Green Business Initiative Sees Rewards, But Faces Challenges
A taxpayer-funded eco-business program is paying off for New Hampshire. The Green Launching Pad at the University of New Hampshire has given grants to more than a dozen start-ups in the state. But it hasn’t awarded any new funds since last year.
But the scene at the statehouse last winter was one of optimism for a cadre of entrepreneurs and their supporters. The Green Launching Pad was awarding its companies federal money. Over the course of two years, the program got $1.5 million in stimulus funding to give out to the most promising green start-ups in the state. Then-Governor John Lynch was optimistic about the program’s future even as the federal funds were drying up.
“I think we all recognize the real value of these Green Launching Pad companies, and the partnerships with the University of New Hampshire. Because they will create manufacturing jobs in an important area for our state," Lynch said. "So because of the recognition of the importance of this, I do think the funding will be available to continue the Green Launching Pad.”
Lynch was a big supporter of the program. In fact, the state’s Office of Energy and Planning actually got the $1.5 million in stimulus funding. And Lynch decided to use it to fund the Green Launching Pad.
But he didn’t advocate spending state money to continue the program. That’s ok, says Venky Venkatachalam, the Project Director for the GLP. “It has been a goal of Green Launching Pad from the very beginning, is to move toward a privatized model from Day 1,” he says.
Venkatachalam also serves as associate dean at UNH’s Paul College of Business and Economics. He’s been busy drumming up private donations. He doesn’t want to say yet how much the programs has raised, but he says it’s “limited.” Still, he has faith.
“What we have developed in the past two years is a very sound and very effective innovation ecosystem in the state, by identifying and providing funding and other business development to help the high-potential entrepreneurs in this green space," Venkatachalam says, "and providing them with support through funding and also through teams of faculty researchers, students, and industry mentors.”
The Green Launching Pad is actually part of a growing national trend. Over the past decade or so, universities have been establishing so-called “Proof of Concept centers." The idea is to help research faculty and entrepreneurs in the very early stages of starting-up, when they don’t know how to attract investors. Many of these companies are too young to even have angel investors or set-up in business incubators. Ted Zoller, Senior Fellow at the Kauffman Foundation, says Proof of Concept centers are especially important in today’s economy, when investors are shying away from riskier, brand-new ventures.
“So a given project may be $50,000 or $75,000. And it’s affordable loss. It’s money that if it turns out to be a very successful foray, it will grow 100-x. If it’s not successful, it’s not a critical problem," Zoller says.
So far, it’s been a “successful foray” for Revolution Energy in Portsmouth.
“The Green Launching Pad for us has been a very pivotal element in our growth and success,” says Mike Behrmann, one of the company's founders.
Revolution Energy tries to make renewable energy more affordably by financing, building, metering, and maintaining systems for clients. And clients then pay the company for that power, thus paying back the cost of the system over the long-term. Revolution Energy was one of the first companies to get Green Launching Pad funding--$60,000.
“At the time, it truly helped keep the lights on! We are your typical, start-in-the-basement, have an idea type of company," Behrmann recalls with a dry chuckle.
Since then, Revolution has been remarkably successful, growing from a single project to 10-projects today. That might not seem like a lot, but Behrmann points out, “It’s basically like saying we’ve grown 1,200 percent each year. Because of the scale of the projects that we’re developing now, because of the dollar figure that we’re working with. It’s enormous.”
But it’s not the only GLP company that’s seen huge growth. Take EnerTrac, in Hudson. It specializes in low-cost machine-to-machine communication [M2M], like creating a special monitor for a propane tank that tells the dealer exactly when to make a delivery. While EnerTrac raked-in a$20,000 grant, founder and CEO Steve Owens says the publicity was worth a lot more.
“There are just so many early stage companies out there! The idea that there’s your picture with the governor, that can be the thing that sort of gets you above the noise floor that now this early-stage investor says, well, I want to talk to those guys and learn more about them,” Owens says.
Of the 14 companies the Green Launching Pad has supported, Revolution Energy and EnerTrac are among the Big Four, along with Therma-HEXX and SustainX. These are the companies that have taken off quickly, are adding jobs, and are getting big publicity. The other ten start-ups are more mixed. Some are doing well, but growing more slowly. Others appear to have stalled, their websites not indicating any progress.
Then, there’s the case of Portsmouth-based Earth Tec, the eco-friendly clothing manufacturer.
Earth Tec shuttered just months after being awarded a $60,000 grant. The GLP ultimately didn’t give Earth Tec the money, realizing the company was dealing with serious problems.
Still, despite the risk of funding start-up ventures, Governor Maggie Hassan is willing to bet state money on the Green Launching Pad. In her budget last month, Hassan called for allocating $500,000 to the program over the next two years.
For his part, GLP Project Director Venky Venkatachalam hopes to begin funding start-ups again this summer. In this round of funding, however, he wants to focus on student innovation. "After all, we are here to help create and sustain the next generation of entrepreneurs," Venkatachalam says. "And they are the next generation of entrepreneurs that the whole state is relying on."