President Biden's Infrastructure Plan: A Boon for Tech and Startups

President Joe Biden’s recently unveiled infrastructure proposal, carrying an approximate $2 trillion cost (accompanied by substantial tax increases), offers the startup ecosystem and the technology sector at large approximately $1 trillion in potential benefits.

For over a decade, technology firms have been pioneering innovations applicable to traditional sectors such as agriculture, construction, energy, education, manufacturing, and transportation and logistics.

Breaking Down Barriers to Tech Adoption

Previously, significant obstacles hindered the integration of technology within these industries. However, the proliferation of highly capable mobile devices has recently dismantled these structural impediments.

These industries now form the central focus of the president’s “Build Back Better” initiative. The considerable funding – directly or indirectly – will significantly benefit both startups and established tech companies.

A Catalyst for Climate Tech

Their hardware and software solutions will be instrumental in achieving the Biden administration’s objectives. Shayle Kann, a partner at Energy Impact Partners, noted, “The climate-oriented investment in Biden’s new plan would be roughly ten times what came through ARRA.”

This presents a substantial opportunity for various climate tech sectors, encompassing clean electricity, carbon management, and vehicle electrification.

Infrastructure Modernization and the Green New Deal

While resembling aspects of the Green New Deal, the plan is presented as a package of essential infrastructure modernization and service enhancements that the nation urgently requires.

Investing in infrastructure inherently supports energy efficiency and renewable energy development, core tenets of the Green New Deal, as efficiency improvements are now integral to modern construction and manufacturing processes.

Key Investment Areas

Over $700 billion of the proposed budget is allocated to enhancing resilience against natural disasters, upgrading vital water, power, and internet infrastructure, and revitalizing public housing, federal buildings, and aging commercial and residential properties.

Boosting Domestic Manufacturing and Innovation

An additional $400 billion is designated for bolstering domestic production of crucial components like semiconductors, safeguarding against future pandemics, and establishing regional innovation hubs.

These hubs are designed to stimulate venture capital investment and startup development, specifically aiming to foster entrepreneurship within communities of color and underserved areas.

This initiative seeks to support the growth of entrepreneurship in communities of color and underserved communities.

Climate Resiliency

The increasing frequency of climate-related disasters in the U.S. during 2020, with a combined estimated cost approaching $100 billion, understandably positions resiliency as a primary focus within the Biden administration’s plan.

A significant initial investment detailed in the plan proposes $50 billion in funding. This capital will be directed towards enhancing, safeguarding, and investing in communities disproportionately vulnerable to climate disasters.

These funds will be distributed through existing programs managed by the Federal Emergency Management Agency, the Department of Housing and Urban Development, and newly established initiatives from the Department of Transportation.

Of particular interest to startups is the emphasis on supporting projects and technologies designed to mitigate or defend against extreme wildfires, rising sea levels, and hurricanes.

Furthermore, the plan prioritizes advancements in agriculture resource management and the development of “climate-smart” technologies.

Startups Addressing Climate Challenges

Numerous startups are actively developing solutions aligned with Biden’s infrastructure goals. Companies such as Cornea, Emergency Reporting, and Zonehaven are each addressing distinct aspects of wildfire mitigation.

Similarly, startups specializing in flood prediction and weather monitoring are increasingly offering their services.

The agricultural sector is also witnessing the integration of big data analytics, advanced monitoring tools, sensing technologies, and robotics.

For the administration’s programs focused on water efficiency and recycling, companies like Epic CleanTec have pioneered wastewater recycling technologies applicable to both residential and commercial properties.

• Wildfire Prevention & Protection: Cornea, Emergency Reporting, Zonehaven
• Flood Prediction & Weather Monitoring: Emerging startups in data analytics
• Agricultural Technology: Big data, monitoring, sensing, robotics
• Water Efficiency & Recycling: Epic CleanTec

These innovations demonstrate a growing entrepreneurial response to the urgent need for climate resilience.

Rebuilding with Efficiency: A New Era

A substantial portion – approximately $400 billion – of the Biden administration’s infrastructure initiative is dedicated to enhancing energy efficiency and upgrading buildings. This encompasses homes, workplaces, educational institutions, facilities for veterans, and federal properties.

This significant investment lends further support to the core principles driving new, climate-focused funds established by Greensoil Proptech Ventures and Fifth Wall Ventures. The latter is currently establishing a $200 million investment fund specifically targeting energy efficiency and climate technology solutions.

Untapped Potential in Building Retrofits

Greg Smithies, a partner at Fifth Wall, highlighted last year the considerable opportunities present in building renovations and the development of innovative technologies to boost efficiency.

Smithies emphasized the abundance of readily achievable improvements, noting the sheer scale of the existing building stock. “There’s $260 trillion worth of buildings globally,” he stated. “A large percentage of these do not meet current building codes. Focusing on practical, yet often overlooked, improvements presents a significant opportunity.”

