16 ways to finance your cleantech business

Find out what sources of financing are available for your cleantech business in Canada

3-minute read

Most cleantech entrepreneurs have ambitious goals: solve major environmental challenges using new, often unproven technologies, all while making a profit.

Cleantechs tend to be hardware intensive, especially in capital-intensive cleantech sectors such as energy storage, advanced materials, waste-to-energy and bioproducts, where tens or hundreds of millions of dollars in investments may be required to build a commercial facility.

“While the high capital requirements and market complexity have scared off many cleantech investors, Canada has still emerged as a cleantech powerhouse and launched some of the most promising, globally competitive cleantech companies,” says Zoltan Tompa, Senior Partner and Team Lead for BDC’s Climate Tech Fund.

Canada ranked 4th out of 19 countries in the 2023 Global Cleantech Innovation Index, ahead of Germany and Israel. Canadian companies also accounted for 12 of the top 100 companies in the prestigious Global Cleantech 100 list.

“Canada is fortunate to have several programs that support cleantech companies at all stages of their growth, but the landscape of support can be confusing to

navigate for an entrepreneur who needs to remain focused on building and growing their business,” says Tompa.

Here is an overview of 16 typical sources of financing for cleantech companies, by development stage.


The start-up phase is when you distill your vision into a compelling business plan that will orient your actions and help you pitch to potential investors and financial institutions. Many cleantech businesses start creating a working prototype of their technology at this stage.

What are my financing options?

Personal investment and love money

Your first investor should be yourself; usually through a combination of your own cash, collateral on your assets and sweat equity—the value of the work you put into the business. You can also turn to a spouse, parents, family or friends for loans and investment (love money).


Angels are high-net-worth individuals who invest directly in early-stage businesses. You can contact angel networks such as the National Angel Capital Organization (NACO), Anges Québec and Canadian International Angel Investors.

Bank loans

Commercial loans can be used to finance your business without giving up equity. Bankers are looking for companies with a sound track record and that have excellent credit. A good idea is not enough; it must be backed up with a solid business plan. Start-up loans will also typically require a personal guarantee from entrepreneurs.

BDC offers start-up loans to entrepreneurs in the start-up phase or first 12 months of sales.

Venture capital

Venture capital can be a great source of funding for the right type of company and for entrepreneurs who are ready to give up equity. Venture capitalists are looking for companies that can scale quickly, and they also expect a healthy return on their investment.

The following Canadian venture capital funds have a dedicated or partial focus on cleantech: ·

Industrial Research Assistance Program (IRAP)

Canada’s National Research Council (NRC) runs IRAP, which provides financing and advisory services to help small and medium-sized Canadian businesses develop and commercialize new technology. For instance, early cleantech companies can use this type of funding to develop prototypes.

Sustainable Development Technology Canada (SDTC)

SDTC supports pre-commercial projects that have the potential to demonstrate environmental and economic benefits relating to climate change, clean air, clean water and clean soil. SDTC funds are disbursed as grants and require matching funds from other investors.

“SDTC can be a great source of non-dilutive financing to help scale up a prototype to a pilot or demonstration facility. SDTC’s rigorous technical and market due diligence also provides comfort to downstream investors,” explains Tompa.


Cleantech companies in the development stage have shown that their technology works, but have not yet proven their commercial viability.

What are my financing options?

Corporate strategic partners

Large corporations are often willing to partner with smaller technology-driven firms developing technologies that present some strategic value to them. They can even enter into joint development agreements or occasionally have corporate venture capital groups that make equity investments.

Scientific Research and Experimental Development (SR&ED) Tax Credit program

The SR&ED Tax Credit program is Canada’s largest R&D incentive. Canadian companies can earn an investment tax credit of 35% on the first $3 million in qualifying expenditures, including salaries, capital, consulting fees and materials. The tax credit is 15% for amounts above $3 million. For most companies, these credits take the form of a cash refund.

“There's potential to use SR&ED receivables to get access to money earlier and help manage your cash flow,” says Tompa.

BDC’s Cleantech Practice

BDC’s Cleantech Practice offers various growth capital solutions to high-potential cleantech companies with proven technology, demonstrated market traction, and the potential for expansion. BDC has $1 billion to help cleantech companies grow and invest in assets, inventory, human resources, R&D, sales growth and market expansion.

“BDC’s Cleantech Practice provides more creative, flexible and patient capital solutions,” says Tompa. This capital is used to finance high-potential cleantech companies that are outside our normal risk parameters, with the objective of building large, global, commercially self-sustaining cleantech champions."


Businesses at the expansion stage have achieved profitability. Some companies will have entered a period of intentional unprofitability to support a development program or acquire another company.

What are my financing options?

Private equity and growth equity funds

These types of equity funds will be able to provide significant amounts of capital to companies to execute global expansion strategies. In return, they will expect at least partial ownership of your business.

For example, BDC’s Growth Equity team provides minority equity investments to mid-market growth businesses looking to become leaders in their industry.

The Canadian Venture Capital & Private Equity Association’s member directory can be a good place to start looking for private equity funds.

Pension and infrastructure funds

These types of funds are looking for long-term, steady returns and might be a good fit for companies that are more infrastructure-like, such as renewable energy production or energy storage companies.

Syndicated financing and corporate financing

Cleantech firms that have achieved profitability and require substantial amounts of capital can apply for large corporate loans with a bank or syndicated loans with several banks at once.

Public markets

Established cleantech businesses can do an initial public offering to tap into public equity and debt markets to raise capital.

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