assessing the relationship between public policy ... · most cleantech investors do take policy...

Assessing the RelAtionship between public policy & cleAntech gRowth among investors &

start-ups in Scandinavia

funded by

Assessing the RelAtionship between public policy & cleAntech gRowth among investors &

start-ups in Scandinavia

Wain Collen & Alexander Lidgren

02

05

10

20

22

04

executive summary

INTRODUCTION

results

bibliograhy &resources

annex 1Interviewees

06 | Public Policy and the Cleantech Sector09 | Objective and Methodology

main findings

contents

Cleantech Scandinavia

www.cleantechscandinavia.com

Magle Stora Kyrkogata 7223 50 LundSweden

funded by

02 03

Assessing the RelAtionship between public policy And cleAntech gRowth in Start-upS in Scandinavia

As scAndinAviAn countries look to

develop the cleAntech sector into A

source of reliAble growth And globAl

competitive AdvAntAge, the role

of start-ups is considered crucial.

however, there Are significAnt bArriers

for the successful development of

start-ups, and consequently public

policy has an important role to play in

mArket development.

Different policies, such as chemical regulations or

feed-in tariffs for renewable energy can be pivotal

in triggering research and business development

for new commercial applications.

Additionally, public policy that does not provide

access to finance beyond R&D; for instance, for

technology demonstration and commercialization for

smaller companies risks reducing the impact of R&D

investments.

We conclude that public policy needs to

be simple, trAnspArent And predictAble

if it is to increAse investor confidence

in cleantech markets. Investors consider

certain types of policies as more “reliable” than

others; these are typically policies that are not easily

revised. Additionally, improved coordination between

diverse public funding bodies may help address the

challenges that start-ups face in moving beyond

R&D to commercialisation. Finally, our findings

suggest that the time and creative effort invested by

entrepreneurs to accessing the full potential of public

funding can pay off substantially in the medium term

This report assesses the relationship between public

policy and cleantech start-up growth in Scandinavia

from the point of view of both start-ups and investors.

This is undertaken by interviews with actors

developing cleantech solutions in Scandinavia and

investors allocating capital to cleantech solutions

in Scandinavia. Results show that public policy has

a positive influence on cleantech growth. Firstly,

environmental policy has been key in providing

incentives for entrepreneurs to begin researching and

developing new technologies. Secondly, policy in the

form of public funding can provide necessary support

to companies in early R&D and business development

processes.

executive summary

Another sphere of government

influence is public funding which

is often necessary in situations

where mArket Actors Are hesitAnt

to provide funding for high

risk-high reWard activities, such

as neW technology development.

hoWever, public policy can also

have unintended negative effects.

this is particularly the case With

unpredictAble legislAtion thAt

may reduce investment confidence

in the sector.

eFFectiVepublic policy = 1+2+3

simple

predictable

transparent

1

2

3

04 05


o The trend of stricter environmental policies in

Europe is a contributing factor for a majority of high

growth start-ups to start developing environmentally

beneficial technologies.

o Long term environmental policy trends do impact

on strategic business development, but less so in the

day-to-day operations.

o Most cleantech investors do take policy implications

into consideration when assessing cleantech business

options.

o However, a significant portion of investors prefer to

not consider environmental policy implications in their

investment decisions. This is due to a lack of reliability

in some environmental policies, specifically those

funded by government budgets. This in turn reduces

the potential for start-ups dependent on such policies

to access venture capital.

o To strengthen investor confidence, environmental

policy needs to be simple, transparent and predictable.

