In the last post I walked through questions entrepreneurs need to think through, research, and thoughtfully answer before attempting to turn a component-level cleantech innovation into a business.  And a natural next question is, "but who will fund this?"

It's perfectly okay if the answer is "hey, we're going to make a component and then sell that component or license it to OEMs."  But if so, you need to choose your potential investors wisely (in this case, probably angels and smaller venture firms focused on such business models, rather than the NEAs and Kleiners of the world).  And regardless of where you do believe you need to draw the boundaries for your future business, you need to show investors you've answered all of the above questions.  

• Talk about the 20 conversations you've had with downstream customers and partners, providing quotes and other evidence that the pain points are real, and that they would be eager to try out solutions like yours.  
• Show you understand all the complexities upstream of you -- for example, if you're a waste-to-energy company, show you know how complex waste stream procurement and materials handling is, and that you have concrete and pragmatic (and cost-effective) plans for addressing those concerns.  
• Show your work -- explain your rationale for why you've drawn the boundaries where you've drawn them.  
• And be forthright about skillsets and capabilities you know you'll need to add to be able to succeed -- the right investor won't mind knowing they'll have to be "value-add" in helping to address these gaps, as long as they know you see them as gaps too.

I suspect this will continue to be an increasing dilemma for entrepreneurs in cleantech.  The innovation cycle is so much faster than the market adoption cycle that people are innovating 3rd generation components for systems that don't really have any sales yet.  So if this column speaks to you, also know you're not alone.

But above all else, don't go to investors and pitch a component as a standalone business for an industry that doesn't yet exist.  Yes, I'm looking at you, photobioreactor designers...