Beyond mitigating global climate change, decarbonizing the real estate sector can substantially enhance the well-being and quality of life for building occupants.

Real Estate's Role in Climate Solutions

Brendan Wallace, co-founder of Fifth Wall, explained that real estate accounts for 40% of all energy consumption and that the majority of economic activity occurs within buildings. “Real estate will be the largest investor in climate tech simply because of its contribution to the carbon problem,” Wallace asserted.

The Biden plan proposes the creation of new grant programs. These programs will provide flexible funding to local governments that actively work to remove obstacles hindering the development of affordable housing.

Included within this framework is a $40 billion allocation aimed at modernizing public housing infrastructure across the United States.

Startups such as BlocPower are already actively contributing to this effort.

A Transformative Investment

Donnel Baird, CEO and founder of BlocPower, described the Biden-Harris climate plan as a pivotal moment for both the American economy and the planet. He likened it to a real-life “Avengers Endgame,” emphasizing the potential for impactful change.

Baird stated, “Investing in the electrification of 2 million American buildings, transitioning them completely away from fossil fuels, represents a strategic investment in American leadership. This will foster a new industry, create jobs that cannot be outsourced, and begin to address the 30% of greenhouse gas emissions originating from buildings.”

Accelerating Clean Energy Investment

A key component of the package, directly benefiting startups, is the proposed $27 billion Clean Energy and Sustainability Accelerator. This initiative aims to stimulate private investment, with a focus on distributed energy resources.

The accelerator will also prioritize retrofits for residential, commercial, and municipal buildings, as well as advancements in clean transportation. Particular attention will be given to disadvantaged communities that have historically lacked access to clean energy investments.

Fueling Innovation: A National Startup Strategy

The White House asserts that historical economic advancements, such as the development of the semiconductor and the Internet, were spurred by strategic public investments in research, commercialization processes, and robust supply networks.

President Biden is requesting Congressional approval for substantial investments in key areas. These include research and development, manufacturing, and regional economic growth, alongside workforce training initiatives designed to enhance the competitiveness of American workers and businesses globally.

Investment in Research and Development

A proposed $480 billion expenditure aims to bolster research and development efforts. $50 billion is earmarked for the National Science Foundation, with a focus on critical technologies like semiconductors, advanced communications, energy solutions, and biotechnology.

Furthermore, $30 billion is allocated to initiatives supporting rural development, while an additional $40 billion will be used to modernize existing research infrastructure.

ARPA-C: A New Frontier in Climate Research

Inspired by the success of DARPA, which played a pivotal role in the creation of the internet, the administration is proposing the establishment of ARPA-C. This new agency will concentrate on climate-related research and demonstration projects.

A $20 billion investment will fund projects in areas such as energy storage, carbon capture, hydrogen production, advanced nuclear technology, rare earth element separation, offshore wind energy, biofuels, quantum computing, and electric vehicle development.

Manufacturing and Economic Equity

A significant portion of Biden’s plan, totaling $300 billion, is dedicated to stimulating manufacturing growth through government funding.

This includes $30 billion for biopreparedness and pandemic defense, $50 billion for semiconductor manufacturing and research, and $46 billion to leverage federal purchasing power for advanced nuclear reactors, vehicles, port infrastructure, pumps, and sustainable materials.

The plan prioritizes equitable economic development nationwide, allocating $20 billion to regional innovation hubs and a Community Revitalization Fund. This fund will support locally-driven redevelopment projects and invest $52 billion in domestic manufacturers, with a particular emphasis on rural manufacturing and clean energy initiatives.

Supporting Startups and Small Businesses

Recognizing the crucial role of startups, $31 billion is designated for programs that improve access to capital, venture funding, and research & development resources for small businesses.

Specifically, the proposal includes funding for community-based incubators and innovation centers. These resources will be targeted towards fostering growth within communities of color and other underserved areas.

Water and Power Infrastructure Challenges in the United States

The infrastructure of the United States, currently assessed as C-grade, faces widespread issues nationwide. These problems span a broad spectrum, from deteriorating roadways and bridges to insufficient access to potable water, failing sewage networks, inadequate recycling capabilities, and escalating demands on the nation’s power grid – demands that current electricity transmission and distribution systems struggle to fulfill.

Drinking Water Concerns and Proposed Solutions

According to a White House statement, aging pipes and contaminated water sources are jeopardizing public health across the country. It is estimated that six to ten million households still rely on lead pipes and service lines for their water supply.

To combat this, President Biden has proposed a $45 billion investment in the Environmental Protection Agency’s Drinking Water State Revolving Fund and the Water Infrastructure Improvements for the Nation Act grants. Alongside this, $66 billion is allocated for upgrading drinking water, wastewater, and stormwater systems, as well as monitoring and mitigating waterborne contaminants. This funding represents a significant opportunity for water sensing and filtration startups that have emerged in recent years, including those supported by specialized incubators.