There is more faith from investors in legislation that

Cleantech is an area that Scandinavia has prided itself on being a market leader in. The region ranks high in various cleantech indexes (1) and there are suggestions to further develop the vision of Nordic countries as sustainability leaders and champions of green growth (2).

bans or taxes environmentally harmful substances,

or implements standards, and less confidence

in legislation that costs governments money –

particularly feed-in tariffs.

o Access to public funds provides significant benefits

for start-ups, particularly to undertake R&D, but

also to attract venture capital. Public investment

helps product development and increases investor

confidence by taking on some of the early investment

risk.

o Despite this, the main challenge for start-ups is to

source further finance for product demonstration and

large scale commercialisation.

o Addressing this challenge will require

i) coordinated funding policies on the national level to

ensure that all stages of the technology development

cycle are adequately funded, and

ii) creative and dedicated attention by entrepreneurs

to the full range of funding options available to them.

In developing new technology solutions, start-ups

have a significant role to play. Smaller companies are

known to foster innovation and be flexible in adapting

to change. And more specifically in the debate

surrounding economic growth: fast growing start-ups

are a major source of growth and job creation (3). These

characteristics make them an important stakeholder

in developing clean technology as a source of reliable

economic growth for Scandinavian countries.

However, the cleantech market is a challenging one for

start-ups to succeed in. Firstly, the cost of developing

new technology tends to be expensive, and the sector

is characterised by a “long time to market” - increasing

costs further - with markets often being conservative

and resistant to adopting new technologies (4).

Consequently, development of the cleantech sector

is often characterised by dependence on government

policies that promote the inclusion of societal costs

of environmental degradation, and policies that

support the development of innovative technologies

that address environmental problems. Nevertheless,

influencing market behaviour in a “beneficial” manner

for society and remaining competitive has proved

challenging for governments, particularly on the

international arena. To address such obstacles public

policy needs to continuously evolve if Scandinavian

countries are to optimise clean technology as a source

of global competitive advantage and economic

growth.

o

mainfindings

1.introduction

Public Policy and the Cleantech Sector

Objective&methodology

public policy needs to continuously evolve if scandinavian countries are to optimise clean technology as a source of global competitive advantage and economic growth.

lack of reliability in some environmental policies,

specifically those funded by government budgets reduces the potential for start-ups

dependent on such policies to access venture capital.

06 07


public policy and the cleantech sector

It can be argued that one important difference between

cleantech and other areas of economic growth –

such as ICT and biotech – is the importance of policy

drivers (5, 6). Various types of environmental polices

(See table 1) are often important drivers for cleantech

research, testing and the commercialisation of

cleantech technologies. Policy support is therefore an

important factor to foster technical change to cleaner

technology (7). This is hardly controversial, though the

issue of how government interventions should be best

designed and applied is still under debate (8).

These include government support for R&D through

grants, subsidies, & tax breaks, government support

for incubators, pilot testing, demonstration projects,

and different types of networking and clustering

projects. In addition to these, some government

support measures are of more importance later in

the technology development chain, when SMEs

have a commercial product ready for the market.

These include education packages for SMEs related

to marketing and sales competence, contract

negotiations, and business model development. There

is also a lot of public interest in supporting cluster-

related activities; for instance, how cleantech SMEs

can team up with competitors in order to win large

contracts. Such activities are considered beneficial to

develop and market more system oriented solutions

that require contributions from several firms (8).

Given the high costs of developing new technology -

access to relatively large amounts of capital is pivotal

for entrepreneurs to succeed in this sector. However,

in the early stages of technology development, most

venture capitalists are not that interested in investing

since they perceive the risk of an untested technology

to be too high. Given these circumstances, all

Scandinavian countries – as well as other governments

around the world - have created publicly funded bodies

to provide sources of funding for entrepreneurs in the

initial phases of product and business development.

Despite all Scandinavian countries providing such

funding options, the mandates of these bodies can

vary greatly, and thus the type of financial support

provided varies also. The majority of these funding

mechanisms are focused on very early stage R&D.

Much fewer of these public finance options have clear

mandates to fund SMEs beyond laboratory R&D,

specifically to develop prototypes and for large scale

commercialisation. This presents a challenge for start-

ups since the jump from laboratory testing to market

commercialisation is well recognised as an area that

lacks financial support in the technology development

process. This funding gap is called the “valley of

death”, specifically due to the lack of investors,

public or private, willing to invest the large amounts

of capital required to move a technology beyond the

laboratory and onto the market (4). Figure 1, by STDC,

demonstrates well the funding gap start-ups face

during this stage.

