Imagine if those best equipped to launch the next big climate companies were simply unable to begin. Many entrepreneurs who demonstrate the necessary grit and talent for success are discouraged, disadvantaged, or thwarted from pursuing their dreams by systemic barriers. This article summarizes a recent white paper that explores “invisible gates” which hinder underrepresented entrepreneurs from launching and scaling climate tech companies. The full paper highlights solutions from the experience of LabStart, a nonprofit dedicated to fostering a more inclusive climate innovation ecosystem.

Inflection points along a founder’s journey; Source: Underestimated start-up founders: The untapped opportunity (Ganesan et. al., 2023)

There is an undeniable phenomenon in climate tech investor portfolios: a severe underrepresentation of women, and Black, Indigenous, and Persons of Color (BIPOC) founders. The U.S. investment figures are a glaring symptom of many systemic barriers and invisible gates to STEM entrepreneurship for diverse founders. In 2022, only 1.9% of all venture capital (VC) deployed went to female-founded teams, 1.5% to Latino founders, 1% went to Black founders, and only 0.1% of VC funds went to Black and Latina women founders. Figures are scarcely different when focusing on the climate sector and emphasize entrenched exclusions, hardly confined to funding.

The first inflection point along any startup journey is “deciding to launch”. However, many individuals with entrepreneurial potential do not have the initial resources necessary to even “decide to launch.” LabStart refers to this pre-pre-seed launch phase as Zero-to-One: a widely overlooked investment stage that leaves incredible human and technology potential unrealized. Socially and economically disadvantaged individuals, who may exhibit the top qualities and mindsets of great founders, often lack clear pathways such as starting capital or the essential networks to move an early-stage technology into a new company. By focusing investment and support at this Zero-to-One launch period, before a company is formed and before a climate technology is licensed, we can immediately widen the funnel of climate entrepreneurship.

Below, we introduce three common gates that continue to limit the number of new climate-related companies emerging: (1) the starting capital gate; (2) the technology idea gate; and (3) the in-network gate. While each may represent an extensive list of social and economic factors that ultimately reduce STEM innovation and entrepreneurship opportunities, we provide just enough context to expose how creative funding, targeted policy mechanisms, and the reframing of qualifications can generate immediate access and opportunity for a wider range of workforce talent.

Three invisible gates and practical solutions to unlock them

The Starting Capital Gate

The Starting Capital Gate describes one of the more obvious and addressable limitations to investors seeing more diverse founders enter their pipelines. Most Americans cannot afford the luxury of time to explore a new business venture without an incoming paycheck to cover basic needs and living expenses.

Those who can either afford outright (or afford the risk) to start new ventures are a narrow few; namely those with financial security of some kind such as savings, passive income, credit pathways, friends and family support, or existing business reserves. This puts many communities of color at a particular disadvantage. For reference, in 2021, the typical White household had 9.2 times as much wealth as the typical Black household — $250,400 vs. $27,100; white households also had significantly more wealth than Hispanic households (5.1 times) and multi-racial households (3.0 times) in 2021.

Many individuals with entrepreneurial potential do not have the initial resources necessary to even “decide to launch.”

The absence of sufficient living stipends in early-stage incubator programs, combined with even modest startup costs, are ubiquitous barriers to founders being able to focus enough time on their venture to get off the ground. Non-dilutive capital, such as living stipends or cash awards, are transformative yet rarely permissible applications of state and federal grant dollars and not often incorporated into entrepreneurial programs.

Some entrepreneur support organizations (ESOs) like LabStart help to unlock the Starting Capital Gate by providing a runway of time through full-salary stipends and early investments. Through a year-long fellowship model, LabStart awards promising individuals $100,000 and an opportunity to focus full-time on their vision. This creates space for essential-to-launch, pre-revenue undertakings such as technology vetting and selection, market opportunity analysis, and extensive customer discovery. Pre-launch capital is a substantial vote of confidence and has helped ten LabStart fellows launch brand new climate companies.

Technology Idea Gate

The Technology Idea Gate describes a gap between those who do and do not have access to cutting-edge research institutions and familiarity with the U.S. patent office or institutional patent licensing systems. In 2019, women were only listed as inventors on 13% of all U.S. patents; and, in general, Black and Hispanic adults are underrepresented among STEM college graduates compared with their share in the college population. This is especially true among those earning Ph.D. or other research doctorates, academic programs that support emerging talent experiment with innovative technologies and develop intellectual property (IP).

