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The effects of corporate investment and public grants on climate and energy startup outcomes

Author

Listed:
  • Kathleen M. Kennedy

    (University of Maryland College Park)

  • Morgan R. Edwards

    (University of Wisconsin-Madison
    University of Wisconsin-Madison)

  • Claudia Doblinger

    (Technical University of Munich)

  • Zachary H. Thomas

    (University of Wisconsin-Madison)

  • Maria A. Borrero

    (University of Maryland College Park)

  • Ellen D. Williams

    (University of Maryland College Park
    University of Maryland College Park)

  • Nathan E. Hultman

    (University of Maryland College Park)

  • Kavita Surana

    (University of Maryland College Park
    Vienna University of Economics and Business
    Complexity Science Hub)

Abstract

Climate and energy (climate-tech) startups can accelerate the commercialization of innovative technologies but face low investment and high failure rates. Here we analyse the effects of recent growth in corporate investments, combined with public grants and other private investments, on startup outcomes. We apply the Cox Proportional Hazards model to a dataset of 2,910 US climate-tech startups founded 2005–2020. We find that corporate and other private investments are significantly associated with both exits (initial public offerings, mergers/acquisitions) and failures (bankruptcy, going out of business). While public grants are not significantly associated with these outcomes, they fill important funding gaps in high-risk sectors. Publicly funded startups also exit at a higher rate with the addition of corporate investment (155% increase) compared with other private investment (78% increase). These findings highlight the roles of different investors in scaling startup technologies to meet climate goals and are robust across sectors, timelines and types of public funding (national, subnational).

Suggested Citation

  • Kathleen M. Kennedy & Morgan R. Edwards & Claudia Doblinger & Zachary H. Thomas & Maria A. Borrero & Ellen D. Williams & Nathan E. Hultman & Kavita Surana, 2024. "The effects of corporate investment and public grants on climate and energy startup outcomes," Nature Energy, Nature, vol. 9(7), pages 883-893, July.
    • Handle: RePEc:nat:natene:v:9:y:2024:i:7:d:10.1038_s41560-024-01530-w
    DOI: 10.1038/s41560-024-01530-w
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