Bans (products and materials),

licenses, requirements on EHS

information, mandatory recycling

and recovery quotas, material

and quality requirements, emission

levels, chemicals regulation

(bans, handling etc.)

Deposit-refund systems, taxes

and charges, liability rules, feed-in

tariffs, removal of subsidies to fossil

fuels, white certificate schemes,

green certificate schemes, various

tax credits, CO2 trading

Requirement on EHS information,

emission registers, material and

quality information and mandatory

labels, information about chemical

content for professional and

private users, energy labelling,

marketing regulations

Responsible Care and similar

industries initiatives, application

of product and process standards,

product panels, environmental

management systems (e.g. ISO

14001), functionality panels,

various agreements between

government and industry

Green public procurement,

technology procurement, public

procurement for innovation,

& public financing for, R&D,

innovation and environmentally

beneficial market solutions

Eco-labelling ISO type I, EPDs,

green claims, energy labelling,

organic labelling of food,

certification schemes of

e.g. hotels, consumer advice,

consumer campaigns, education

ADMINISTRATIVE

MANDATORYINSTRUMENTS

VOLUNTARYINSTRUMENTS

ECONOMIC

INFORMATIVE

table 1: examples of different policy instruments. adapted from: mont, o. and dalhammar, c.(9)

APART FROM POLICy INSTRuMENTS THAT

PROVIDE INCENTIVES TO INFLuENCE MARkET

DEMAND AND SuPPLy, OTHER TyPES OF PuBLIC

SuPPORT TOOLS AND ACTIVITIES ARE ALSO

INFLuENTIAL FOR THE DEVELOPMENT OF

CLeAnTeCh (5, 10).

08 09


fundamentalresearch

appliedresearch

Technology development &demonstration

product commercialization

& market development

market entry & market volume

GOVERNMENTS industryangel investors

venture capital banks

FUNDING INTENSITY

industry

Figure 1: Funding intensity for new technology in Canada. Adapted from SDTC (11)

Thus, we can see that governments can provide

support for cleantech SMEs through a variety of

policies that can have varying impact on startup

growth and investor confidence.

Objective

This report investigates the role of policies in driving

new cleantech solutions in smaller companies; how

it affects both cleantech start-ups and their potential

investors. It also looks into how government funding of

cleantech start-ups can interact with and complement

private funding. The research is undertaken in a

Scandinavian context and as perceived by :

1 individuals running start-ups and 2 cleantech investment managers.

The purpose is to provide fresh insights, and identify

question-marks for policy-makers on the impact of

public policy as perceived by those closest to the

ground in the cleantech market.

Method

We address this by undertaking semi-structured

interviews with:* 20 start-ups in the Scandinavian cleantech sector * 10 investors strategically allocating funds in

Scandinavian cleantech market. * 1 other relevant institutional actor

Interviewees where selected out of the two groups of 25

Nordic Cleantech Open (www.nordiccleantechopen.

com) finalists in 2011 and 2012. These companies were

selected from among 82 applicants in the first year,

and 97 in year two. The 25 companies were selected

by a jury of 60 industrials, investors and cleantech

experts. They represent the current upper echelon of

the start-up landscape in cleantech in the Nordics.

Investor interviewees where hand-picked on the

criteria that that they

A. actively invest, B. represent a variety of Nordic countries, as well as

some non-nordic investors who actively invest in the

Nordics, and C. represent the different stages of Cleantech

investments (from seed to commercialisation to

expansion).

objective &methodology

10 11


Below, the results of our investigation are summarized.

3.1 Is environmental policy creating

an incentive for entrepreneurs

to research and develop new

technologies?

