Over the last few months, SustainableBusiness.com has been contacted by more than a dozen venture capital funds forming to invest in sustainable business worldwide. As a result of our long term healthy economy and stock market venture capital firms are proliferating around the world with sustainable business the recipient of a small, but rapidly growing share of investor interest. The capital markets are finally starting to take notice of sustainable business, with the renewable energy currently at the center of attention. Yes, folks, even the president of the Trends Institute named “Energy” – the transition from fossil fuels to clean energy – as THE most significant trend of the coming century. Clean energy is on the verge of becoming commercially successful.
Can renewable energy companies become the darlings of Wall Street? Steve Oshinsky, who just launched a VC group, The Fuel Cell Venture Capital Fund, says, “the growth of the fuel cell industry is anticipated to be as great as the growth of the PC.” FAC Equities First Albany, an investment bank, recently announced a new research and investment team dedicated to alternative energy and power technology. Eric Prouty, who heads up the new group, believes this sector “could provide investors with an investment opportunity similar to that seen in the early days of the internet sector. The global power market is one of the largest markets in the world, so even a small penetration of the existing demand could prove immensely profitable for any of these alternative energy companies.”
The recent run-up in fuel cell stocks over the last couple of months would light up the dollar signs in any investor’s eyes. General Electric- backed Plug Power (NASDAQ: PLUG) shares surged from $15 to $156, and DCH Technology, (OTC BB: DCHT) a manufacturer of hydrogen sensors and portable fuel cells rose from $.75 to $10.00. According to Allied Business Intelligence (Oyster Bay, NY), the market for fuel cells is expected to skyrocket from $40 million in 1999 to over $10 billion in 2010.
VC firms around the world are investing in wind companies. For example, three Swedish VC companies – Arbustum Invest, SEB Foretagsinvest and Novare Kapital – purchased Nordic Windpower, a eight year old Swedish wind company that has developed more efficient blades for offshore wind generation. The group expects renewable energy to play a significantly more important role over the next 5-10 years, especially since Sweden and Germany are beginning to decommission their nuclear power plants.
Nth Power, a San Francisco VC firm, plans to invest $50 million in renewable energy companies by the end of this year. Maurice Gunderson, a founding partner, likens the opportunities arising from electric industry deregulation as similar to those that followed deregulation of the telecommunications sector. New Energy Partners, a Greenwich, CT. firm founded in 1997, expects to invest up to $15 million in 10-15 companies over the next decade. The company has invested in several hydrogen energy technology companies with products for domestic use.
Several general sustainable business funds are getting off the ground too. Most notably, Sustainability Investment Partners, a partnership of European insurers and financial institutions, will invest $100 million in business projects that advance sustainable development. The group was started by a German insurance group, Gerling Group, to “exploit commercial opportunities arising from climate change.” Another VC firm, Environmental Investment Partners focuses on opportunities in eastern Europe. And there are about a half dozen VC groups forming or actively pursuing investment opportunities to support sustainable businesses in Latin America.
Take a look at the VC/Financing section of SB.com for a growing list of investor opportunities for sustainable businesses. If you know of other firms please post them there.
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