Clean Energy Start-Up Companies Are Most Likely to Succeed When They Partner With Government, New ITIF Report Finds

August 24, 2020

WASHINGTON—Start-up companies in the burgeoning field of clean-energy technology—a.k.a., “climate-tech”—become more successful when they partner with federal agencies and laboratories, according to a new report released today by the Information Technology and Innovation Foundation (ITIF), the leading think tank for science and technology policy. 

The report finds that these collaborations produce more patents and earn more follow-on financing than similar collaborations involving private firms or universities—an important insight at a time when clean energy innovation is not moving swiftly enough to achieve the critical societal goals of averting the worst consequences of climate change, boosting economic competitiveness, and enhancing energy security and affordability.

“Entrepreneurs and government agencies may seem like an unlikely match, but the evidence shows they are highly compatible,” said Kavita Surana, assistant research professor at the Center for Global Sustainability at the University of Maryland’s School of Public Policy, who co-authored the new report for ITIF. “Indeed, collaborations between climate-tech start-ups and federal agencies yield better results than their collaborations with universities or other firms, as measured by patents received and follow-on financing.”

The new ITIF report shows that start-up patenting activity soars by an average of 74 percent as a result of collaborating with a government agency or laboratory, while each technology license given out by a government agency to a start-up more than doubles its financing deals. 

Yet the federal effort to facilitate collaborations between start-ups and agencies leaves plenty of room for improvement, and there are three fundamental barriers that need to be overcome to fully reap the benefits from these partnerships:

  • Most start-ups don’t have access to federal experts or laboratories because they lack networks and knowledge, or they confront bureaucratic barriers and high costs. 
  • Federal agencies have weak incentives to work with start-ups, such as metrics to reward collaborations, and they have few ways to cover costs. 
  • Finally, there is a lack of coordination on climate and energy technology transfer within the Department of Energy and its laboratories and across other agencies.

“To benefit from climate-tech start-up collaborations, policymakers need to design approaches that account for their unique needs,” says David M. Hart, director of ITIF’s clean-energy innovation program. “This can be a win-win situation. The federal government and agencies gain, because collaborations increase the returns on federal investments in R&D. Agencies also are better able to meet their mandates for technology transfer while advancing their respective missions. Meanwhile, climate-tech start-ups are better positioned to commercialize new technologies, lower investors’ perceived risks in clean energy, and bring in private-sector capital.” 

Read the report.