In our sample of 20 companies, 12 (60%) of those

interviewed cited some form of environmental

policy as a driver for the initial founding of the

company. Of these, the most commonly cited

policy drivers were the more long-term Eu 20-20-

20 goals1 , or the 2020 requirements on energy use

in buildings set in Eu law 2 , and other regulations to

curb climate change in general. To a lesser degree,

more specific legislation was cited, like solar feed-

in tariffs, the phase-out of incandescent light-

bulbs, the ban of toxins in REACH3, and recycling

standards, as those set in the 2006 (Eu) Battery

Directive4. This suggests that the trend of stricter

environmental policies to reduce pollution, increase

efficiencies, and promote renewable energy is

a contributing factor for a significant number of

entrepreneurs in starting a company that has a

solution to environmental problems. It also suggests

that long term environmentally related goals can

have a significant effect on start-up activity in the

Cleantech sector.

A majority of the companies interviewed –

75% - cite environmental legislation that, to some

degree or other, benefits the market for their

product (See table 2). Of these, eight companies

cited environmental legislation that we categorise

as indirect; that is to say, legislation that does not

significantly reduce costs, or increase revenues in

the short term, or significantly drive short-term

demand. Examples are the Eu 20-20-20 energy

goals, or the Eu 2020 building performance goals.

The other seven companies influenced by

environmental policy refer to legislation that we

categorise as having a direct impact on company

performance. These included the REACH Regulation

which bans certain harmful toxins, the phasing out

of incandescent light bulbs, standards on emissions

and truck idling, as well as solar feed-in tariffs.

Five companies (25%) feel that environmental

policy does not really impact on their business.

believe that some form of environmental policy is as a driver for the initial founding of the company.

cite that environmental legislation benefits the market for their product.

feel that

environmental policy does

not really impact on their

business.

Is environmental policy benefitting your company?

Yes, Directly

Yes, Indirectly

No, Not ReallY

60%companies

75%companies

25%companies

35%

40%

25%

1 The so-called 20-20-20 package in the Eu includes the targets that by 2020, 20 % of Eu energy use should come from renewable energy

sources, 20 % energy efficiency improvements should have been reached, and GHG emissions in Eu should have been cut by 20 %.2 DIRECTIVE 2010/31/Eu OF THE EuROPEAN PARLIAMENT AND OF THE COuNCIL of 19 May 2010

On the energy performance of buildings. The directive requires, among other things, nearly-zero standards for new and retrofitted buildings

by 2020 (2018 in the case of Public buildings), and also has rules on the application of a cost-optimal methodology for setting minimum

requirements for both the envelope and the technical systems of buildings.3 REACH is short for the Eu regime for chemical control, as set out in Regulation (EC) No 1907/2006 of the European Parliament and of the

Council of 18 December 2006 concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), establishing a

European Chemicals Agency. The aim of REACH is to improve the protection of human health and the environment through improved and

earlier identification of the intrinsic properties of chemical substances. under REACH, bans and other use restrictions on chemicals are set.4 DIRECTIVE 2006/66/EC OF THE EuROPEAN PARLIAMENT AND OF THE COuNCIL of 6 September 2006 on batteries and accumulators and

waste batteries and accumulators.

