How to Fund an Atomic Startup

8/21/14Follow @mlamonica

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promising medical treatments will find a willing buyer, says Krishna Gupta, general partner in early-stage venture firm Romulus Capital. Energy and materials companies, on the other hand, often have market risk in addition to the technical risk common to most startups.

With his background in materials science at MIT, Gupta says he would like to fund more science-based companies, but he’s gravitated toward software because the funding requirements are relatively low and the returns quicker. Still, one company in his portfolio, medical device maker Allurion Technologies, has been efficient with capital by outsourcing and relying on grants.

“I believe some of these science-based companies will find a way to be more capital-efficient, just like hardware companies have,” he says. “There are a lot of big problems to be solved that software has no role in solving, so there’s a ton of opportunity for science-driven companies.”

Entrepreneurs in energy are looking for alternatives to venture capitalists, either by choice or necessity. Helion Energy’s Kirtley notes that funders, such as family-run foundations, are structured to make long-term bets on potentially transformative technologies. For instance, Bill Gates has been funding yet another nuclear startup called TerraPower.

Funding can also come from government grants, angel investors, and the venture capital arms of large companies, such as General Electric. In the case of UPower Technologies, which is making a small nuclear reactor for remote and off-grid locations, some of its seed funding came from business plan competitions, CEO Jacob DeWitte told me earlier this year.

Kirtley is hopeful that the pool of investors interested in funding startups taking on ambitious technology problems such as nuclear power will grow. “There’s definitely hesitance to go out and fund science experiments,” he says. “But we are seeing a sea change in clean energy and biotech where investors are looking for things that can make a really big impact either in society, in industry, or financially.”

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