Green Technology not venture capitalists’ cup of tea?

greentechnologyClimate change, global warming have been issues of global concern since these last couple of decades. Developing clean technology was devised as one solution to these problems. Clean technology,green technology or environmental technology are different names for the same technology which aims to reduce to the harm done to the environment while having sustainable efficient energy processes.

Even though innovations like hybrid cars, solar panels are popular and globally accepted around the world, clean tech isn’t exactly the favourite investment sphere for the venture capitalists.This is mainly because of the input resources clean tech companies require to give results. “Clean technology turned out to be hard for the venture capital model because of the amount of time and money it took to make companies successful,” says Joel Makower, a strategist for corporate sustainability practices and clean technology.

However with an increasing worldwide demand for energy and the need to develop it sustainably, the falling VC interest in the same doesn’t lessens the need, rather the sector is getting funded by other mainstream sources. According to recent release by Bloomberg New Energy Finance, the global investments in clean energy during the third quarter of 2013 was down 14% on this year’s second quarter and 20% below 2012′s Q3. Calling it the weakest quarter since 2009.

However the lag between the VC investments and the monetary need for the development of green tech, could be made up by the investments by several corporations, and by green bonds. Green bonds or Climate bonds are fixed-income financial instruments (bonds) linked in some way to climate change solutions. They are issued by organisations like the World Bank etc. Last month, the World Bank announced the launch of USD 550 Mn worth Green Bonds—its largest US issuance to date. Green Bonds could lead a way forward for climate finance.

Similar Read:  Decoding Recruitment Industry Outlook and Where Technology Fits into the Picture

And even currently with the reduction in VC fundings in this sector, all is not lost. Three clean tech companies TesIa Motors, SolarCity and FuelCell Energy are expected to report positive cash flows in their reports in the coming weeks. And just yesterday SolarCity, American provider of energy services, announced to have raised USD 396.6 Mn for fuel expansion from stocks and bonds. This is one example of how the green tech industry is moving ahead with alternative sources of investments.

So will green tech companies join the mainstream companies by shunning the venture capitalist investments in the long run? What’s your take?

To contact the author, write to sugandh.dhawan@wirefootindia.com

Category