results

12 13


A significant number of investors interviewed –

4 out of 10 – state that environmental legislation is

not a consideration in their investment decisions,

and that cleantech is assessed on the same principles

as any other business would be. For example, one

investor at sarsia seed [14] argues that

they prefer to focus on products that

generAte vAlue in And of themselves,

rather than satisfy the next generation

of legislAtion. Another interviewee

at cleantech invest [15] argues that

environmentAl legislAtion’s biggest

influence on investment decisions

can actually be a negative one: this is

especially the case if policies are seen

as unpredictable. This highlights a consensus

in opinion among investors that if a technology

is dependent on certain types of legislation,

especially if it is complicated and unpredictable,

this increases risk for investors. There is a specific

lack of confidence expressed by investors regarding

programmes that cost the government money –

for instance, feed-in tariffs and subsidies. These

programmes can end up costing governments

more money than initially budgeted, causing

backtrack on the policy decision. Furthermore, due

to the political cycle, programmes approved by one

party in power may be overturned by a succeeding

party. Examples that were cited by interviewees

To summarise, we see that environmental

policies can and have been an important driver for

cleantech growth. Consequently, many investors

take policy issues into consideration for allocation of

investment capital. Nevertheless, due to some cases

of environmental policy being unpredictable, there

is a larger than expected portion of investors who

prefer to avoid policy considerations and focus on

cleantech as any other business case. Additionally,

programmes that cost the government money are

currently viewed as less reliable due to possible

adjustments in the future.

This is a significant finding, because if environmental

legislation to influence market demand and supply is

not giving investors the confidence to allocate funds

in companies that benefit from such schemes, then

this reduces the effectiveness of said legislation.

Of the 10 investors interviewed – 6

explicitly take environmental policy into

consideration when making investment

decisions. These investors justify this

approach by citing cases where policy

can create a market - as in the case for

legislation on managing ballast water

[12-14], or the most notable regional

example perhaps being wind energy in

Denmark, which was driven by strong

policy interventions. As a Director of

Climate Change Capital Private Equity

Fund states, the clear impact of public

policy to boost wind energy in Denmark

was best demonstrated when benefits

were removed for wind, and this resulted

in an almost complete halt in wind

development- locally at least (12).

include: norway removing subsidies for cleantech

partnerships with India (due to concern over loss

of technology to foreign countries)(16); the Finnish

government setting up a fund for Combined

Heat and Power (CHP) production, but the new

government is planning to change it (17); Spain

removing their solar subsidy – and to add insult to

injury actually making them retroactive – requiring

those who had benefitted to pay back (12-14); and

uncertainty over solar subsidies in several countries (12,14,15). These factors understandably have

investors sceptical of the long-term stability for such

mechanisms. Companies that might be dependent

on such benefits for growth will therefore struggle

to convince investors.

3.2How is public policy influencing

the allocation of capital by

investors in cleantech?

explicitly take environmental policy into consideration when making investment decisions.

6/10investors

14 15


for solar energy in Germany. However, newer

technologies, such as solar heating, still do not

have the full backing of government and are more

susceptible to unpredictable influence by isolated

policy-making (18). One investor argued that

legislation that can actually generate income for

governments, such as taxes, or policies that are

not adjusted due to changes in political power or

budgetary reasons, such as standards are viewed

with more confidence than feed-in tariffs [15].

Once standards are put into place, for instance

Eu standards included in REACH, investors

perceive that it is less likely that these will then be

reversed. A partner at WHEB Partners, stated it

clearly: “A ban – now, that you can build a market

on.” A ban being a very clear example of easily

understandable and predictable environmental

legislation (19). These answers suggest that it

may not only be a case of “which” legislative

tools are better for clean-tech (subsidies vs. taxes

for instance), but it is also the “how” policies are

derived that is important (ensuring long term

security through agreements across political

party boundaries, long-term finance, etc.).

Although there is scepticism over the

role of policy in market development,

most investors concede that policy does

have a role to play in clean-tech growth,

given that it is such a young industry

and would struggle to compete with

established fossil fuel industries. So until

it can be competitive, what should the

role of policy be according to investors?

there is broAd Agreement

Amongst the investors

interviewed thAt in order to

be effective; legislAtion needs

to be simple, predictAble And

transparent.

For instance, a key to the success of

wind in Denmark was that the tariffs

introduced were long-term, between 10

and 20 years, and thus predictable. The

wind industry was driven by such broad

support that it was not so susceptible

to political whimsy. It is a similar case

A clear majority of companies

interviewed - 18 - have received some

form of public financial support. All

of them state this financial support

as extremely beneficial for initial

business development given the lack

of venture capital available in the

early development stages. In Finland,

getting funding from TeKeS is almost a

prerequisite for attracting private equity,

according to the CeO and co-founder of

netcycler(20). The reasoning being that

you need to have at least passed the

threshold of public funding agencies in

order to be eligible for venture funding.

