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Money’s Gone: Why U.S. Green Tech Startups Are Crashing and Burning

Daniel Kim Views  

The Financial Times (FT) has reported a troubling trend in the clean energy sector: increasing companies face bankruptcy due to failed fundraising efforts. Once hailed as a promising frontier for future technologies and a top investment choice for major tech firms, the industry is now struggling.

According to Bloomberg data, the number of renewable energy companies filing for bankruptcy with debts exceeding $50 million has reached its highest level since 2014. Many of these companies have attracted substantial investments from major energy firms.

For instance, Moxion Power and SunPower announced operational halts in July. Moxion Power is a mobile energy storage startup with big investments from Amazon and Microsoft. SunPower is also a solar module company owned by French oil giant Total. Ambri, a liquid metal battery company backed by Bill Gates’ venture fund, filed for bankruptcy in May. A wood pellet supplier, Enviva, is currently undergoing bankruptcy proceedings.

Swell Energy is a virtual battery power plant company that secured $120 million in investment from SoftBank’s Vision Fund and Ares Management in 2022. However, they announced in August that it would cease operations in its current form. Swell CEO Suleman Khan stated that the company’s solar and battery systems will remain operational, and they will work closely with utilities and battery manufacturers to ensure the continued functioning of power plants.

While not all companies have filed for bankruptcy or operational shutdowns, many are struggling with funding. FreeWire Technologies entered a creditor agreement earlier this summer and undertook job restructuring. It is a legal measure often used as an alternative to bankruptcy. FreeWire mainly manufactures electric vehicle charging stations. FreeWire previously described itself to help the Biden administration build a network of electric vehicle chargers in the U.S.

Analysts attribute the crisis to decreased investment attractiveness amid high interest rates. Arash Nazhad, co-head of the cleantech group at Moelis, explained that clean energy startups frequently struggle with commercial viability while needing significant capital to advance technologies crucial for climate and energy transitions. He further noted that many companies face increased risk, especially those expending more resources than they are generating, and lack a clear path to achieving positive cash flow.

FT also noted that one of the crises facing clean energy firms is the growing competition for funding among emerging sectors. Bilal Zuberi, a partner at Lux Capital, explained, “Venture capitalists have seen a larger-than-expected portion of their [cash] reserves called into other sectors like AI, life sciences, and defense tech.”

However, FT pointed out that some companies remain promising and continue to secure funding. In June, silicon-based battery developer Sila Nanotechnologies raised $375 million. In August, Svante, manufacturing carbon capture machines to decrease carbon emissions, received $100 million from the independent fund Canada Growth.

Daniel Kim
content@viewusglobal.com

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