Friday, March 8, 2013

10 Green Sectors Attracting Investments

There are new innovations and ideas generated each day in the cleantech / green sectors. This article helps to separate the hype from the truly revolutionary breakthroughs. Here is a 2011 article from Research White Paper that reviews ten sectors garnering interest from investors. They asked 100 venture capital investors about what types of sub-sectors they are interested in; here are the 10 sub-sectors they have identified.

1. Energy Efficiency Technologies

This is still ranked highly in their list, energy efficiency (technologies, process and applications), that’s because these applications can be applied immediately to existing infrastructure, and able to generate cash flow much quicker than reinventing a new technology. It’s about improvement, not about revolution, for instance, car companies have invested into new energy efficient motors or batteries instead of trying on new type of engine.

2. Recycling technologies

There are contracts available from governments worldwide to improve their recycling process.

There are a lot of interests are coming from US, China, Japan, Taiwan, Singapore regarding recycling technologies to address their garbage problems.

There have been quite a number of companies successfully developing new technologies for recycling, including companies that convert solid waste into energy, or recycle materials into packaging materials or building materials.

Venture Capital & Private Equity investors as well as government and utilities companies have been supporting these companies, and strategic investors including building & construction companies and large engineering companies.

3. Green Building Materials

This is a sector that has been overlooked by the media. It is actually a very important industry, green building materials such as green cement can replace the traditional cement; which is one of the biggest pollutants invented by mankind. Green building materials can also save significant amount of water for curing.

Private equity firms in Europe, Middle East and China are also investing into building materials that require less water have made investments; which are suitable for their markets due to scarcity of water in these regions.

4. Water Resources Conservation

As one of our members rightly pointed out, it’s not just about new technologies, but the evolution of green industries is also about environmental conservation.

Countries like Canada, Australia and Israel are particularly active in investing in water resources technologies. These include diagnosis, water treatment and irrigation systems. In Asia, Singapore, Taiwan and Japan have also placed water management technologies as one of their key industries to develop, Singapore has achieved remarkable success in this field and the industry was heavily invested by the Government and also its private sectors including venture capital funds.

5. Home Products

One sector that is quite interesting is the home products. These products can be easily replaced, and easily understood and accepted by the customers. In addition, a lot of these products also receive rebates as part of their incentives to encourage environmental products.

This creates new opportunities for manufacturers, and investors have also backed products such as low water toilets, better windows, energy efficient furnace or air conditioning units as well as domestic use solar panels and water heaters.

6. Geothermal Energy

Some of the fund managers have also mentioned geothermal as the next area for developments. It is a proven technology and resources have been identified, and compared to nuclear energy, geothermal energy is far less controversial, and relatively easier to develop.

Investors in geothermal energy can be from different sources of investors including venture capital, private equity, utilities companies and mining & resources companies.

7. Applications and Technologies to improve solar & wind energy

A number of investments made last quarter were relating to energy storage technologies specifically designed to boost efficiency for solar and wind energy infrastructure.

For example, we had helped 2 companies in Europe; that had developed technologies to improve efficiency for wind farms as an example, also better batteries for solar power plants.

Investors into energy storage technologies including venture capital

8. Cleantech Marketing Companies and Websites

Cleantech & green industries are not just restricted in the technology and energy sectors. As we have seen recently, a number of social media websites that are dedicated to green industries.

Some of these websites and marketing companies have been expanding at very rapid rate, there are now cleantech specialized public relations companies in the United States, they create campaigns for cleantech and green companies, or to reach the LOHAs communities, which are often more affluent communities with higher disposable incomes.

In addition, investors have backed Green media companies such as cleantech news sites, cleantech investment websites or business matching sites.

Investors including both cleantech and Internet venture capital investors.

9. Green Services & Investment Funds

Companies that are dedicating their services such as PR, marketing and capital raising can also expect interests. We have noticed venture capital firms have backed a number of corporate advisors and funds that are dedicated to green industries.

Green financing is another area worth noting which has seen a substantial growth due to investors’ appetite in these opportunities. For example, green private equity firms also back some Green ETFs as fund of funds, either to invest in private companies or to invest in public listed companies.

Social Responsible Investments was an area of interest back in 2006 & 2007, and this may come back again in future as more companies are available for investment managers to choose now.

10. Environmental Services

As the result of increasing awareness and regulatory requirements, environmental services sector is another popular area for investments.

These companies are considered relatively safer for investments as they are without the technology development risk, but also able to grow without significant capital expenditure.

So, as you can see, the industry is not just about technology or energy innovations, but they can also expand into services and IT as well.

Many venture capital & private equity funds are also expanding their investment mandate; for example, Google, Intel and other technology venture capital investors are now investing into cleantech projects.

See the researchwhitepaper website.

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