In a volatile moment for climate tech, many founders are struggling to survive long enough to deliver.
“It’s definitely a funky time out there,” Dimitry Gershenson of Enduring Planet says on the latest Agents of Impact podcast, citing federal policy reversals and the broader fundraising doldrums. But he said climate entrepreneurs are unusually resilient. “People are so committed to the mission that they find creative and innovative ways to survive despite market challenges.”
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One of those ways is to borrow against contracts already in hand. Washington, DC-based Enduring Planet makes loans of working capital to climate tech startups that have inked contracts but need upfront cash to fulfill their obligations. Planet’s loans are secured by receivables tied to those contracts.
Startups in need of such working capital often struggle to get financing from traditional lenders, which typically require a long track record, a significant bank balance or lots of assets to securitize loans.
“They just have this sort of chicken-or-egg feature where they need to accomplish a milestone but they need the capital to do that before they can unlock it,” says co-founder Erin Davis.
Enduring Planet lends to climate tech companies that target mitigation, removal, adaptation or resilience. One recent transaction supported a company delivering electric vehicles to the city of Riverside, Calif., under a municipal contract, providing the working capital needed to procure and deliver the vehicles.
Another finances recycling and waste management companies building facilities with grants from California’s CalRecycle. And then there are the bees.
“We’ve done corporate beekeeping,” Davis says. The Best Bees Company manages hives on corporate rooftops, including for JP Morgan. The pollinators provide “a material benefit to the adaptation resilience of communities,” Gershenson adds.
“And then JP Morgan can give little honey gifts to their customers.”
Climate credit
Before founding Enduring Planet, Gershenson supported financial intermediaries lending to climate ventures in emerging markets, while Davis ran a debt fund providing working capital in Africa and Asia.
They looked at the US market and found a near absence of early-stage working capital for climate startups. Many climate startups are also not yet profitable, Gershenson says, putting them outside standard bank credit requirements. Institutional climate lenders tend to focus on larger deals, leaving a financing gap for earlier-stage companies in need of smaller loans.
At the same time, advances in financial technology were making faster underwriting possible. For companies waiting on milestone-based payments, long wait times for working capital can mean missing payroll or shelving a project altogether.
They launched Enduring Planet not just as a fund, but as a technology-enabled lender. “We can usually get to a term sheet within a week,” Gershenson says, and fund a loan less than a month later.
That’s because most borrowers have a contract in hand. “We’re looking for either government contracts or commercial contracts that we can lend against, that have a high likelihood of payment,” says Davis. The Trump administration has yanked many federal loans and grants, but state governments are still actively funding climate programs.
Enduring Planet itself provides a first-loss guarantee. To further reduce perceived policy risk, the firm secured a guarantee from the Community Investment Guarantee Pool which backstops investor principal up to 10% at the end of the fund’s life. That catalytic guarantee has “absolutely helped us attract funding,” Davis says.
Small by design
The firm’s pilot fund totals $5 million; they’re targeting a $20 million raise for their second.
Enduring Planet structures its funds as special purpose vehicles, offering investors notes via note purchase agreements. Notes carry multiple maturity periods and pay interest in real time, letting investors get their capital back quickly. Backers include impact-oriented family offices, foundations, donor-advised funds and high-net-worth individuals. Davis says Enduring Planet has ambitions to bring in larger institutions, and larger checks.
Gershenson acknowledges that many institutional investors do not consider managers below $100 million. But smaller ticket sizing is a strategic choice for them.
“Even when we’re managing a billion-dollar pool of capital, we’ll still make $100,000 loans. “That’s never going to change,” says Gershenson.
“The folks who will need to borrow $10-, 20 or 30 million tomorrow are the folks who need one hundred grand today.”
