Why invest in Cleantech
The cleantech industry has been promising for more than 100 years, when the hydropower plants first started to operate. The competition between Tesla and Edison and AC/DC power generation started the electricity revolution that would bring substantial green technologies in the following years. Although clean technologies were developed throughout the 20th century, the United Nations Conference on the Human Environment held in Stockholm in 1972 was important to start the discussion on how people can improve the environment, and the Kyoto Protocol in 1997 was a turning point to set goals and metrics to reduce greenhouse gas emissions through initiatives and technology development. This also proved that a big part of the population supports these initiatives.
Currently, there are several well-developed clean technologies: biomass powerplants, hydropower plants, wind and solar farms, and biofuels to name a few. What is interesting is how important partnerships are to this space, especially among innovators, company leaders, and investors. JP Morgan invested in Thomas Edison, the same way that powerful, modern investors have supported Tesla. These investments and the relationships that ensued were crucial to the success of scientists who created or disrupted various industries, such as the electricity domain.
Also, governments and large companies play a big role in moving this industry forward. It starts with a government’s sponsoring the construction of big power plants in the past, and not only providing incentives to technology development but also setting the rules for some of the markets, such as in renewable energy. Countries, such as the USA and Brazil, set policies to incentivize biofuels development. Large companies, such as GE and Ecolab, started the movement towards allocating capital to the clean tech space many years ago. Currently, companies in the private equity and asset management industries that are focused on specific sectors, such as energy and infrastructure, are the ones who are driving the market for bigger and more consolidated projects.
But what has driven the cleantech industry in the last years, apart from the brilliant ideas and great initiatives of entrepreneurs, is the interaction between startups and venture capitalists and impact investors. Both venture capitalists and impact investors have a big role in identifying and investing in great entrepreneurs. Companies who are disrupting the energy market, such as AMS and STEM (companies that I visited during the Cornell SGE and Energy MBA club trek in the Bay Area), created software solutions for microgrid and received investments from venture capitalists, private equity funds and asset managers and now are operating at commercial scale.
As part of my MBA at Cornell University, I learnt that the NY State has great initiatives to promote the cleantech space. The New York Greenbank aims to sponsor good sustainable projects. The 76West Clean Energy Competition, organized and sponsored by NYSERDA, focuses on supporting growing entrepreneurs and attracting resources from the U.S. and around the world to build clean energy businesses and jobs in New York State’s Southern Tier region. Universities such as Cornell University and University of Rochester, incentivize entrepreneurs through development and mentoring programs. The cities of Rochester and Ithaca (and other cities in the state) have a great environment to develop cleantech startups. To name a few, Capro-X, Dimensional Energy and Heat Inverse are companies in which I had the opportunity to learn from the entrepreneurs in networking events, how innovations in the cleantech space have a long way to scale, and that is why I believe that we should all invest in this industry.
