Growing green: Venture capital support for clean technology
by Jennifer Hayden and Yanuar Nugroho
Manchester Institute of Innovation Research, University of Manchester, United Kingdom
Global venture capital has been hit hard by the recession, dampening the prospects for many would-be start-ups at just the time when job creation and innovation are badly needed. Venture capital plays a critical role in funding the risky, early stages that other forms of finance often shy away from. Fund managers bring a mix of expertise and capital to guide a good idea to fruition with the goal of reaping large pay-offs at the IPO, but more often than not the venture fails – a risk that traditional funding bodies will not take on board. The success of the venture capital industry is important because it acts as a catalyst for innovation in the economy and can be critical in bringing course-altering technologies to the fore1. It is promising then that global venture capital is addressing itself to the grand challenge of climate change through its support of green technologies.
Green technology, or Cleantech, is a cross-sector business category that has emerged in response to the great threats and opportunities presented by climate change and the depletion of fossil fuel reserves. Cleantech is broadly understood as that which enables more efficient use of materials thereby improving the environmental footprint of a product, process, or organization. The industries that fall under this designation are involved in clean energy, energy efficiency, environmentally-friendly production, conservation, pollution mitigation and related training and support.