My interest in cleantech started back in 2005, when the solar sector was really taking off again. I can honestly say it’s the most rewarding work that I’ve done.
A big part of it is, there’s a huge upfront cost when it comes to paying for these technologies, so there has to be financing models to enable the rapid adoption. The reality is, right, in these cleantech sectors, VCs at times may not be the right investor. They may play a part, but over the long run, their investment horizon oftentimes does not match with a cleantech investment horizon. A VC may need to return capital in five to seven years. It may take five to seven years just to get the technology piloted. So, that’s why we’re seeing a lot of increased investment not coming from the VCs, necessarily, but coming from strategic investors.
What that does mean for VCs is who’s gonna integrate all of these technologies, right, and pull all that together. Oftentimes, it’s gonna be software. Those capital-light models VCs prefer, so there will continue to be a big role for venture capitalists, but it’s all of the investors collectively that are moving this whole arena of clean technology forward.
And then there’s non-bank lending groups that are really important here, too, that can fill that interim financing void before a large corporate bank will be comfortable coming in and providing lending support to the business.
When we’re talking to clean technology clients, the first place we start with is the business model. Entrepreneurs need the right capital providers, and they need the right strategic partners to help them scale as they come in and sell to these sectors. We can play a great role in connecting technology with these end markets that entrepreneurs are trying to sell into.