By Benji Jones
Photo by Jeff Engel
December 22, 2019
Around 2008, Silicon Valley declared clean tech dead. Poor investments coupled with coalescing financial forces led to weak returns.
While the industry is now starting to bounce back, progress has been slow. That's according to Emily Reichert, the CEO of Greentown Labs. There's a persistent mentality, she says, that "clean tech is not a good place to invest."
That makes Reichert's job particularly challenging. After all, Greentown Labs is a startup incubator — the largest in North America — designed to help clean tech companies get off the ground. That is, she helps them secure investment.
But against all odds, Greentown Labs' companies seem to be thriving. The company has incubated more than 230 startups since it was founded in 2011, and those companies have a survival rate of 88%. Graduates include the buzzy beverage company Bevi, in addition to businesses like Sense, which makes a home energy sensor.
So what makes her companies survive? Other than capital investment, Reichert says there are three things that successful startups have in common. She shared them with Business Insider in an exclusive interview.
Clean tech startups need a proven product-market fit
"The number one problem we see startups struggle with is the product-market fit," Reichert told Business Insider. "They have tech that can be applied to something. But they don't necessarily have the data to know that there's a real market."
Entrepreneurs might invent something innovative and flashy in a lab that has no clear market, she says. Maybe it's too expensive. Maybe it's too difficult to manufacture at scale. Or maybe no one wants it.
"They can spend years stuck on thinking this is the best thing since sliced bread," she said of some entrepreneurs. "A lot of times you get stuck with not having the technology and the market find each other. You're not going anywhere without the market."
That's one reason why so many neat technologies that promise to turn trash — or carbon or whatever waste product the world doesn't want — into something useful pop into the news cycle, make a big splash, and then never reappear. Many of these products work, but they don't find a market.
Corporate partnerships are tough to build. But they can spell the difference between success and failure.
"One thing that I see startups fail at is partnerships," Reichert said.
Corporate partnerships can really pay off, she says. Industry giants can provide technical expertise, investment, or the infrastructure to manufacture products at scale. Often, they're also the customer.
But Reichert says it's not uncommon for relationships between startups and corporate partners to unravel. That can leave the startup bankrupt with no plan B. And if nothing else, these deals just take a while to ink.
"Often, those deals can take months or even a year or more to negotiate," she said. "So the startup is kind of trudging along with a small budget, knowing that they have a limited amount of runway. And so sometimes those timelines just don't line up."
Or worse, a company will suddenly sell off a division, she says, and move in a new direction.
That's why Reichert puts a lot of effort into building out strong corporate partnerships at Greentown Labs. She brings startups and partners like Enel and National Grid together early on so that when it comes down to dealmaking, sign-off is swift.
"We have very structured engagements with corporate partners where we can force all of that interaction to happen," she said. "It just collapses the decisionmaking time. It's so simple, but no one does it."
Diversity of all kinds makes startups 'move so much faster'
If there's one thing that jumps out when you scroll through the staff pages of clean tech startups (and legacy energy companies) it's that they're filled with faces of men, mostly white. That's a problem. Diversity begets innovation, Reichert said.
"The best teams are diverse teams," she said. "The more diverse teams are more successful and make more money."
And diversity doesn't just apply to gender and race, she says.
"Is there a business person and a technical person, who are both together at the beginning?" Reichert said. "Companies that have that move so much faster. What they bring to the table is complimentary."
As for what it's like for Reichert, who's one of the rare female CEOs in the industry, she says, "it's nothing new." Reichert has a PhD in chemistry — "in college, I was in physics classes where I was the only female" — and an MBA.
But now on her own team, it's a different story: "This is definitely the most diverse team that I've worked on in my entire life."