product development. A few months later, the startup had all the capital they needed to build an MVP and a strong partner/initial customer to help them better prepare for broader commercialization.

Case 2: Corporates can fill a public grant gap

Another startup developed a machine learning (ML) model to support rapid tree planting following major disasters. As an initial market entry point, they saw a big opportunity with wildfire-affected areas in the Pacific Northwest, but struggled to find a paying customer. They’ve even reached out to public agencies, but their software focus has made them ineligible for local grant opportunities.

After some research, they discovered a large tech company had committed to Net Zero and had also issued a grant RFP for local organizations to reforest watershed areas around their data centers in the region. Given the tech company’s investments in ML/AI, the startup applied and temporarily built capacity to do tree planting themselves. While it was not a perfect fit with their initial strategy, the startup successfully landed the grant and also built a long-term corporate strategic partner. And all without an ounce of dilution!

💸 that’s free? Not entirely

The main hurdle to accessing grant capital is time. Applications tend to be long and complicated and, with a wide array of funders and programs, it can be hard to identify the right one. Once you win, reporting and maintaining a relationship with the grantor can also be quite burdensome. Still, the potential for non-dilutive capital with no required repayment means that grants should be on any climate founder’s radar and considered as a critical part of a holistic fundraising strategy. The key is understanding the operational burden of the application and reporting and doing the math to balance value and cost.

To minimize wasted time, founders should take care to clearly understand their near- and mid-term goals and carefully research potential grant programs. Beyond that, take the time to dig into application and reporting requirements, and if you can, speak with other grantees who have been through the process before. Similar to raising VC $$, doing your diligence on a particular opportunity could save you a lot of heartache down the line.

If you'd like more tactical advice related to raising grant capital for your climate business, check out our piece on Winning at SBIR with Kay Aikin and read our comprehensive guide on grants for climate change projects.

Joel Armin-Hoiland is the Founder and CEO of Climate Finance Solutions, with previous experience leading a wide range of climate-related ventures. He is also a co-founder and advisor at The Climate Map and a mentor and advisor at Third Derivative, Techstars, and the Breakthrough Energy Fellows program. He holds a Master of Environmental Law and Policy from Vermont Law School.

Climate Finance Solutions is a mission-driven consultancy that helps companies secure non-dilutive funding to develop, deploy, and scale high-impact climate solutions. CFS has secured over $75M in non-dilutive funding for a diverse portfolio of clients, and its team has raised over $500M over their collective careers. CFS has clients on five continents, with a team distributed across North America, Europe, and Africa.