Doing “Cool Climate Tech Shit” Isn’t Enough to Ramp Your Series A Raise
Even as a coalition of the UN and more than 20 climate tech and generalist funds seek to encourage more investment in climate tech startups with the formation of the Venture Climate Alliance (VCA), economic factors such as startup bank failures and looming recession fears are hovering like rain clouds over the playing field.
This makes it more crucial than ever that startup founders and advisors, focused on decarbonizing our society and transitioning us to using cleaner energy or more sustainable products, “play from ahead” to optimize the speed, size, and investor makeup of their Series A raise.
“Valuations are down, financings are taking longer, investment terms are more investor-friendly than founder-friendly—we are seeing all of that in our sectors,” observes Craig Lawrence, Partner and Co-Founder of Energy Transition Ventures.
Immune from outside forces
Climate Tech VC’s analysis shows that the broad venture market dropped 53% YoY in Q1. Climate tech investments declined by 40%. CTVC writes that this reveals that climate tech companies are “ somewhat more insulated, but not immune to macro realities like the frozen exit markets. In fact, late-stage and growth investments in climate tech saw a greater dropoff than the market, potentially exacerbated by the relative capital-intensity of the physical asset climate tech businesses.”
However, CTVC’s analysis also indicates an uptick in early-stage investments in the first half of 2023. CTVC writes “that this could be a sign that investors are allocating capital toward earlier technologies up (or down) the value chain from their existing investments, either to support big prior bets or because of updated learnings.”
The surge in funding in 2022 reflects a growing recognition among investors that the transition to a low-carbon economy is not only a planetary imperative but is expected to be a profitable business. However, as the first two quarters of 2023 have shown, building a successful climate tech startup remains challenging and complex. Beyond general startup funding needs, these companies often solve tough engineering challenges that require spending large amounts of capital on R&D, demonstration/pilot projects, and manufacturing facilities—all before scaling and commercialization.
This leaves startups in a consistent cycle of raising funds, especially in the early days when competition for those funds is fierce. Those who thrive from angel and seed rounds through Series A and B play from ahead and let their branding, messaging, and strategic media exposure do the hard work for them.
Rising from Seed to Series A
Raising money for your Series A round is one of the most critical challenges you’ll face. It can sometimes be even more difficult than engineering R&D milestones because you have the added element of people and their perceptions. At least with engineering, you know you’re dealing with objective elements like math and the laws of chemistry or physics!
Addressing—and managing—the perceptions of people who might invest in your company is why successful startup founders build a strong brand early in their company’s development. This can help grease the wheels of investor conversations, shorten the path to term sheets, and increase the company valuation, among other more subtle benefits.
Doing “Cool Shit” is Not Enough
Yes, the technology you are building is “cool shit.” You’re working to stop the worst effects of climate change and enable a faster energy transition. However, you can’t depend on people to notice and “get it” alone. There’s too much noise and competition; frankly, people are lazy. No one has started drinking your Kool-Aid yet.
This is where a strong brand comes in.
Your brand is your company’s identity. It sets you apart from your competitors and makes you memorable to investors. It tells your story of what you are doing, why, and most importantly, why it matters.
“Branding is more than just logos and slogans,” says Oscar Guzman of Guzman Labs. “There are so many questions founders and startups have to answer: What do you do? What do you stand for? What problem are you solving, and how are you doing it better than the companies already out there? Why do any of this at all? Good branding can help you answer those questions and convey important aspects of who you are in both implicit and explicit ways.”
A strong brand identity can help you build credibility with investors because it may differentiate you from other startups and make you memorable. Spending some effort on your brand also signals to investors that you understand the importance of marketing to reach new audiences and customers. Investors bank on teams more than anything else, and a strong brand can demonstrate that your team has the skills and knowledge necessary to build a successful company.
