The gap nobody talks about
Here’s a problem that doesn’t get nearly enough attention: a startup has a promising clean energy technology. It works in theory or in the lab. It has credible science behind it. And it has a founder willing to bet years of their life on it. But to get to the next stage — real-world pilot, third-party validation, investor-ready data — they need access to specialized equipment that costs millions of dollars to build and operate.
Most early-stage startups simply cannot afford it.
This is the quiet bottleneck sitting in the middle of the energy transition. Governments invest in basic research. Investors come in once a technology is proven. But the messy, expensive, technically risky middle — the stage where a promising prototype becomes a bankable asset — is where innovation can sometimes go to die. Not because the ideas aren’t good enough. Because the infrastructure to prove them isn’t accessible.
California decided to fix that. What it built is worth understanding — because it works, and because it can be replicated around other parts of the world. Here’s how.
The pipeline that changed the game
The California model runs in two stages, and both matter.
It starts with CalSEED – the California Sustainable Energy Entrepreneur Development Initiative – which, after passing through a due diligence process, provides non-dilutive, non-matching grants to clean energy entrepreneurs at the earliest stage of development, when they have a concept but not yet a prototype. No equity surrendered. No requirement to find private co-investment first. Just capital at the moment when an idea is most fragile and most fundable by nearly nobody else, combined with post-grant guidance and support. CalSEED was deliberately designed to reach the founders that conventional funding filters out – people without investor networks, working on technologies that take years to mature, from communities that have historically been locked out of the innovation economy.
The pipeline leads to CalTestBed: a voucher program that gives clean energy entrepreneurs up to US$300,000 worth of vouchers to access world-class testing facilities at University of California campuses and Lawrence Berkeley National Laboratory at no cost to them. No equity. No matched funding. No IP claims. Just access to the equipment and expertise needed to turn a working prototype into something an investor can actually underwrite.
The jump in Technology Readiness Level – the internationally recognized scale from basic concept (TRL 1) to full commercial deployment (TRL 9) – that companies make through CalTestBed averages 1.6 levels. That doesn’t sound like much until you understand what it means in practice: the difference between a technology that sits in a drawer and one that lands a strategic partner, a major funding round, or a commercial contract.
Since CalTestBed launched in 2019, the 64 companies it has supported have collectively raised an estimated US$438 million in follow-on private investment – from US$16.5 million in testing vouchers. And it started because government was willing to be the first risk-taker in the room, so that other capital could follow with confidence.
Both programs are funded through EPIC – the California Energy Commission’s ratepayer-funded R&D initiative, built on a simple public compact: utility customers invest in the innovations that will ultimately make their energy cheaper, cleaner, and more reliable. It is public money deployed at the stages where private capital won’t go, in service of outcomes the market alone won’t deliver.
What this looks like for a real company
Coreshell Technologies is the story of the right support arriving at the right moment.
Jonathan Tan spent a decade commercializing membrane technology for industrial applications before co-founding Coreshell in 2017 around a deceptively simple problem: every time you charge a rechargeable battery, a little bit of it dies. That gradual capacity fade is one of the core barriers to affordable, long-lasting batteries for electric vehicles and grid storage – and it was a problem nobody had solved at scale. Coreshell’s answer was a nanolayer coating applied to the inside surface of battery electrodes, preventing degradation without requiring manufacturers to change their existing production lines.
CalSEED was one of Coreshell’s very first backers. That early, non-dilutive support gave Jonathan and his team the runway to develop their concept without giving up equity, IP, or spending the company’s early months chasing investors rather than doing science. From CalSEED, they moved into CalTestBed: accessing UCLA facilities and Lawrence Berkeley National Laboratory simulation tools that would otherwise have been far beyond their budget.
Coreshell has since raised close to US$40 million, including a US$24 million strategic round in March 2025. They won the Startup World Cup’s US$1 million grand prize. They are now delivering commercial battery samples to global automakers from a manufacturing facility in San Leandro, California. The California Energy Commission and New Energy Nexus California were among their earliest supporters. The market came in once the science was proven.
That is what the pipeline is designed to produce. And Coreshell is not an exception; it is a representative example of what happens when you remove the access barrier at the right moment.
