While the sands are shifting, the percentage of overall venture capital flowing to female founders and entrepreneurs of color remains woefully low. According to the latest PitchBook and CrunchBase stats I could dredge up, just 2 percent of the total in 2021 went to women; about 1.2 percent in the first half of last year went to Black founders.

Two new programs aimed specifically at climate tech startups — including an initiative launched by the Los Angeles Cleantech Incubator (LACI), and one developed by financing startup Enduring Planet — offer an alternative blueprint for how to address that gap with revenue-based financing.

In short, these programs are focused on providing loans that are paid back as a percentage of the venture’s sales, without requiring complex arrangements under which the founder might have to put up collateral or personal guarantees. (The particulars of the two programs differ, but the net effect is that founders don't have to put as much of their personal wealth at risk.) That means, of course, that the company has to be generating some sort of sales. It wouldn’t work for an early-stage organization deep in the research phase.

Indeed, the $6 million LACI Cleantech Debt Fund is targeted at startups that need financing to deliver on their first customer orders or that need working capital to scale. It will provide loans of between $25,000 to $250,000 over the next five years to an estimated 100 early-stage ventures fronted by "underrepresented founders." It has a specific focus on female, Black and Brown entrepreneurs — not just those working with LACI but also with other U.S. climate tech incubators including Greentown Labs, Evergreen Climate Innovations and New Energy Nexus.

"This is a missing piece of the capital stack for early-stage investors," LACI CEO Matt Petersen told me.

LACI has been piloting the funding concept as part of a research project with the Department of Energy, organizing loans of $300,000 to nine startups, including SparkCharge, which is deploying on-demand mobile electric vehicle charging stations, and Envoy, which has created a business that provides shared, on-demand, community based EVs. Envoy used the financing to create a pilot program of its car-share service for residents of a public housing complex in Los Angeles. SparkCharge used its $40,000 low-interest loan to help hire 40 employees.

Read the full article about climate tech founders by Heather Clancy at GreenBiz.