LACI Receives $2 Million Boost from Schmidt Family Foundation to Expand Cleantech Debt Fund

LACI Gets a $2 Million Grant for Cleantech Innovation

The Los Angeles Cleantech Incubator (LACI) has just announced an exciting development for the cleantech startup ecosystem: a generous $2 million grant from the Schmidt Family Foundation. This significant funding will be instrumental in growing the LACI Cleantech Debt Fund, aimed at providing vital working capital to early-stage startups focused on groundbreaking climate solutions.

Since its launch in 2022, the Debt Fund has already made waves in the cleantech sector by deploying $5 million in loans across multiple states and business sectors, including electric vehicle charging, metallurgy, and grid resiliency. With this fresh infusion of capital, the Debt Fund is set to expand to a total of $7.6 million, providing both working capital loans and financing for first customer contracts.

A Unique Approach to Funding

One of the primary advantages of the LACI Debt Fund is its approach to financing, which offers an alternative to traditional venture capital. Startups often struggle to secure funding due to a lack of assets and limited cash flow that make them appear uncreditworthy. Consequently, many turn to equity financing, which can lead to founder dilution and inflated company valuations. The Debt Fund, in contrast, allows for non-dilutive loans that ensure founders retain significant equity while still meeting their financial needs.

Additionally, underrepresented groups such as Black, brown, and women entrepreneurs typically face challenges when accessing funds. The LACI Debt Fund sidelines the traditional requirements of personal collateral and credit scores, thereby fostering an inclusive financial environment.

Matt Petersen, LACI’s President and CEO, emphasized the importance of this support: “Thanks to the generous backing of the Schmidt Family Foundation, we can enable more cleantech founders to access essential working capital. This funding will help remove significant barriers for entrepreneurs aiming to bring game-changing climate solutions to market.”

Transformative Impact on Startups

The LACI Debt Fund has already proven beneficial for companies like Evolectric, which focuses on electric vehicle conversion for commercial fleets. According to Evolectric’s co-founder, Jakson Alvarez, the fund provided the necessary working capital to us at a critical growth phase, allowing them to scale their business effectively. With this latest influx of funds, LACI aims to support even more startups with larger loans between $500,000 and $1 million.

Adrienne Lindgren, Senior Vice President of Unlocking Innovation at LACI, expressed her commitment to empowering underrepresented founders: “Through the LACI Cleantech Debt Fund, we’re working to dismantle barriers to capital access without diluting the equity that founders hold in their businesses.” By collaborating with an extensive network of partners, LACI aims to identify viable startups from diverse backgrounds.

Why This Matters

In the face of climate challenges, the need for innovative solutions has never been more pressing. As Patrick McGrath from the Schmidt Family Foundation points out, achieving climate goals demands effective financial tools to enable early-stage climate tech companies to grow. The LACI Debt Fund is a potent model for leverage catalytic capital to bridge the funding gap in the cleantech sector.

Founded in 2011 as an economic development initiative by the City of Los Angeles and its Department of Water and Power, LACI has made impressive strides. It has assisted over 500 portfolio companies in raising more than $1 billion, creating thousands of jobs and having a substantial economic impact of over $733 million in the Los Angeles region.

With this new grant, the future looks promising for LACI and the burgeoning cleantech industry as it continues to support innovative minds while advocating for sustainability and equity in funding.