Gridware is another. The company came into CalTestBed (and later CalSEED) with technology that monitors electricity distribution lines in real time, catching faults before they cause outages or wildfires. After testing through the program, Gridware’s Gridscope technology was integrated by S&C Electric into a grid-resilience product now being deployed by utilities across the US. The CalTestBed validation gave a major industrial partner the confidence to build Gridware’s technology into their own product. That kind of outcome — a startup’s technology embedded in an industry leader’s commercial offering — is extraordinarily difficult to achieve without the credibility that independent, third-party testing provides.
Why most countries don’t have this
The underlying logic of CalTestBed is simple: the infrastructure already exists. Universities and national laboratories have some of the most sophisticated research equipment in the world. But it was built for academic research, and most of it remains largely inaccessible to the startups that need it most.
The reason most countries don’t have a program like this isn’t lack of will. It’s a default assumption baked into most public funding design: that government should wait for private capital to show up first, and only then provide support. Match requirements, co-investment conditions, milestone-based tranches – all of them are designed to reduce government risk by making sure someone else has already committed. The effect is to make government funding available only to the companies that often least need it: those that already have networks, credibility, and backing.
California inverted that logic. Government goes first. It backs the science before the market will. And in doing so, it creates the conditions for the market to follow – at scale, and with confidence. The return, across CalTestBed alone, has been roughly US$26 in private investment for every public dollar in vouchers – or to put it another way, US$438 million in follow-on funding from US$16.5 million in public vouchers.
That model is not California-specific. It is replicable anywhere with research infrastructure, early-stage startups, and a government willing to act as a first mover rather than a last resort.
Australia is where we’re starting to expand
Australia has committed over AU$70 billion to decarbonising Australia’s economy over the coming decades. It has world-class universities, abundant critical minerals, a strong engineering tradition, and a generation of clean energy entrepreneurs who are ready to build. What it has lacked is a reliable, structured, funded pathway to turn early-stage innovation into investment-ready technology – the same gap the California pipeline was built to close.
The problem is structural. Australian early-stage grant funding programs almost universally require matched private investment, which creates exactly the barrier that California removed. The Investor Group on Climate Change has put a number on the consequence: 61% of institutional investors cite a lack of investment-ready opportunities as their reason for staying on the sidelines. The capital is there. The ambition is there. The pipeline between them is not.
AusTestBed is our response to that.
Modeled directly on CalTestBed, it will give Australian clean energy startups non-matching vouchers to test their prototypes at Australian universities and research institutions: the same model, the same logic, applied to Australian infrastructure and Australian founders. The pilot program, supported with seed funding from Boundless Earth, will see three battery and energy storage startups — Powerblocks, Adoxima, and Carbophite — each receive AUD$50,000 to begin testing at Australian facilities.
But testing is only half the pipeline. AusSEED — modeled on CalSEED — is the next piece: non-dilutive, non-matching concept grants for Australian founders at the very earliest stage, building the pipeline that feeds into AusTestBed. Together, they would give Australia what California spent years building: a coherent, no-match, equity-free pathway from first concept to investor-ready asset.
The AusTestBed pilot launched at Sydney Climate Action Week 2026, with California Energy Commission Chair David Hochschild — under whose leadership CalSEED and CalTestBed were funded and scaled — in Sydney for the occasion. His presence reflects something important: this isn’t a theory being imported from abroad. It is a proven model, with five years of data behind it, being deliberately adapted for Australian conditions by the people who built the original.
We are working with EnergyLab to grow AusTestBed and potentially AusSEED into national programs, universities, and state and federal governments. Initial testbed partners include TRaCE (a partnership between UNSW and the University of Newcastle), which will provide access to testbed facilities, alongside the University of Melbourne.
We believe the model has potential beyond Australia too: there are markets across the Asia-Pacific and beyond where the same pipeline problem exists and the same solution could take root. But that ambition starts here, with this pilot, and with the question of whether Australia is ready to back its founders the way California backed its own.
We think the answer is yes. And we believe the returns — for founders, for investors, for the energy transition — will speak for themselves.
To learn more about AusTestBed, AusSEED, or the testbed model, contact kirk.mcdonald@newenergynexus.com.