ChargerHelp! Energizing the EV Driver and Workforce
Before ChargerHelp! announced its $17.5 million Series A raise in 2023, they were already well-known for the company’s alignment of ensuring functional EV chargers for customers and providers while also enabling a diverse and local workforce to diagnose and repair the wide range of unique EV charging technologies available in the US. Their rise in the EV industry started in 2021 with a write-up in Afrotech. Their $2.75 million seed raise caught the attention of TechCrunch, as well as a spotlight on The Fund, Business Insider, and other industry publications. They also took a turn on the podcast circuit with episodes on Watt it Takes, Climate Stories, the Earthlings Podcast and more. Along the way, they announced partnerships with Tesla, FLO, and ChargeNet, offered thought leadership on why equity must be central to EV infrastructure planning and were highlighted by California’s Governor and the Biden Administration.
ZeroAvia Lifts Off on Aviation’s Push to Decarbonize
In 2019, the hydrogen aviation startup ZeroAvia had yet to complete its first R&D hydrogen airplane prototype. But they knew it had to launch out of stealth to prime the runway for its Series A raise. They needed to get their story and gain brand awareness with investors, potential partners, and government regulators. ZeroAvia received inquiries from three airlines, three investors, and various potential partners three days after launching from stealth. Additionally, 11 upcoming conferences allowed the company to speak on their panels, including the Bloomberg New Energy Finance Summit, the National Association of State Energy Officials, and Revolution Aero USA. Post-launch, ZeroAvia kept its momentum going with partnership announcements with Shell and Alaska Airlines and hosted a (now annual) virtual summit on hydrogen aviation. This gathering put the startup at center stage with its top stakeholders and investors, as those it was courting for future engagements. One year later, in 2020, they announced their $21.4 million Series A raise.
ZapBatt Zeroes in on Forgotten Battery Tech for MicroMobility
In 2021, ZapBatt realized it needed to expand its brand awareness if it was going to close a Series A. The startup has developed micro-mobility battery applications using the well-established but often overlooked lithium-titanate (LTO) battery chemistry. The startup understood its first task was to overcome historical misconceptions about LTO with a thought leadership campaign that landed them in outlets like Fierce Electronics, POWER Magazine, and Automotive World, among others. The company followed that campaign up with one connected to the battery fires in New York City, leading to further coverage in both local and the trade press, including Bloomberg, Business Insider, and BronxNet TV. Additionally, the company secured a mention in the U.S. Department of Transportation’s Charging Forward toolkit and an endorsement by the New York Daily News editorial board. The company continues to leverage this media exposure to establish large customer deals in the consumer electronics space, strengthen its relationship with Toshiba, and attract the attention of new categories of investors.
Building a Thrifty, Authentic, and compelling brand
However, this advice doesn’t mean you should spend $50,000 on a new brand identity, complete with brand archetyping, templates for case studies, white papers, and the like. As a pre-series A startup, you don’t need all of that. You need a well-designed logo and mark, three to five “on-brand” colors, and a simple style guide. You want your logo in a vector format in all the varieties you can think of full color, single color, black and white, sized for social media, etc. You can take this foundation of your branding from a designer and work it into your investor deck, business cards and website.
Most importantly, be sure to ask your designer for all your design files when you close the project. Designer relationships can be fleeting, and I can’t tell you how many companies have had to redesign their logo because they didn’t have the original design files.
Next, develop a compelling brand story that communicates who you are, what you stand for, and why your product or service matters. It should be authentic, compelling, and aligned with your values and mission. After that comes your brand voice, which is how you communicate with your audience. Do you want to be technical and purely factual, a grand visionary with an eye on the future, an “everyman,” or even snarky?
Regardless of your type of voice, it should be consistent across all channels, including your website, social media, and marketing materials. When your brand voice aligns with your key audience demographics and preferences, this consistency helps you build trust and establish lasting connections.
Use your new logo and style guide, brand story, and voice to develop a basic, one-page scrolling website that talks about what you do, why you are doing it and what it means for your industry. You’re an early-stage company, so you get a chance to balance being vague/stealthy with being specific to your work enough to provide credibility.
