In 2009, the US Department of Energy started funding energy research through the Advanced Research Projects Agency–Energy (or ARPA-E) program. The goal was take more risks than traditional federal efforts and help new renewable energy technologies get off the ground. Private investment had been flagging due to slow returns, but the huge societal benefits of clean energy was deemed to justify government support. The hope was that the funding could accelerate the timeline for new technology to mature to the point that private investors would find the technology more attractive.
At least, that was the idea. A team led by University of Massachusetts Amherst’s Anna Goldstein figured that ARPA-E’s first class is now old enough to check in on. She and her colleagues looked at a limited sample of 25 startups and found some interesting ways in which these companies seem to have beaten out the competition—and some in which they haven’t.
Best in class
The 25 startups selected in ARPA-E’s first round were compared to several other groups of companies that were born around the same time. The first group consists of the 39 companies that applied for ARPA-E funding and didn’t get it but still received an “encouraged” runner-up rating. In the next group are the 70 companies that received funding from the Office of Energy Efficiency and Renewable Energy (EERE) with related government stimulus spending. And finally, there are almost 1,200 other clean energy startups that found their funding elsewhere.