Infrastructure Startups Win

Biden Billions: Infrastructure Startups Win

The $1.2 trillion “infrastructure bill” recently signed by the US president is encouraging to many investors. And while Biden’s original plan featured double that, the US government will inject hundreds of billions of dollars of public investment into various sectors of the economy where startups play a particularly prominent role..

Who will be the first to win? The list of industries and programs for funding is quite extensive: cyber security, infrastructure for electric transport, expansion of broadband Internet access, alternative energy and climate technologies. Investors should look closely at the values ​​of up-and-coming players in these industries that may show multiple growth.

$120 billion in intellectual infrastructure

Upgrading a nation’s water, sewer, and power systems is not often among the challenges faced by tech startups, but it is in this area that a real window of opportunity opens up for many companies today.

«In my opinion, the risk business has the opportunity to invest in intelligent infrastructure platforms, in the so-called virtual twins.», explains Dan Dini, partner at Touchdown Ventures, a company specializing in 5G and edge computing, cloud connectivity, security, and the workplace of the future.

A virtual twin is a digital copy of a physical object, such as a power plant. This computer model allows you to assess ongoing processes in real time and collect critical data. These “twins” help utilities manage systems as efficiently as possible and properly assess the condition of critical infrastructure facilities.

The law provides for an investment of almost $120 billion in such projects.

Startups in this sector – for example, SewerAI of San Francisco or axes of Switzerland, usually first dominate one area (for example, water supply) and then cover others as the potential of their platforms grows.

$65 billion in 5G and broadband

The laying of cables and fiber optics is also difficult to attribute to the standard activities of IT startups. But the US government’s $65 billion in high-speed Internet and 5G deployments are making investors particularly interested in technology companies that provide “fixed wireless” services.

This is the name of a new technology with which rural areas can be provided with broadband Internet through 5G networks. This proposal is in demand where the telecommunications giants do not see economic benefits in laying fiber.

The availability of high-quality Internet access will allow various industries to create private 5G networks to better manage data and operations.

«Such data is in demand in the agricultural sector; for example, they allow us to study the effect of temperatures on crop yields. Large food and agriculture companies like Archer Daniels Midland may be interested in this.», Dini says.

$2 billion in cybersecurity

Ensuring the safety of critical infrastructure and the innovative solutions listed above is prescribed as a separate spending item in the infrastructure law. This document provides for the allocation of $2 billion for initiatives in the field of cybersecurity. Experts, however, consider the number mentioned to be insignificant and say that the government has not yet realized the full gravity of the consequences of the devastating hacking attacks.

The funding stream will be divided into different streams. For example, the Federal Emergency Management Agency will distribute about a billion dollars to state and local governments. For these funds, they will have to modernize the IT infrastructure.

John Funge, director of cybersecurity at investment firm DataTribe, is confident that participants in critical infrastructure upgrade projects — water and power, operational technology, and industrial security — will spark increased interest from investors.

yes new york Clear attracted $140 million in investments in June of this year, and in November dragon trees of Maryland received $200 million in funding at a $1.7 billion valuation. Such companies can provide investors with a solid income only through contract work to protect critical facilities commissioned by state and local authorities.

$112.5 billion in infrastructure for electric cars

The Biden administration’s plans to build electric vehicle charging infrastructure everywhere will spur investment in software startups.

In all, the law provides $110 billion to repair dilapidated bridges, roads and highways across the country. And improving road infrastructure will benefit manufacturers of all kinds of vehicles, including the electric and autonomous cars of the future.

The presidential law detailed a separate spending item, $7.5 billion, for charging stations for electric vehicles. Another $5 billion is earmarked for the purchase of electric and hybrid school buses.

Biden has previously stated an ambitious goal of installing 500,000 charging stations across the country by 2030.

«Unique investment opportunity opens up for EV charging station software», explains Cathy McClain, partner in Chicago Energize Businessinvest in alternative energy companies.

EV software developers are likely to receive significant investment, McClain said. Since the government focuses on road repair, road construction, and charging stations, startups should focus on EV software.

«Cars are getting smarter and more electrified, and software developers have a lot more options», McClane thinks.

Now, the electric transportation market is experiencing a severe shortage of mobile platforms that can provide drivers with up-to-date information about charging stations in real time. Investments in technology are needed to enable users to find such devices, reserve them and access additional services while charging their vehicles.

According to McClain, 500,000 charging stations are not enough. With more drivers and automakers switching to electric driving, the demand for charging will only grow. And that means plenty of opportunities for startups.

$112 billion in alternative energy and climate change

The infrastructure bill provides $47 billion for climate action. The state will invest another $65 billion in electrical grids and clean energy. This is the largest investment in the country’s history aimed at preventing and minimizing the effects of floods, heat waves, fires, storms and droughts, the devastating events triggered by climate change.

At least one climate startup is already counting profits after the president signed the law. TerraPower, a nuclear power industry company founded and partially financed by Bill Gates, announced in November that it would replace its coal-fired power plant in Wyoming with a $4 billion next-generation nuclear reactor.

The government will cover $1.5 billion of these expenses with funds allocated under the infrastructure law. The construction and commissioning of a new nuclear power plant will take up to 7 years. If all goes according to plan, this installation will be convincing proof of the feasibility of an innovative project.

There is also the possibility that the government will finance companies that fight against climate change.

The statutory Grid Deployment Authority (GDA) will allocate $65 billion to develop clean energy technologies, smart grid upgrades, carbon capture, clean hydrogen, and nuclear reactors.

Investors are already showing interest in climate technology companies.

In January New York Union Square Ventures announced the creation of a $162 million climate fund In July, the launch Beyond NetZero — a $4 billion company focused on climate technology — said in general Atlantic. TO GTP announced the launch of an investment fund with a capital of $5,400 million, also focused on the prevention of climate change.

Based in New York low carbon capital, which focuses exclusively on carbon reduction projects, announced in August that it had raised $800 million for its projects.

«It turns out that raising funds for the climate fund in the face of unprecedented heat and thick smoke from the fire turned out not to be too difficult.», Chris Sacca, founder of Lowercarbon, writes on his blog.

While the investment in climate technology and clean energy is unprecedented, experts say it is a drop in the ocean compared to the amount needed.

“50 billion dollars totally inappropriate amount», says Shalini Wajhala, executive director of the San Diego Center for Regional Policy and Innovation.

The real help will come from the $555 billion allocation to combat climate change under the Better Recovery Act.

This document will finance concessional loans for renewable energy and will also significantly expand the social protection system for US citizens.