Three things early-stage startups and utility companies should keep in mind when working together
Last week I had a honour to speak at the one of the most important event in cleantech and green economy, World Green Economy Summit. During the panel we discussed the problem that youth aren’t engaged enough in creating more startups in clean-tech and green energy field.
I decided to share with you some thoughts why it is that and the ways how it can be improved.
1.Give an equal access to modern energy technologies and innovative prototypes.
So in that way young entrepreneur would be able to test, try and understand what opportunities are there in the market. In this case a well-organized green hackathon or a maker space should be enough.
2.Utility companies should be aware about the challenges that early-stage startups are facing.
As energy sector is a very regulated field, it’s almost impossible to build a successful energy startup without proper communication and financial help from utilities. Nowadays, a lot of companies create VC funds to work with early stage startups. But still, a lot of work should be done until corporates and startups will understand how to work with each other more efficiently.
Utility companies that has chosen to work with early stage startups should understand that early stage means that they will not receive ready-to-market product within next 12 months and there are a lot of tests needed before launching on the market. I see two ways of boosting these cooperations. Utilities could create mechanisms to help startups in their journey to success or stop working with early-stage startup and concentrate on ready-to-market companies.
3.Pilot project with utility company can be risky, devastating and harmful for the startup. But when well-planned and financed it will be payed-off.
From the first contact established between the startup and the utility company to the launching of the pilot it will usually take about one year, one year and a half. During this time a startup will improve its product and will receive appropriate certification. Dozen things will be agreed and improved within this timeframe which will make the pilot possible and efficient. During this time utility company has to find and approve customers who will participate in the pilot. During this time early stage startups make tremendous adjustments to the specific utility and based on negotiations some significant changes to a product could be made. It takes a lot of resources, especially financial. Ideally, utility will cover the expenses of these adjustments. But there’s always a risk they won’t.
The pilot projects should have a very structured plan. It should answer all the following questions: what product is being launched, what is being tested; what audience is being tested; what KPI is important and what are the timelines for it; what does it mean “a successful pilot project” and what will happen after it? All these questions should be answered with clear numbers and timelines. Sounds very simple, isn’t it? But I have seen a dozen of pilot projects with telcos and utilities without these general things.
Having a detailed financial and development plan would be a huge asset for the startups to receive a financial help from utility itself, VC fund or business angels. Not having finances during the pilot is a threat to lose a company while adjusting to the pilot projects.
To summarise, to engage young entrepreneurs to create companies in cleantech and green economy, we need to build infrastructure that will help them to do this and not interfere. This is work for both startups and corporations and if we do this work together, we will accelerate development in green economy and clean-tech as never before.