3.3 How can public policy

lower risk for investors?

3.4 What is the role of publicly

funded grants and loans

for start-ups in the

cleantech sector?

have received some form of public financial support, which was extremely beneficial for initial business development given the lack of venture capital available in the early development stages.

18/20companies

16 17


gap concerns. This appears to follow the Swedish

strategy of supporting technology demonstration

projects with large industrial partners. One

entrepreneur familiar with the process of accessing

public funds informed that smaller companies

in Sweden are allowed a maximum of 200, 000

Euros in public funding (21). This study does not

investigate the motivations underlying the reasons

for this policy, but we highlight that this may

influence the allocation of capital by investors in

Swedish start-ups. For instance, Peter Vriesman,

partner at breadfruit capital investment firm,

states that if his organization has a choice between

a Swedish start-up and a Finnish start-up, they will

invest first in the Finnish start-up since there is

much more public finance available in Finland for

demonstration and commercialization and much

better communication between funding bodies (22).

Denmark on the other hand, aims to address the

“valley of death” by explicitly coordinating funding

between different public funding bodies. The goals

is to ensure that new technology has the necessary

financial support from initial research through

demonstration to market introduction (23). Figure

2 demonstrates that Denmark, principally through

the EDDP, has targeted the demonstration stage as

a major receiver of public finances, with fewer limits

for finance for smaller companies. This approach

In terms of funding strategies to

address the “valley of death”, national

policy approaches differ quite widely

between countries in Scandinavia.

For our purposes, we will look at

the Swedish and Danish cases as

examples.

Sweden has identified the challenge

of translating public research

investments into profitable

innovations and commercial products,

and recognises that “an important

step in the development from

concept to commercial product is the

demonstration of technology and

manufacturing”(4). Consequently,

in 2010 the Swedish government

earmarked SeK 8 billion to be used over

a three-year period for demonstration

and commercialization. Interestingly,

after receiving 39 applications for

demonstration funds, funds of over

1 billion SeK were awarded to only 6

companies: chemrec Ab; göteborg

energi Ab; södra cell Ab; seabased

industry ab; volvo personvagnar ab.

Most of these beneficiaries are all very

well established industrial companies

and do not suffer greatly from funding

attempts to harmonise efforts between finance

bodies to ensure that no stage in the development

chain of energy technologies is left unfunded, or

disproportionately overfunded.

3.5 Different national

policy approaches to

addressing funding gaps

in the demonstration and

commercialization stages.

This shows that policy strategy

in terms of how public funds are

allocated can have a significant

impact on the access to funds

that start-ups have to bring new

technologies to market.

appliedresearch

dscr

ForskEL

ForskVEElforsk

EDDP

Green labs DK

Danish National Advanced

Technology Foundation

EU: FP7-Energy

Fornyelsesfonden

The Danish Council for Technology

and Innovation

basicresearch development demonstration market intro

Figure 2: Energy research programmes (2011) in the Organizational strategies for accessing public funds in Denmark. Adapted from (23)

18 19


vasasensor is a Swedish company founded in

2004 that has developed a wireless sensor system

to reduce costs in paper production. The company

manager argues that spending time on developing

relationships with public finance bodies pays off

over time. She says that “the entrepreneur needs

to re-define financing rules by working closely with

public funders on applications, and seeing how

you can make the funding work for you” (25). This

has admittedly taken time - up to 9 months of

negotiating and working with the Swedish energy

Agency -, but thus far, one-third of all Vasasensor’s

capital backing has come from the Swedish Energy

Agency and Vinnova, including sufficient finance

for building a prototype. All in all around 1 million

Euros has been sourced from public funding, and

this despite Vasasensor not being a large Swedish

industrial company.

