Startups Beware: Generalist Service Firms Think the IRA Is a Climate Tech Bonanza
August marked the one-year anniversary of the Inflation Reduction Act (IRA), the single largest investment in climate and energy in American history. The $369 billion in programs aims to put the U.S. on a pathway to achieving the Biden Administration’s climate goals, including a net-zero economy by 2050. Couple this with the massive influx of venture capital funding that’s come into the sector in the past few years, and the sector is looking very tempting for generalist professional service firms.
From business consultants, law firms and accounting firms to marketing, public relations, government relations and recruiters, there is a rise of consultants attempting to move laterally into the climate tech, cleantech and sustainability sectors.
“I think it’s only natural for a general practitioner, or an energetic newcomer, to claim expertise in this sector. Cleantech is an awesome industry to be a part of, and we have seen incredible growth over the last decade, and the potential to make a positive difference in the world is incredibly rewarding,” says Jack Jacobs of Cleantech Law Partners. “But unfortunately, there is no shortcut for experience. It takes many years of practice to develop a specialty. I guess that’s why you can get a free haircut at your local barber school or a free root canal at a dentistry school! Everyone has to learn sometime, but who wants to be their guinea pig?”However, there is a gulf of difference in experience and levels between service firms new to these sectors and those with over 10 years of experience in the sector. Those service providers who survived Cleantech 1.0 know what companies need to be successful in today’s 2.0 world. They know what brought down earlier companies and what bolstered the ones that thrived. They have book smarts and street smarts. And, because they survived the ups and downs of previous markets, you know these firms are dedicated to the climate tech sectors for the long haul.
The right vendor, the right time
There’s always the temptation to hire a vendor with a prominent brand name or one that operates out of multiple offices worldwide. Often, the people making the hiring decision fear less for their own personal career success at a company if they hire these “big brand” firms.
As the old saying goes, “No one gets hired for hiring Edelman.” Well, if one reviewed their track record for supporting cleantech companies at the same time the worldwide company lobbied on behalf of oil companies, maybe they should.
Unfortunately, it’s only after companies have gone through the pain (and expense) of a fruitless contract with a “big brand” vendor that they realize they need a service provider with deep domain experience and a long track record in the sector.
“A lot of my client inquiries come from cleantech companies that had already made the mistake of hiring an agency that was new to clean energy,” notes solar marketer and influencer Tor Valenza (a.k.a. Solar Fred) and host of the Probably True Solar Stories podcast.
“Undoubtedly, outside agencies can have the general skills to do the work. In practice, however, they waste their and the client’s time by being too general. They’ll apply a residential solar persona to a commercial solar persona.”
Vetting the right providers earlier in a company’s journey sets them up for success at the beginning, saving them time to execution, money, and frankly, frustration. The energy, environmental science, engineering, utilities, manufacturing, transportation, and construction industries are witnessing a boom in business as they figure out how to deliver what the world will need next. These industries can lean on services firms that have past experience in these fields to succeed in a changing world.
“The risk is that the high costs won’t give the clients good ROI,” cautions Nancy Edwards, founder of Clean Power Marketing Group. Edwards recalls a scenario in the early 2000’s when early-stage companies were convinced to execute massive campaigns, including Superbowl ads, when they really weren’t ready for the volume. Sites crashed, they couldn’t service clients, and many companies did not survive when the bubble burst in 2008.
Swimming in the kiddie pool
Generally speaking, big agencies typically struggle to give smaller clients the same attention as their higher-paying customers. This often results in smaller clients competing for their service firm’s attention, requiring them to push the team for results or having to come up with their own ideas. Additionally, larger accounts tend to demand the best talent for their teams, resulting in smaller clients working with more junior or inexperienced people.
“A company has to really make sure their internal marketing team has the chops to properly manage a bigger agency,” suggests Edwards. “And chances are, if they’re a startup, they won’t have the time it takes to educate and bring the team up to speed.”
When navigating the cleantech and climate tech markets, it makes sense for clients to partner with an agency that knows the space, can hit the ground running, and has the experience to know when it’s appropriate to go big. In this sense, size doesn’t matter; instead, look for a team that’s smart and prepared to scale as the company grows.
This lack of industry expertise can translate into poorly executed SEO and digital ad campaigns due to a lack of knowledge of a target market. Valenza recalls working on the SEO of a utility solar client’s website only to discover that every keyword and tag was optimized for residential solar leads.
Valenza points out that in the B2B product space, professional services providers largely do not take the time to truly learn about the industry jargon and acronyms. Instead, new clean energy marketers tend to avoid complicated terms altogether and make marketing materials and communications too general, leading to inauthenticity. This fails to address the priorities and pain points of the client’s target market.
The other downside of new cleantech marketers and PR people is the lack of industry connections. Renewable energy trade editors are overwhelmed with press releases. When they come from a longtime PR pro, whom they likely have a friendship with, their outreach gets results. The same is true for trying to get a podcast interview or setting up a webinar: an experienced cleantech marketer knows what topics and partners make sense for a mutual target audience.
Connections and experience are also critical when hiring in this sector. Generalist firms struggle to understand a climate tech company’s human capital needs and how they intersect in the industry’s unique market dynamics.
“This once-in-a-generation opportunity to transform our world requires a bold approach and not ‘more of the same’ type of reactive recruiting,” warns Paige Carratturo, CEO and co-founder of talent venture firm Sea Change Advisors. “Often, generalist recruiters think a tech worker with an impressive pedigree can move laterally into climate tech. Sometimes it’s just that easy. But, often, there are nuances to getting these deals done that you only learn through experience. Today, climate tech companies who invest in their talent roadmaps to place the right people in the right positions hold the opportunity to reduce their execution risk and optimize their ability to meet critical milestones. A partner who is embedded in the market can help you get there faster.”
While new money in the cleantech space has led to new entrants trying to stake their claim, proceed with caution when choosing vendors to help you navigate this complex new world. Some technologies or verticals are so new that finding a professional services provider with years of experience in that area would seem impossible. However, they do exist if you take the time to do your research and vetting.