Unless You Are Clean Tech, VCs Likely Not Investing

clean-tech44.jpgKleiner Perkins, the monolith of venture capital, released a 1.2B dollar green fund, and yet, what is the likely result? Clean tech companies getting big, fat, juicy checks. Mind you, one of these clean tech ideas will revolutionize the way energy is produced and therefore help to transform our society, but isn’t there more to “green” than energy generation and storage? The question on my mind is whether VCs are genuinely good for the sustainability movement, outside of the clean tech arena. The answer: probably not. If you’re a clean tech company, possibly. If you have a truly altruistic company that shouldn’t have a 3 year horizon on an investment, emphatic no.
So, given that, where do you go for money if you’re a green company looking for success without VCs? The answer: nowhere. Angels likely won’t “get” your company and finding one that does is often like the proverbial needle in a haystack; most VCs won’t care and you likely don’t have the dough yourself. The result: get a job and leave the green stuff to the big boys.
But, wait, the big boys aren’t getting it done either. When was the last time you were genuinely affected by a newly funded, market-penetrating green company (especially an online play)? Do we simply give up on the sustainability movement like Adam Werbach poignantly alluded to in his seminal “Is Environmentalism Dead?”

For the faint of heart, yes; the forces are against you and the money is tough to find. For those of us not ready to shrug the atlas, seriously, get a job. The founders and visionaries behind green companies are probably best equipped to take the company to success and therefore further the environmental movement by having their own separate source of income. Easier said than done I know, but there are plenty of ways to bring home just enough income to survive and grow your company, dare I say, organically. Do consulting on the side, take a 20 hour a week day job, sell stuff on eBay, do anything…just don’t sell to some nefarious investor who only wants to make a buck off environmentalism. And most likely, they won’t invest anyway and you’ve just wasted your time.
This goes to my next point: why are so many amazing green companies struggling financially? I hear about these big dogs barking about all the money they want to invest in green yet I’m not finding many companies that are in fact funded. It seems like the carrot is too big for anyone to chew. This article in India illustrates that there is supposedly a buffet out there but no hungry patrons.
Why is it that so many amazing green companies are on the brink of financial collapse? What I’ve found is that the green behind green is only interested in already existing revenue streams or some fancy clean tech idea that will “change energy as we know it.” I find it to be a total oxymoron that these guys are claiming they’re raising these funds for “green” yet are obviously in it for the ROI (oh….that “green”). While green companies can and should be profitable, if money is the goal, you’re likely not authentically fostering the movement, but opportunistically taking advantage of it.
This is a call to the VC and investor world in general: really put your money where your mouth is and invest in more than just the obvious, ROI-oriented companies or clean tech. In anywhere from 15-50 years, society as we know it won’t be here to care about the zeros in your bank account if we don’t change course quickly. What we have right now is the split second opportunity to divert the car before hitting the tree. Yet all I really see, for the most part, is greedy investors licking their chops for the next big win. We’re all in the car, people, and your money is not an airbag. Step up to the plate and fund the amazing green companies that need to grow quickly and thoroughly, not so you profit, but so this human species has one final shot at survival.
If you’d like to get in touch with many companies that fit this profile, send me an email.
scott – at – creative citizen

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5 responses

  1. Hey Scott – I don’t think the role of VC is to fund every imaginable thing, plus a traditional venture capitalist is always going to require a certain return, usually strictly financial. I don’t think this has anything to do with whether or not they’re interested in “green”.
    Also, I know loads of socially and environmentally conscious startups that are doing pretty well with and without VC funding, and finally, you say that “one of these clean tech ideas will revolutionize the way energy is produced and therefore help to transform our society”
    Man, that’s a pretty big deal, no? I’m more than happy to let VCs play their game if the outcome is what’s quoted above. I think your advice is for small timers regardless of green and it’s sound, but I’m losing you when you talk about how it’s distinct for green entrpreneurs.

  2. You’re also forgetting VCs like Good Capital (http://www.goodcap.net/), who are interested specifically in the sustainability sector. I agree to the point that VCs are always looking for the next “new” thing, and for one, solar isn’t really “new” anymore. Anyway, starting your own company in general is hard, and it may fail. There most certainly should be more of a push, or some kind of policy, such as “we won’t fund you if you don’t have an environmental policy.”
    That would be really interesting to ask some VCs if they do have a eco policy!

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  4. I agree that investments in clean tech are very valuable to our society as a whole and the planet in general. What I’m pointing to is that most VCs are still seeking profit as their purpose, rather than realizing that profit is a consequence of a well-executed business.
    Further, I do believe that it is distinct for green entrepreneurs; most of the time it is not a widget or a RE project at the core of their model, but social utilities that are far harder for ROI-driven VCs to grasp. When all you see is the money that can result, you fail to see the benefits to society and the environment that will result. And they are not mutually exclusive!
    Disclaimer: there are definitely some amazing green-oriented VCs out there, like Good Capital, Funk Ventures etc. But, most are polar opposites.

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