Alongside long-term efforts to improve representation in STEM-focused institutions, existing patents for breakthrough technologies are sitting dormant. In the U.S. Department of Energy National Labs alone, there are over 20,000 climate and energy-related patents available to license. While some lab scientists decide to launch businesses around their innovations, they are the minority. Not all inventors have the risk profile, business acumen, or desire to commercialize the technologies they develop, leaving a large stock of available IP on the shelf. While labs often market this IP for corporate portfolios, any entrepreneur can license and launch companies from university or National Lab IP. It is the gap in licensing know-how, and even the knowledge of this opportunity pathway, that creates the Technology Idea Gate.

1000 climate unicorns need to be created and 300 climate decacorns need to be created by 2030 in order to meet climate goals. (McKinsey)

To address this Technology Idea Gate, LabStart connects entrepreneurial-minded individuals with premier labs and universities to identify licensable-IP and evaluate market opportunities. LabStart works with founders to demystify the IP licensing process and ensure they find follow-on funding, accelerators, or lab partnerships to continue beyond their launch-year with LabStart. This model helps diversify and broaden the funnel of climate tech innovators, while making the long journey of technology commercialization a more viable pathway for all.

In-Network Gate

The In-Network Gate describes the disadvantage of underrepresented founders who need to build from scratch, rather than inherit, relational access to exclusive groups of influence such as funder networks, potential customers, industry partnerships, or other entrepreneurs and mentors. The In-Network Gate also extends to the outsized influence of exclusive groups in positions of power such as investors, lenders, tech transfer officers, and corporate decision-makers.

People tend to associate with those who are similar to them, leading to the perpetuation of homogeneous, exclusive networks and making it difficult for new or unknown entrepreneurs to break in, especially in a field such as venture investment that heavily relies on warm introductions and past associations. For example, one of the biggest barriers to female leadership in climate sectors is that venture capital (VC) and finance remain male dominated: only 3% of venture capital partners are women and only 14% of angel investors are women. Historically, VCs have tended to fund startups with all-male management teams. Research shows that startups led by men received over 16 times more funding than those led by women. Established players within the industry may actively or subconsciously gatekeep by setting criteria that favor insiders or those with specific backgrounds. These are common systemic biases born from many generations of underrepresentation.

LabStart and peer ESOs, like Browning the Green Space, address the In-Network Gate through a multi-pronged approach. Firstly, ESOs can provide access to a strong community of peers and mentors, creating a supportive network for underrepresented founders. Secondly, ESOs can actively facilitate warm introductions to investors, potential customers, and industry partners, helping founders build crucial connections through existing relational capital. Lastly, ESOs can advocate for redefining success metrics by adopting broader criteria that prioritizes entrepreneurial potential and idea/market viability. By encouraging investors and others in positions of power to look beyond systemically fraught markers such as elite educational background, niche technical degrees, or prior experience, we can immediately create more opportunities for diverse founders and diverse climate solutions. For example, LabStart’s application process filters for grit, tenacity, leadership experience, entrepreneurial-spirit, scientific-acumen, coachability, compelling storytelling, and a desire to make a real impact on climate change.

Conclusion & Call to Action

The underrepresentation of diverse founders in climate tech is a systemic issue with far-reaching consequences. By unlocking “invisible gates” such as these, which hold back a floodwall of sustainability-committed entrepreneurs, we could quickly see more companies emerge and a fuller spectrum of climate solutions arise.

LabStart and other ESOs drive investments and policy innovation at the earliest possible startup stages to ensure entrepreneur pipelines and technology pipelines are not limiting variables in how many climate solutions we see deployed.

At LabStart, we believe our impact extends beyond individualized support; it’s about fostering a self-sustaining ecosystem of diverse climate innovators. By encouraging and demonstrating true catalytic capital, LabStart is helping to cultivate a new generation of leaders who will shape the future of the climate tech sector. These founders, emboldened by their life experiences and executing from their core values, are poised to become investors, mentors, and role models for the next wave of underrepresented entrepreneurs.

We call on other ESOs, investors, and policymakers to adopt similar approaches, recognizing that supporting underrepresented climate tech entrepreneurs is not a matter of equity, but a necessity for unlocking the full potential of climate innovation.

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This article is part of a series of insights on emergent topics in inclusive climate innovation from Entrepreneur Support Organizations (ESOs) that are part of the Autodesk Foundation’s Inclusive Climate Innovation Initiative (ICII). ICII pieces highlight barriers and provide actionable insights to foster a more inclusive funding ecosystem. Through this initiative, the Autodesk Foundation awarded grant funding to four ESOs addressing capital and resource inequities for climate tech founders: Browning the Green Space, Elemental Excelerator, New Energy Nexus, and LabStart Innovations.