BIPOC Women Drive Climate Tech and the Industry Needs to Take Note and Support

BlogClean EnergyEnergy Equity

Sneha Ayyagari September 24, 2024

This blog was written with research support from Marilyn Lemus Guiterrez, Climate Equity Summer Associate.

Many low income households and communities of color experience the impacts of climate change first and worst- the result of decades of environmental and economic inequity. While several efforts have aimed to increase diversity and inclusion in the cleantech industry, BIPOC women and founders of other underrepresented groups continue to face barriers to funding and support at every stage. Creating a more inclusive clean-energy economy that is representative of people of color can help increase access to clean energy technologies in communities that are more impacted by climate change due to discriminatory practices like redlining.

In 2023, only 7% of climate tech venture capital went to women-owned companies while less than 1% of all venture capital (VC) went to Black and Latinx women founders.Recent backlash against programs such as the Fearless Fund, a grant program for Black women business owners, highlights the uphill battle BIPOC women face in accessing funding.

Below, I walk through two of the most common barriers BIPOC women and other underrepresented founders face in receiving funding and explore possible solutions the industry can adopt.

Barrier #1: Funding opportunities are often limited to existing networks

Currently, many funders invest exclusively based on referrals within their networks. According to VC Include, women make up 5% of venture capital partners, 3% of US venture capital partners are Black, and only 2% are Latinx. Their analysis shows that investors are missing out on as much as $4 trillion in value by not investing in more diverse founders and ensuring that those businesses are operated in an inclusive and equitable way. Investors sometimes overlook women and BIPOC funders despite research showing that diverse businesses perform better and can better reach a wider range of customers in an increasingly diverse country.

Recommendations for founders

• Diversify funding streams with values-aligned government, non-profit, andphilanthropic grants

As early-stage companies build their businesses, applying to grants and other financing programs run by values-aligned funders can offer pathways to funding for diverse entrepreneurs and support them in developing meaningful community partnerships. Funded by the California Energy Commission and administered by New Energy Nexus, CalSEED is one example of an early-stage grant funding and professional development program that provides entrepreneurs with training, funding, and networking support to help them to build a diverse, equitable, and inclusive company and address environmental inequities through their technologies. The Greenlining Institute works with the CalSEED program to expand awareness on the need to support BIPOC women entrepreneurs.

In addition to CalSEED, there are several other relevant state and federal grants that can help diverse funders grow their businesses such as the American Made Challenges. Low-interest financing through the Department of Energy's Loan Program Office can supplement VC funding. There are a number of values-aligned private investors and advisors, including Radicle Impact, Kapor Center, DiverseCity Ventures, and the 11th Hour Project.

Recommendation for funders

• Increase representation of VCs and other funders of color and eliminate barriers to entry.

Due to the legacies of redlining and other discriminatory policies, many people of color have been excluded from intergenerational wealth-building compared to many white investors. Funders can do their part to address this disparity by developing internal diversity, equity, and inclusion plans that include hiring, retention, and organizational processes that create a welcoming workplace for BIPOC women and other underrepresented groups. Funders should connect with groups like VC Include that accelerate investment into historically underrepresented venture capital fund managers.

• Increase transparency in reporting

Funders should publicly report the demographics of their investors or program officers and those of the groups they invest in. Transparent reporting can help build accountability across the industry and encourage founders to apply for funds. VCs can build from efforts to increase transparency across climate nonprofits and foundations by groups such as Green 2.0. Funders should create more open solicitations and conduct inclusive outreach outside of their existing networks.

Barrier #2: Lack of communities of support

Through our interviews with founders, funders, startup employees, and leaders in the climate tech industry, we found that BIPOC women face barriers in finding mentors, connections, technical assistance, and support to advance their companies. While some groups assist with topics such as business development, legal, and operations, these programs often have significant capacity and funding constraints, and founders may not be aware of them.

Recommendation for founders

Joining values-based incubator programs such as CalSEED, Elemental Impact, Los Angeles Cleantech Incubator, or Second Muse can help founders network with other like-minded entrepreneurs and gain the business, legal, and workforce development knowledge needed to advance their companies. There are many organizations, including Women of Color in Sustainability, Women in Cleantech and Sustainability, GreenLatinos, Asians in Energy, and the American Association of Blacks in Energy, that seek to build community and increase access to jobs and funding (see more organizations here).

While founders operate in a competitive landscape, creating a diverse and collaborative ecosystem benefits everyone rather than each company approaching fundraising as a zero-sum game and edging out a diverse range of companies.

• Communicate and connect how lived experiences align with community values and opportunities.

In addition to technical and business expertise, BIPOC women founders bring relevant lived experiences that can help them better connect with the communities their products serve. For example, Kameale Terry brought her experiences growing up in South Central Los Angeles to build ChargerHelp!, a company that builds from the assets and resilience of the community to provide EV infrastructure and workforce development services. Similarly, Zora Chung of Rejoule used her experiences as a BIPOC woman fundraising for her company to share advice and expertise with others and help develop a thoughtful approach to diversity, equity, and inclusion within her company.

Recommendation for funders

• Partner with programs to build the pipeline and connect talent to investors and climate tech companies.

Funders should support and connect with programs that create pathways into the climate tech industry and provide mentorship, wraparound services, and support throughout their career development. For example, the Los Angeles Cleantech Incubator's Middle School Girls in STEM program builds a pipeline for future female innovators. The Empowering Diverse Climate Talent (EDICT) Internship program provides opportunities for youth from traditionally excluded groups to work in the climate tech field. The Climate-Resilient Employees for a Sustainable Tomorrow (CREST) program also focuses on helping individuals from low-income households, people of color, women, and other underrepresented groups with reskilling and preparing for careers in the green economy.

Funders and founders both have a role to play in creating a more accessible funding landscape to enable the teams and technologies we need to solve the climate crisis equitably. Please reach out to learn more about the CalSEED program and training materials for entrepreneurs on social impact, energy equity, community partnerships, and more.