How to build a great data room for CleanTech startups

This decade will be critical for the future of our planet.

In 2022, the capital invested into CleanTech start-ups amounted to EUR 0.7bn (representing 15% of the total capital invested into Swiss start-ups that year). The relatively large investment amount demonstrates the increasing attractiveness of this industry vertical from an investor's perspective. We at BV4 believe that CleanTech investments will become more popular and that venture capital can pave the way for related innovation.

However, CleanTech start-ups face a greater challenge raising capital than other sectors. Their focus on social equity and the design of environmentally beneficial products, services, and processes can increase initial capital outlays and may delay short-term profit recognition, instead favouring long-term sustainable profitability. 

Our analysis of 11 venture capital firms and 10 CleanTech start-ups in the DACH region shows that, while differing in terms of mission and long-term approach to profit, VC-backed CleanTech start-ups share similarities with conventional VC-backed business models. Hence, the VC due diligence basis and required documents are rather similar, while some sustainability- specific documents may be additionally needed. A structured and comprehensive data room is crucial in order to secure funding.

Besides the general documents required, the specific emphasis is summarised as follows:

• Evidence of greater good (climate and people), purpose-driven motivation, and relevant qualification of the founder team.
• Research & Development should be documented and explained to increase understanding and the importance of the innovation.
• Validation of supporting regulations (reporting, tax incentives, fines, and laws) as an opportunity and risk should be addressed and incorporated.
• The sustainability folder is being added and is gaining importance to demonstrate the internal sustainability performance and show the external impact to mitigate greenwashing risk.

Moreover, the specific documents required in the data room change throughout the different financing stages (Seed, Series A, Series B) and are weighted differently.

If you are interested to learn more and get the full insights, please send an e-mail to info@bv4.ch.