danish power systems has benefitted from the

broad range of public funds in Denmark and has

been granted over 3 million euros – divided over

several years. This gives the company capital to

undertake product development for the next two

years at current activity levels. These are grants that

do not require the owners to give away influence

to external investors. The company Business

Development Manager does however agree that

accessing public funds can be complicated mainly

due to the diverse set of government funding bodies

To conclude, access to public

funds is an important element

for most start-ups;

particularly so in the early

R&D stages, and securing public

funds can help to attract

venture capital later on.

With such policy variations, and

with many start-ups struggling to

move beyond the R&D phase, do

entrepreneurs have alternatives to take

better advantage of the public funding

opportunities available?

One the one hand, some start-ups see

applying for large public funds as overly

complicated and time consuming.

Several interviewees stated that

applying for public funds could be

extremely bureaucratic and, in some

cases not worth the trouble (24). Others

stated that just getting to understand

the requirements for funding was

complicated, and given the diverse public

funding bodies, each with their own

requirements, this made applications

and compliance more confusing.

Considering that start-ups often have

limited manpower, it is understandable

that they may be more focused on day-

to-day management than with dealing

with bureaucratic regulations.

However, our study suggests that

developing a focused and creative

strategy for accessing public funds can be

a way for start-ups to overcome “valley

of death” issues proactively. We present

three cases to exemplify that funding

the “valley of death” may be as much up

to creative business management as to

national policy.

and their diverse requirements. he suggests that

a higher degree of alignment may support start-

ups in the fund raising process.

reformtech, a Swedish company, offers solutions

in the fields of environmental catalysis, fuel

reforming and industrial production. The company

CeO and founder shows that sometimes you have

to find creative ways to get the funds you need

in Sweden. Recognising that the Swedish limit of

200,000 Euro for product demonstration would

not be sufficient for the company’s purposes, they

decided to partner with Scania. According to the

CEO, if a smaller company wants any chance of

qualifying for “the big money” necessary to build

a demonstration prototype, then a viable option

is to partner with a large industrial company (21).

Consequently, in liaison with a large industrial

partner, Reformtech has been able to source an

additional 1.5 million euro for demonstration and

commercialisation.

Our research thus suggests that accessing capital

to overcome funding gaps is not exclusively

dependent on national policy parameters, but

also on the approach taken by entrepreneurs

to targeting public funds. Aggressively and

creatively targeting public finance and allocating

the necessary time and manpower may be worth

the effort.

Despite this, there are some characteristics that

may hinder growth in start-ups. In some cases,

public spending on clean technology does not

adequately address the challenges that smaller

companies face when looking to demonstrate

and commercialise products. Making finance

available to both large and smaller companies

and coordinating efforts between finance bodies

to ensure that the complete development cycle

is financed may be strategies that can help

start-ups grow. Secondly, many entrepreneurs

focused on early business development may lack

the resources or the time to work through and

comply with public finance criteria. Given the

large sums of money available, this suggests that

improved coordination between financiers and

start-ups may be needed to optimise these funds.

There could be opportunities for a coordinating

service to add value between start-ups and public

financiers. This could be a public function itself,

or could present new business opportunities

for a private actor with skills in cross-sectoral

management.

3.6 Entrepreneurial approaches

to accessing public finance

“Public money is the cheapest money you can get - if you put the effort into getting it.” argues Danish Power Systems’ Business

Development Manager.

20 21


bibliographyand sources

1

23

2

24

3

25

4

26

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

WWF, C.G., Coming Clean: the global cleantech innovation index 2012.

Ministers, N.C.o., The Nordic region – leading in green growth. Report by the Nordic Prime ministers’ working group for green growth. 2011.

OECD, Removing Barriers to SME Access to International Markets. 2008: Singapore.

SEA, Swedish Cleantech opportunities: A market overview from the Swedish Energy Agency. 2010.

