Solar startup Solyndra was lucky enough to procure a $535 million guaranteed loan from the government earlier this year.
To get the loan, though, the company spent $10 million over three years while wrangling with the Department of Energy, according to Rockport Capital managing partner and Solyndra investor Wilber James. James told the story during a clean tech panel in Boston at the National Venture Capital Association’s annual meeting.
The struggles of Solyndra are instructive for startups still hoping to get loan guarantees and for Steven Chu, the new head of the DOE, who promises to speed up the process.
“Incredibly frustrating,” is how Jaimie McJunkin, a general partner at Walton family fund, Madrone Capital, described the process. Madrone invested in Solyndra and guided First Solar early in its development.
McJunkin’s advice for any other company waiting to hear from the government: “We found at Solyndra that you need senior contacts,” to get projects initiated, but more importantly, you “need junior officers to carry the water,” to press your case. Otherwise, it all slips through the cracks.
This matters, because there are still 15 other companies waiting to hear about loan guarantees from the government. When the government announced the program in 2005, it invited these companies to apply for the loans. The companies invited to participate were working on cutting back on greenhouse gas emissions, and improving commercial technologies.
That was at a time, as McJunkin pointed out, that companies were still able to raise money privately. They raised private capital as well, but for four years they’ve had to burn millions while dancing with the DOE. After all that, just one company has received the go-ahead from the government.
The DOE now sits on billions of dollars to allocate to promising startups. When we spoke with Solyndra about the process, a representative attributed the fact that it finally got its loan to the new administration. Let’s hope that that’s the case and Solyndra’s example becomes the rule and not the exception.
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