John (Grizz) Deal and Deborah Deal-Blackwell
September 15, 2020 (Investorideas.com Newswire) Even with all of the markets in turmoil due to the current pandemic, believe it or not, the clean technology sector is a rare exception. Rather than facing a downturn in investing, as many other industries have, investments in this sector are actually on the rise. Of course, this uptick should be no surprise, as many business leaders are even accepting the fact that there is a current and looming environmental crisis, which is inspiring investors from all walks of life to put their dollars where it matters most.
While of course, impact investing is not a new concept, the sector is starting to get a big boost as it is now attracting some very high-profile executives. Included in this list is Jeff Bezos of Amazon, who recently created a $2 billion venture fund that will specifically focus on clean energy. His commitment is expected to inspire both large and small investors to jump on the clean energy bandwagon and increase interest in this sector.
Adding to Amazon’s commitment is the fact that innovators are constantly on the rise working to launch new, and investable clean solutions. From soutions that help with climate control, to innovations that help reduce food waste, to technologies designed to treat and clean industrial wastewater so that freshwater can be preserved for families, crops and communities – these types of advancements seem be endless.
On the other hand, while all these new “inventions” and Amazon’s commitment is a significant step in the right direction, it’s going to require hundreds of trillons of dollars from both public and private investors to fully achieve the critical sustainability and preservation issues that we face in the United States alone.
So with this in mind, consider some of these key challenges that speak to the monumental work that still lies ahead…
Challenges in CleanTech
- Marketplace Fit: Many cleantech innovators struggle to determine how their invention fits on the market. Not all warrant the creation of a product or company, and the reality is that most innovations are incremental improvements suitable for existing product lines.
- Time to Market is Long: While cleantech innovations manifest themselves as manufactured goods, one must still prototype, test, and repeat until reaching expected performance. Then it generally takes years of commercial testing in the field. For example, watertech innovations generally require from eight to twelve years from invention to market due to product refinement and integration into existing infrastructure.
- Traditional Venture Capital is a Poor Fit: Traditional venture capital has created enormous funds, minimizing startup money. In many instances, VCs also expect sales, early contracts, and outsized returns. These gates are difficult to overcome when attempting to put a multi-million-dollar product on the market.
- Reluctance to Partner: One would think that an easy way to get access to capital is to partner with an existing company, yet many mega-sized established companies posture that they can create the proposed product in house. This is the old “thank you for the idea, but what do we need you for?” response.
Investor Interest and Access to Capital
Despite the challenges in the industry as well as general market conditions brought on by COVID, interest in cleantech investing is still high. Investors – and the general population – understand that no matter what happens with the pandemic, a climate change disaster is looming, and the problem is not going to go away.
But cleantech innovators need access to high-risk, patient capital. Their products are often big, expensive products that can be integrated into new infrastructure that can last for decades and turn existing industries on their heads. In the CleanTech space, a modest investment of a few million dollars at the seed level could result in tens of billions of dollars in sales each year of market dominance – which could last decades.
The bottom line is that the planetary impact caused by humans is requiring us to undergo a new industrial revolution that will make the internet bubble look like a quaint improvement in communication.
The Future for CleanTech
Jeff Bezos and Amazon’s recent investment in clean technology is just the tip of the iceberg. These types of giant one-time investments signal to other investors that the time is right for a particular type of investment and create a ripple effect that increases the amount invested exponentially.
CleanTech will need a steady flow of investor capital over a long period to truly realize the potential of these innovations. But on the brighter side, people want sustainability, meaning that the future for cleantech investing is bright – and there are many ways in which interested investors can get involved, especially with the accesiblity of crowdfunding platforms.
Investors can even focus on solutions for the largest problems, such as clean water, air, transportation, and waste. Startups in these sectors will make a difference in the acceleration of climate change. Over 1.8 billion people on the planet do not have access to water that is fit to drink or bathe in; this is a big problem, requiring a big solution – it also means that investors have a big opportunity to ride the wave of cleantech innovation, which can allow them to realize a nice return on their investment, while also doing good for the planet.
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John (Grizz) Deal and Deborah Deal-Blackwell are two of the founders at IX Power Clean Water, a tech spin-out from the U.S. National Lab at Los Alamos, New Mexico. After 7 years of development at the DoE lab, the University of Texas, and New Mexico Tech, and 6 years of commercialization work, the company is introducing its technology or treating industrial wastewater to the market.
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