Bürer, J.M.a.W., R. , Which renewable energy policy is a venture capitalists best friend? Empiriacl evidence from a survey of cleantech investors. Energy Policy 2010. 37(12): p. 4997 – 5006.

Ghosh, S.a.N., R. , Venture capital investement in the clean energy sector. . Harvard Business School, 2010.

Del Rio Gonzalez, P., The empirical analysis of the determinants for environmental technological change: a research agenda. Ecological Economics 2009. 68: p. 861-878.

Analysis, S.a.f.g.p., Miljödriven näringslivsutveckling - Några grundläggande utgångspunkter för en verksam, effektiv och lärande politik. 2012.

Mont, O.a.D., C. , Sustainable consumption: at the cross-road of environ¬mental and consumer policies. International Journal of Sustainable Development, 2005. 8(4).

Grubb, M., Technology innovation and climate change policy: an overview of issues and options. keio Economic Studies, 2004. 41(2): p. 103-132.

SDTC. The Funding Gap. 2012 27/02/2012]; Available from: http://www.sdtc.ca/index.php?page=the-funding-gap.

Skovbjerg, T., Director, Climate Change Capital.

Moen, H., Investment Director, Investinor. 2012.

Berg, J., Partner, Sarsia Seed. 2011.

Linainmaa, T., Partner, Cleantech Invest. 2011.

Egeland, k., General Manager and Co-owner, Innowind. 2011.

Huurinainen, S., Managing Director, MHG Systems. 2011.

Jakelius, S., Investment Manager, Industrifonden. 2011.

Sperling, J., Partner, WHEB Partners. 2012.

koponen, J., CEO and co-founder, Netcycler. 2012.

Hagstrom, D., CEO and founder, Reformtech. 2012.

Vriesman, P., Partner, Breadfruit Capital. 2012.

EDDP, Energy 2011: Annual report on Danish energy research programmes,. 2011, published in cooperation between Energinet.dk, the Danish Energy Agency/the EDDP secretariat, the Danish Energy Association, Danish Agency for Science, Technology and Innovation/ DCSR secretariat, The European Commission Representation in Danmark and the Danish National Advanced Technology Foundation.

Nilsonne, H., Black Silicon Solar.

kocher, S., VD, Vasasensor. 2012.

Albertsen, k., Business Development Manager, Danish Power Systems. 2012.

22 23


annex 1 interviewees

Innowind Investment Kjetil egeland

EnevoJohan Engstrom

justcommonsenseJonas Carlsson

akkuser Tommi Karjalainen

Ensol Phil Denby

remake Hilmir Ingi Jónsson

aerogelSusanne hedblom

MHG systemsSepo Huurinainen

NetcyclerJuha koponen

Applied Nano Surfaces Mattias Karls

Climate Change Capital Thomas Skovbjerg

Cleantech Invest Timo Linnainmaa

Sarsia Seed Jon Berg

Environmental Technologies Fund Per ericsson

Industrifonden Stefan Jakelius

Finnish Industry Investment Juha Letola Investinor helle Moen

Sitra Sami Tuhkanen

Breadfruit Capital Peter Vriesman

3M New Ventures young-Jin Choi

BT WoodJuha Etsakari

Ecospark hans Lindberg

Cellfab Kiano Mottaghian

norsetek Vidar holmoy

Centriclean systemsDaniel Johansson

Danish Power systems Kim Albertsen

Black Silicon Solar hjalmar nilsonne

Vasasensor Sofia kocher Reformtech Daniel hagstrom

ZemissionAnders Vestin

20 START-UPS 10 investors

Nordic Council of Ministers/Nordic Innovation Hans Fridberg (Other)

publiccleAn-techpolicy & gRowth

www.cleantechscandinavia.com

desi

gned

by

ww

w.t

iffinb

ox.in

assessing the relationship between public policy ... · most cleantech investors do take policy...

Documents