For pretty much every startup, there’s a perilous period that occurs after things are up and running but the money isn’t flowing. Called the “valley of death,” the conundrum is especially challenging for climate tech startups, which tend to have a longer time to revenue than something like a payments SaaS, making the valley that much longer and more treacherous.
With some hard tech problems, whether they be fusion power, carbon capture or mushroom-based leather, another valley of death happens even earlier.
Traditionally, this is how it has worked: Founders start with government grants and pitches to attract investors. Particularly good pitches might convince more traditional investors to join larger seed rounds. But for many, the best way to cross the valley of death isn’t to bring more cash but to find the shortest route through it.
That’s the idea behind a new partnership between Collaborative Fund and Harvard University’s Wyss Institute. TechCrunch+ has exclusively learned that the venture capital firm is giving the Wyss Institute $15 million to build a lab focused on sustainable materials research, and in return it will get first crack at technologies and companies that come out of the institute.
“Moving the needle slightly is not going to have any real impact. We need to completely reimagine, completely reinvent what we already have,” Sophie Bakalar, partner at Collaborative Fund, told TechCrunch+. “Our objective is not just to fund these really breakthrough technologies, but find a way to get them out of the lab and into our lives.”
That same philosophy was what led to the Wyss Institute’s founding. University laboratories are teeming with technologies and discoveries that often die when the scientist leading the effort, often a postdoc, gets a paper published in a big-name journal and finds a job elsewhere. The way academia is set up, there’s little incentive for others to continue the work and de-risk the science to the point where investors feel comfortable investing in a seed round let alone a Series A.
For some sectors, like fusion, the potential market size might coax reluctant investors off the sidelines. But not every climate tech problem worth solving will have a total addressable market that would rival the world’s energy infrastructure.
Before the Wyss Institute, director Donald Ingber had founded a number of startups that were borne from his research at Harvard. Several of his colleagues had done the same, and they all recognized the peril that nascent technologies faced after a groundbreaking paper describing them was published.
“From the very beginning, it was very clear we wanted to solve that,” Ingber told TechCrunch+.
Over the years, the Wyss Institute has refined its formula. Today, several groups within the institute review technologies and discoveries with an eye toward intellectual property and commercialization. But as technologies begin descending into the valley, support starts to dwindle. As part of a university, there is only so much the institute can do to help promising startups emerge from the lab. The partnership with Collaborative is meant to address that gap. “We’ve tried to fill that ‘valley of death’ zone,” Ingber said.
Part of the inspiration behind the new partnership is another, similar deal that the institute has with Northpond Ventures that’s focused on biotech.
The partnership with Collaborative was first floated during an exploratory meeting Bakalar had at the Wyss Institute. There, she heard about the institute’s deal with Northpond and its desire to dig deeper on climate. The institute was to address problems in both health care and the natural world, though much of the work to date has focused on the former. (Hansjörg Wyss, who gave the money to start the institute, founded a medical device company and has donated substantial sums to environmental causes.)
For its part, Collaborative was gearing up to launch its $200 million Collab SOS fund, which will need a pipeline of promising technologies that can be turned into billion-dollar companies. “I had this sense that we really need to catalyze this industry, we need to show climate entrepreneurs that there’s opportunity here that they can think big and outside the box,” Bakalar said.
The new lab will help scientists work on “moonshot materials,” she said. She’ll also have an appointment at the institute as a visiting scholar, in part to help promising candidates “go from the research phase into the company phase into fundraising and and beyond.”
“We can help solve for a lot of the things that are hardest at those earlier stages,” Bakalar added. “The goal is we bridge that gap.”
As universities look for more creative sources of funding, and as climate-focused VCs search for more investments, more of these partnerships might begin to take root. There’s certainly not a shortcoming of research emerging from universities, but the bottleneck will be finding institutions that have sufficient experience shepherding research out of the laboratory and into the commercial world. Stanford, MIT, and to a lesser extent Harvard, have shown the world how the model can benefit both sides of the equation.
Other universities have spent the last couple decades rushing to duplicate the model, but outside of a few other notable examples, research universities haven’t been able to create the same sort of dynamo effect or replicate the scale of Stanford or MIT.
It’s possible that climate tech could tip the balance. The sheer breadth, volume and urgency of issues that need to be addressed means that there should be ample opportunities for universities around the world to create these sorts of partnerships. Still, both sides will have to overcome challenges. Universities not versed in the startup world will have to develop the requisite institutional knowledge, and venture capital firms that don’t work closely with universities will have to learn how to match their dance partners’ steps. Both of those things will take time, but the benefits for everyone will be too significant to overlook.
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