Clean tech startups that work with Portland nonprofit VertueLab are now eligible for a $6 million loan fund thanks to a partnership with the Los Angeles Cleantech Incubator.
The funds are under the LACI Cleantech Debt fund, billed as a first-of-its-kind nationwide fund, designed to help early-stage clean tech and climate companies bridge a funding gap that arises when companies have a product and early sales but lack the longevity to secure traditional bank lending. It's an access to capital issue that is common for many startups.
To source deals, LACI is partnering with other groups that work in a similar space, including VertueLab, to funnel vetted startups to the LACI team for further due diligence.
“To loan to an early-stage company with no operating history is a risky proposition for a bank,” said Ken Vaughn, director of impact investment at VertueLab. This program is designed to help mitigate that risk by looking at startups that are known to the different partner organizations like VertueLab.
“When we have companies that meet the profile we know them, or they have been in one of our programs or we invested in them, we can vouch for them," he said. "Our role is finding the companies that fit the program profile and vouch they are well managed and then we hand them off to LACI and their program manager."
VertueLab has already funneled a number of companies to LACI and some are in underwriting now, he said.
There are two types of loans through the program:
- One to support first customers or grant reimbursements. This ranges from $25,000 to $100,000 for three months to 12 months and 9% interest.
- The other is working capital. This ranges from $50,000 to $250,000 for 12 months to 36 months and 9% interest.
LACI raised the fund from philanthropic donors but it is designed to be a profitable loan fund, said Vaughn. The VertueLab team is also using this partnership as a way to test such a program.
Solving this funding gap for entrepreneurs “is a common problem a lot of organizations like us are looking at,” said Vaughn. “We have it on our roadmap, to offer this kind of funding. This is an opportunity to work with another organization to bring it to our ecosystem (sooner).”
Other groups that are feeding into this program are: Evergreen Climate Innovations in Chicago; Greentown Labs in Boston and Houston; and New Energy Nexus in Oakland. The lending partner for this fund is Mission Driven Finance of San Diego.
VertueLab has been participating in this partnership since May.
In addition to this funding avenue VertueLab has a Climate Impact Fund. It is just about done investing from the first fund and set to start fundraising for a second fund, Vaughn said.
Aside from funding, VertueLab offers a cleantech accelerator, a pre-accelerator and assistance with applying for federal grant money.
For entrepreneurs looking to connect with VertueLab there is more information on the group’s website.
