Author: Erki Ani, former CEO of Cleantech Estonia
Once cleantech or Greentech was regarded as something for the "tree huggers", it wouldn’t generate any profit and be more like philanthropy for investors rather than with clear ROI and clear market opportunity. Well, back then, during the "second coming" of cleantech – so-called cleantech 2.0 – Cleantech sector in Estonia started being formed by people with the ability to see further than profit, but instead put impact first, accompanied by the profitability of technologies (meaning as hardware and software) that are deemed to flourish in the future. That was in 2014-15.
Beginning of 2016, the non-profit Cleantech Estonia was born. From day 0 clear goal being the umbrella organization for cleantech startup companies. Or, when there weren’t too many of them, it took on the duty to do everything those startups would appear in Estonia. So, partnering up with the European Institute of Innovation and Technology, this journey started on promising grounds and took on the goal of advancing and advocating the cleantech innovation’s potential in the economy. What has happened in the meantime?
Since then, Cleantech Estonia has been running hackathons, incubators, and accelerators dedicated to...well...cleantech startups. One of the earliest programs we started in 2015 is the ClimateLaunchpad (by EIT Climate-KIC). That is intended to seek the potential idea-level teams that would like to turn their (sometimes ludicrous) ideas into scaling impactful startup companies. Another program that started in the same year is the ClimAccelerator, also by EIT Climate-KIC. Here the startup companies get to polish their business models and seek Industry contacts and investors – in short, that’s the next step after ideation with funding included. Next to these core programs are different variations of incubators/accelerators, hackathons and solution-seeking activities for local municipalities.
Today, around 90-100 cleantech startups in Estonia alone have raised some kind of investment. Of course, the most popular sectors are Energy and Mobility, but also Agriculture & Food and Novel Materials. A good indicator in this startup sector is the number of investments that indicates a rising trend for sustainability – while in 2017, the investments made into cleantech startups were around 20M €, in 2022 H1, the number is 153M €.
But that’s not all we’ve been doing since then. As mentioned, back in the days, there was little awareness of the cleantech sector and its possibilities, opportunities, and potential. We’ve been actively working with the public, academia, and private sectors to increase those cleantech innovations' knowledge and potential. Representing Estonia at the European Commission’s Circular Economy missions in Singapore, Malaysia and India, leading panel discussions at the United Nations Climate Change Conference (COP26), and similar activities have led to growing our team’s network firmly and led to the understanding of what a tremendous demand or even hunger there is for sustainable, innovative solutions.
Each year we’ve helped roughly ten very early-stage startups and ten rookie teams to understand if their business idea will fly = we help validate the ideas. Regarding funding those with the most potential, 1.3M€ had we provided to 56 startups by mid-2021. As a non-profit, it’s not too bad. FOR a non-profit, however, as our team of 5 was in constant funding hunger due to peculiarities of project-based operations and non-existent governmental interest, that was intense times. Yet, it just happened so that often when a paycheck "got lost in flight", another opportunity or idea arose.
One of those was the belief of a strong-led Estonian renewable developer firm Sunly’s CEO, with whom I took a flight to San Fransisco’s Cleantech Forum and, on the flight back, decided to initiate an international accelerator program laser-focused on cleantech. Fast forward to July 2022, and Beamline Accelerator has run 2 Batches with 14 startups from 8 countries. From the first Batches, there are already multiple successes, one of them being the Beast – a software startup (these are, in fact, rare in our portfolio) with their fleet of Teslas today in Estonia, Finland, Sweden, and Norway, Latvia and Lithuania. Soon to be on the market also with their peer-to-peer Tesla sharing option as they’re advocating the uptake of electric mobility through solid branding and excellent agility. An example from the other end of the spectrum is Äio tech, a startup that is programming microorganisms to produce enzymes that could make organic matter edible for humans – in short; they make it possible for us to eat wood.
On the 7th of July Cleantech Estonia and Sunly had the honour of hosting the President of Estonia, Alar Karis, who visited the Cleantech Demo Centre in Tallinn, Pirita. I, as usual, put on the tour guide hat and showed what Estonia has to offer to create a robust innovation foundation in the cleantech sector. The Demo Center is unique in Estonia, exhibiting Estonian cleantech startups' products and services.
As typical for our small, agile, and digitally witty country, Energy topics led the discussions the most. The majority of investments flow there, and innovations in this sector are needed the most in turbulent Green Transition times. Novel materials development thrives, too, backed by solid research and development level, yet lacks the knowledge on how or why to set up a company that would scale the impact of applied research.
Estonia has ambitious plans to back the uptake of existing solutions. We keep scouting for bright minds still at the idea level and wish to start a new life in the entrepreneurial world—something we’ve been doing good for many, many years. When is our work done?
As one might imagine, our day-to-day work includes providing great deal-flow to pre-seed/Seed stage angels, investors, Seed/Series A stage VCs, and lately, more Growth stage investors from the US. Why that’s special? We’re working with only cleantech investors that acknowledge the "whys“ of investments into (hardware) sustainability and innovation. Regarding that as a pre-filtered selection of startups to investors and vice versa, there is also no reason to explain to investors that we can not tackle today's challenges with technologies invented 100 years ago.
There is much work to be done still to help scale early-stage startups into impactful businesses, and that is precisely what our ambitions are today. As Cleantech Estonia’s startup’s development-related activities have scaled to the EU level with Beamline Accelerator, our local cleantech sector development activities are also to scale, specifically in the Baltics. And let’s see then, perhaps there will be a time when all businesses are regarded as cleantech or sustainable – then our work is done.
