The technology is not yet commercially proven at scale. These companies have likely grown beyond the scope and cheque-writing capabilities of venture capital. But they’re still too early in their corporate life cycle for the larger pools of growth equity or infrastructure capital, says Michael Denham, head of commercial and private banking at National Bank of Canada.
“Bridging that ‘valley of death’ is the greatest challenge for clean-tech companies.”
A growing ecosystem
Canada has been growing a number of globally recognized clean-tech companies, ranking second in the 2024 Global Cleantech Innovation Index. Canadian companies accounted for 13 of the top 100 companies in the prestigious list.
Mr. Denham, who has spent almost a decade as a financier to clean-tech clients, says the goal is to help maintain Canada’s position as a global leader and to see home-grown clean-tech companies flourish on the world stage.
He notes that many up-and-coming, pre-commercialization companies sprout from pioneering research done at universities or from the ingenuity of plucky entrepreneurs. “We punch well above our weight as a nation.”
While Canada has seen some clean-tech companies flourish abroad, the U.S. still dominates the global landscape thanks in part to supportive government policy. That’s actually an opportunity for Canadian companies, Mr. Denham says. We’re right next door and can fully participate in both the Canadian and U.S. markets, while taking advantage of Canada’s strong employee talent pool.
One Canadian company that has done so is FLO, which boasts coast-to-coast electric vehicle charging networks in both Canada and the U.S. FLO was supported by National Bank’s advice, tailored banking services, financing and connections with large pools of investors.
A significant part of the challenge in raising capital for clean-tech companies is that many are developing what’s referred to as “hard tech,” or breakthrough products.
“Hard tech requires a lot of tweaking and retooling to ultimately get to a viable and competitive commercial project,” says Sophie McCormack, managing director in the Private Capital Solutions practice of National Bank’s Investment Banking division.
Support at every stage
She notes that clean-tech companies that face funding challenges at this point should turn to their financial institution to seek the expertise, resources and network to help them achieve their financial goals.
“These are early-stage companies that are aiming to have a significant impact and potentially create generational technology,” says Ms. McCormack.
National Bank has a reputation for supporting entrepreneurs, and provides banking services for clean-tech firms at every stage of their journey.
Ms. McCormack says Canadians have plenty of reason to be optimistic about the clean-tech industry, with every part of the nation contributing. She points to the success of Eavor Technologies, a Calgary-based geothermal energy company. National Bank assisted the company in raising over $200 million as part of its series B fundraise.
Eavor illustrates ways in which know-how in other industries is spurring advances in clean-tech. The company has leveraged drilling technology used in heavy oil production to create geothermal power on a large scale.
“It’s a great Canadian success story where its founders identified a market opportunity and came up with instrumental technologies to tap into the market,” Ms. McCormack says.
Building bridges to close the funding gaps
It can be a tough stretch to go from venture funding for early-stage lab benchtop work, to growth equity that accelerates commercialization. To navigate it, clean-tech companies need to be able to rely on a strong ecosystem, and financing is a piece of it.
The right financial partner plays a key role in helping them get in a position to do so. “Acting as a guide in this space is what we take a great deal of pride in, and being there to help our clients early on is very important to us,” says Ms. McCormack.
Working alongside National Bank, companies like FLO and Eavor are bridging that funding gap to complete those FOAKs, make it across that “valley of death” and get to commercialization, Mr. Denham says. “The more we can help accelerate the growth of clean-tech, the more we can contribute to our future, which is hopefully a cleaner, brighter one.”