If you want to start a green business, you’re going to need some greenbacks. Here are four green industries that venture capitalists like right now. If you recently earned your MBA, it would be wise to look into starting your first company in one of these growing green industries.
Back in 2011, Solyndra, a startup that built photovoltaic cells, defaulted on a $535 billion loan from the federal government. The default launched a scandal, in which Big Energy-backed politicians accused President Barack Obama of giving government loans to Solyndra to pay back his own campaign supporters. Four years later, the Department of Energy loan program that funded Solyndra is now turning a profit for American taxpayers.
Solar companies funded by the loan program have shown that innovative companies can build viable solar business models. As a result, lenders and venture capitalists have become much more eager to fund these firms. Elon Musk’s investment in SolarCity, a solar panel leasing company founded by two of his cousins, gave a vote of confidence to the industry. As a result, several solar energy companies have seen big VC investments over the past year:
- Sunnova Energy Corp. Sunnova, a Houston-based provider of residential solar systems, bagged $250 million from Triangle Peak Partners and Franklin Square Capital Partners.
- SunRun, Inc. This solar energy company from San Francisco got $150 million from Accel Partners, Sequoia Capital, Madrone Capital Partners, and Foundation Capital.
- Solexel, Inc. Solexel manufactures photovoltaic solar modules in Milpitas, Calif. The company got $65 million from several VC firms, including Kleiner Perkins Caulfield & Byers.
2. Other Alternative Energy
For entrepreneurs who want to launch an innovative business career by starting alternative energy firms, now is a good time to ask for venture capital. According to CBInsights, VCs invested over $2 million in green energy in 2014, despite slumping fossil fuels prices that could have turned off wary investors.
Big winners in the VC arena for alternative energy included:
- LanzaTech. LanzaTech has developed a unique “gas to liquid” fuel-making method that eliminates the need for petroleum without the environmental consequences of using biofuels. The company snagged $60 million in Series D funding last year.
- Phonononic Devices, Inc. Phonononic, a North Carolina company, builds thermoelectric devices that can convert heat into electricity. Oak Investment Partners and others seem to like the idea – they gave the company $44.5 million in VC funds.
- Boston-Power, Inc. This Massachusetts company that manufactures lithium-ion batteries earned an amazing $250 million from “undisclosed sources.”
3. Sustainable Foods
Many people think that an animal-based food supply is unsustainable over the long term. Environmentally minded entrepreneurs are creating new ways to reshape the food system and make it more plant-based. The livestock industry alone accounts for 15 percent of the world’s carbon emissions. Just look at the resources required to create one quarter-pound hamburger:
- 6.7 pounds of grains and feed
- 52.8 gallons of water for drinking and irrigating feed crops
- 74.5 square feet of land for livestock grazing
- 1,036 BTUs of energy (enough to power a microwave for 18 minutes) for transportation and feed production
By creating meats, cheeses, and other products using plant-based proteins, these companies hope to cut the size of our carbon footprint. Venture capitalists seem to like the idea, and they’re putting their money where their mouth is:
- Hampton Creek. This San Francisco plant-based food manufacturer has raised $120 million to date thanks to a $90 million VC infusion in 2014.
- Impossible Foods, Inc. Another plant-based meat and cheese manufacturer from California received $75 million in Series A funds from Google Ventures and other partners.
4. Water Treatment
One look at drought-ridden California tells you that we need innovative ways to conserve and recycle water. Water treatment, however, has big potential for saving lives in the developing world. Over 2.5 billion people — 40 percent of the world’s population — either practice open defecation or use unsanitary restroom facilities.
The Bill and Melinda Gates Foundation has funded water treatment plants by Janicki Bioenergy. Each plant, which costs $1.5 million to start, can create drinkable water for 100,000 people. Since Bill Gates likes it, so do venture capitalists. Tampa-based water treatment company AquaVenture Holdings got $50 million from venture capitalists last year.
Green Technology for the Future
Even though certain politicians may say that green energy is a loser, venture capital flow says otherwise. There’s never been a better time to realize your dream of launching a green business.