A substantial capital infusion is necessary due to the widespread failure of water infrastructure to keep pace with growing needs in many regions of the country.

The Strain on the Power Grid and Economic Impacts

Similar challenges are increasingly evident in the power sector. The White House reports that power outages inflict economic losses exceeding $70 billion annually on the U.S. economy. Considering this, a proposed $100 billion investment appears justified, presenting considerable financial prospects for relevant startups.

Initiatives to construct a more robust and resilient transmission system are particularly encouraging for companies like Veir, which is pioneering technology to enhance the capacity of existing transmission lines – a project specifically highlighted within the Biden administration’s plan.

New Authorities and Incentives for Grid Modernization

The Biden plan extends beyond financial allocations, proposing the establishment of a Grid Deployment Authority within the Department of Energy. This authority will streamline the utilization of rights-of-way along transportation corridors and facilitate financing for the development of new high-voltage transmission lines.

Furthermore, the administration intends to incentivize the adoption of energy storage and renewable technologies through extended and phased-down direct-pay investment and production tax credits over a ten-year period. Clean energy block grants are also included, alongside a commitment to procure 100% renewable energy for federal buildings.

Remediation, Cleanup, and Sustainable Development

A $21 billion increase in funding will support waste remediation and cleanup efforts. Companies like Renewell Energy, and various non-profit organizations focused on plugging abandoned oil wells, are well-positioned to contribute to this effort.

Opportunities also exist to recover mineral deposits or repurpose wastewater from these wells, attracting investor interest in early-stage businesses. The plan also aims to redevelop brownfields into sustainable enterprises.

Opportunities for Innovative Companies

Indoor agriculture companies, such as Plenty, Bowery Farms, and AppHarvest, could benefit from additional funding to convert unused industrial spaces into operational farms. Idled factories could also be repurposed as hubs for energy storage and localized power generation and distribution.

“President Biden’s plan will also stimulate targeted sustainable economic development through the Appalachian Regional Commission’s POWER grant program, Department of Energy retooling grants for idled factories (through the Section 132 program), and dedicated funding to support community-driven environmental justice initiatives – including capacity and project grants to address legacy pollution and the cumulative impacts experienced by frontline and fenceline communities,” the White House stated.

Carbon Capture and Lower Emission Technologies

The establishment of pilot facilities demonstrating carbon capture retrofits for large-scale steel, cement, and chemical production facilities is a key component of these redevelopment efforts. The administration could further support the development of lower emission manufacturing technologies, such as those being advanced by companies like Heliogen, utilizing solar energy for mining operations, and Boston Metal, collaborating with BMW on sustainable steel production.

Facilitating Project Development

A $25 billion commitment to finance pre-development activities is crucial for ensuring effective fund allocation, particularly to support smaller project developers, as noted by Rob Day in Forbes.

“Local project developers are essential for implementing sustainability projects where they will have the greatest impact – in communities most affected by both local pollution and climate change. These smaller developers face significant expenses simply to reach the stage where private-sector infrastructure investments can be secured,” Day explained. “While there is much discussion about supporting entrepreneurs, much of the support is directed towards technology innovators rather than these project developers who would actually deploy those innovations. Infrastructure investors are often hesitant to provide capital before projects are construction-ready.”

Enhancing Internet Accessibility Across the Nation

The White House has asserted that broadband internet access has become as fundamental as electricity, being essential for employment, education, healthcare, and social connectivity. Despite this, over 30 million Americans currently reside in areas lacking sufficient broadband infrastructure to meet minimal speed requirements.

Disproportionately affected are individuals in rural communities and those living on tribal lands, who experience limited access. Furthermore, the United States exhibits some of the highest broadband costs among OECD nations, preventing millions from utilizing available infrastructure.

Federal Investment in Broadband Expansion

The Biden administration is allocating $100 billion towards broadband infrastructure development. A primary objective of this investment is to achieve universal high-speed broadband coverage throughout the country.

Priority will be given to networks that are owned, managed, or associated with local governments, non-profit organizations, and cooperatives.

Regulatory Changes and Increased Competition

Alongside financial investment, a shift in regulatory policies is underway. This change aims to foster competition by enabling municipally owned or affiliated providers, as well as rural electric cooperatives, to compete with private internet service providers.

Greater transparency in internet provider pricing is also being mandated. This heightened competition is anticipated to benefit hardware vendors and potentially stimulate the creation of new businesses for aspiring ISPs.

Companies like Wander are already demonstrating the viability of high-speed wireless internet solutions, for example, in Los Angeles.

Addressing High Costs and Promoting Adoption

The White House recognizes that Americans currently pay significantly more for internet service compared to citizens in many other countries. The President is dedicated to collaborating with Congress to identify solutions for lowering internet costs for all Americans.

Efforts will also focus on increasing broadband adoption in both rural and urban areas, ensuring provider accountability, and maximizing the efficient use of taxpayer funds.