Financing Energy Innovation: The Need for New Intermediaries in Clean Energy

Sustainability, 12(24), 10440

25 Pages Posted: 5 Oct 2018 Last revised: 15 Dec 2020

See all articles by Soh Young In

Soh Young In

Stanford University - School of Engineering; Precourt Institute for Energy, Stanford University

Ashby Monk

Stanford University

Janelle Knox-Hayes

affiliation not provided to SSRN

Date Written: December 14, 2020

Abstract

This study aims to advance the understanding of and address the valley of death that is significantly widening in the clean energy domain due to its financing challenges. We conduct a case study on three new investment vehicles in the US energy sector (First Look Fund by Activate, Prime Impact Fund by Prime Coalition, and Aligned Climate Capital), which set their missions to contribute to bridging the valley of death in clean energy. While three cases focus on different technological development phases, they raise a consistent point that investment opportunities (and risks) are not assigned to the appropriate investors. We argue that current financial intermediaries have failed to effectively channel funding sources to entrepreneurs, as we evidence network fragmentation and information asymmetries among investor groups and companies. Therefore, we propose three intermediary functions that can facilitate intelligent and effective information flow among investors throughout the entire energy technology development cycle. Our findings highlight the emergence of collaborative platforms as critical pillars to address financing issues among new energy ventures.

Keywords: Energy Innovation; Financial Innovation; Entrepreneurial Finance; Valley of Death; Financial Intermediaries; Energy Investing Ecosystem; Collaborative Platforms; Catalytic capital

JEL Classification: G23, G24, Q42, Q55, Q58

Suggested Citation

In, Soh Young and Monk, Ashby and Knox-Hayes, Janelle, Financing Energy Innovation: The Need for New Intermediaries in Clean Energy (December 14, 2020). Sustainability, 12(24), 10440 , Available at SSRN: https://ssrn.com/abstract=3248032 or http://dx.doi.org/10.2139/ssrn.3248032

Soh Young In (Contact Author)

Stanford University - School of Engineering ( email )

Stanford, CA 94305-9025
United States

Precourt Institute for Energy, Stanford University ( email )

473 Via Ortega, Suite 324
Stanford University
Stanford, CA 94305
United States

HOME PAGE: http://https://energy.stanford.edu/

Ashby Monk

Stanford University ( email )

United States

Janelle Knox-Hayes

affiliation not provided to SSRN

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