Wells Fargo, one of the largest global financial institutions, runs a corporate philanthropy program which has committed over $400 million in 2018 to various community and environmental causes. Part of the company’s environmental philanthropy efforts includes a strategic $30 million grant program funded from the Wells Fargo Foundation in partnership with the National Renewable Energy Laboratory (NREL) to help speed up R&D and commercialization of early-stage clean technologies.
Started in 2014, the program, called the Innovation Incubator (IN2), has a goal to identify some the most promising and scalable energy efficiency innovations, and then help to finance and deploy them in the real world. The innovations provide significant benefits, reducing energy usage for the buildings where they are deployed, while at the same time helping organizations like Wells Fargo to meet their goals around reducing their carbon footprint and promoting sustainability.
Wells Fargo takes a direct role in helping to introduce the innovations to the marketplace, installing them in pilot programs within the nearly 100 million square feet of real estate owned by the firm. Ashley Grosh, VP at Wells Fargo and co-lead for IN2, comments that “the program brings together aspects of our philanthropy, our commitment to our communities where we operate, and our work with clients to deploy capital to promote sustainability. The program is unique because we beta test the innovations in our own buildings, which includes integration with existing data management, security and infrastructure systems.”
In effect, the innovations are stress tested, allowing the entrepreneurs to fine-tune and improve before continuing to scale up. To date, the initiative has sponsored 20 new companies in the commercial buildings and energy efficiency sector, completed 3 beta tests, and those companies have collectively raised $83.65 million in follow-on funding from external investors. Proving their model of injecting resources into these early-stage companies and aligned pilots, IN2 serves as a key de-risking platform for investors.
The federal government’s National Renewable Energy Laboratory (NREL) plays a key role in vetting projects. The Laboratory accepts hundreds of applications a year from innovators looking for technical assistance and the opportunity to work with the Labs researchers, facilities and equipment to further their technology development. Only a handful are accepted by NREL, and many of those will advance to the stage where the Wells Fargo team engages with the opportunity to deploy on a Wells Fargo building for testing and validation in the field.
Richard Adams, Director of the Innovation and Entrepreneurship Center at NREL, comments that “our joint technical assistance and placement program helps significantly reduce the failure rate for these entrepreneurs. The IN2 program validates the technology and partially de-risks the market for these technologies. Our thesis is that we can improve investment potential to a 70% success rate. It’s a great partnership, which helps to vigorously test the potential for these innovations.”
Mr. Adams also confirms that he has seen “no loss of momentum” from the federal government to support the program, with the U.S. Department of Energy recently approving a “permanent structure for the Agreement to Commercialize Technology (ACT) program which will add flexibility on how the Lab can contract with private sector partners”. This is important, in part because the Lab receives no public funding for IN2.
“These partnerships emerge because they are commercially viable, regardless of political winds. As in this case, leadership from the private sector is instrumental,” says Adams.
IN2 leverages a network of more than 40 channel partners made up of universities, accelerators and other incubators for participant referrals, and is continuing to grow its ecosystem of stakeholders and innovators. The program will further its focus on funding early-stage commercial buildings technologies while also introducing a new vertical in the food, energy, water nexus. The same model of providing technical validation and aligning and subsidizing beta pilots for agtech innovators is a critical gap that IN2 can fill, helping more ground breaking technologies get to the marketplace.