“An authentic brand aligned with who you are and your company’s objectives will improve your pitch by adding clarity, improving retention, and building credibility, all the while helping you stand out against a crowded field of competitors,” continues Guzman. “A strong brand can be an internal compass guiding managers and employees as a startup grows, and a badge to investors and external stakeholders that signals what your company is all about.”
Leverage Media to Break Through the Noise
Once you know who you are and what your brand stands for, you can use media coverage to amplify your brand. This exposes you to broader audiences that can expand your options for new investors, partners or customers. Media coverage also gives you credibility with any stakeholder, primarily because a news outlet found you interesting enough to spend its reputation on. Whether the publication has an industry focus or a broad mainstream draw, these articles and broadcast pieces help your story from a third-party perspective that can be seen as more trustworthy and less biased.
Journalists are more likely to cover startups with a compelling story, a unique value proposition, and a clear mission – i.e., “doing cool shit.” But unless they are looking specifically for a company like yours, they are highly unlikely to find you. This is why you want to start your media outreach.
Connecting your startup’s story to what’s happening in society and the news is crucial for making your brand feel relevant and compelling to investors. By tying your company’s mission to a larger narrative, you can help reporters and investors understand the significance of what you’re doing and why it matters.
Journalists are tasked with covering what new, innovative, and novel is. They want to know how you are pushing your industry or society forward. By showing how your solution fits into a larger movement, you can create a sense of urgency and relevance to capture their attention.
The easiest way to establish relationships with reporters (outside of hiring a PR firm that comes with those connections) is to chat with reporters on social media. Compliment them on their stories, ask them questions related to their content, or offer suggestions for new stories. Give your ideas and network to support them in their success. This pile of value you build will inevitably feel so uneven that they will ask you about your firm and what you do. You can always push for that inquiry by offering to talk with them “on background” about the topic at hand.
Explain and Educate the Media
A background or “explainer” interview is one that is informal and purely for the benefit of the reporter’s understanding of a topic or industry. There is no expectation of coverage—although you might get lucky and land something shortly after the chat.
In this meeting, you want to do your best to educate the reporter on the topic and drop hints about how your company fits into that. They will surely ask you to follow up on those open threads. Additionally, in this meeting, you can tell them what milestone achievements your company might have coming up and offer to send them a heads-up beforehand. Afterward, be sure to thank them for their time and send them any additional materials you offered to supply them. (Note: Never consider anything you say to a reporter, no matter how casual, to be “on the record.”)
Once this meeting is complete, you’ve primed this reporter to cover your company once you reach a milestone. This helps increase your chances of getting news coverage, especially with a busier, mainstream reporter. That class of journalists is typically more pressed for time and might not be confident in writing about new technology. The background interview educates them ahead of time so that when your news breaks, they can quickly move on with a piece of coverage.
Sometimes, you won’t have milestones ready to talk about. In this case, you can demonstrate your expertise through thought leadership articles. These pieces you write typically cover a problem in your industry that’s being overlooked or a counter-argument to an established understanding. By connecting your story to current events and larger societal trends, you can create a powerful narrative that resonates with investors and helps you stand out in a crowded marketplace.
The ideal approach is to hook this thought leadership angle with a current event or happening in your industry. This makes it timely and newsworthy. Once written, you (or your PR team) can pitch media outlets for the article’s placement. Or, you can join paid platforms like the Forbes Council, Fast Company Executive Board, or Energy Central to guarantee placement with their audiences. Or, you can simply post it on your blog or as a LinkedIn article. Regardless of how you publish your thought leadership, you will show investors that your team is knowledgeable and engaged in the conversation.
When you’re leading a startup, raising money is never easy. It will always take longer than you think and require more effort than expected. Your role as chief fundraiser can also be hindered when you start and stop the process between funding rounds. Conversely, if you are constantly out there drumming up investment, it can take your attention away from actually scaling your technology.
Instead, let your brand and media exposure do the heavy lifting between rounds to keep your company top of mind and build up your valuation with all the cool shit you are accomplishing.
