GreenTech and CleanTech are terms used
interchangeably and sometimes this can be confusing.
Here
is the thinking from the internet that has become de rigueur since the early days of investing into Clean and Green:
“CleanTech” is a term popularized (and I believe
coined) by persons who founded the CleanTech Venture Network (now Cleantech Group) in about 2002 as
an umbrella term to describe the “green and clean” technologies that venture
capital investors were turning to in increasing numbers as the next big thing
in technology investing after the collapse of the tech boom. And energy tech is
still a term used in many investing circles, though it has been quite heavily
consumed inside the Cleantech umbrella. As a side note – before it’s coining as
an asset class and technology category, “cleantech” as a word was most likely
to refer to dry cleaning equipment.
Here’s straight from the horse’s mouth: “The
concept of “clean” technologies embraces a diverse range of products, services,
and processes that are inherently designed to provide superior performance at
lower costs, greatly reduce or eliminate environmental impacts and, in doing
so, improve the quality of life. Clean technologies span many industries, from
alternative forms of energy generation to water purification to
materials-efficient production techniques.” – Cleantech Venture Network
“CleanTech or clean tech is generally defined as
knowledge-based products or services that improve operational performance,
productivity or efficiency while reducing costs, inputs, energy consumption,
waste or pollution.
CleanTech is differentiated from
green technology since it generally refers to the emerging financial industry
(as opposed to the actual technology in which the industry invests).
Specifically, the investment focus includes water purification, eco- Efficient
production techniques, renewable energy, green technology, sustainable
business. Since the 1990s the financial community began more active interest
and investing into the CleanTech space.”
IMO, this
reflects a rather vague definition by VCs and this overlap or lack of
discernment by VCs contributes towards a lot of “selective inattention” to what might actually be “green” and by
vice versa “CleanTech.”
From the view of
Climate Change it is great to learn of start-ups that move away from the
dependence on fossil fuels and towards carbon offsetting: Solar and Wind farms
are the most popular.
For example, Nuclear
Energy is totally clean and produces a lot of bang for buck. Wind and solar farms
fall into this category. However, bio fuels derived from Jathropha, algae and
other crops are Green-but not necessarily clean.
The problem that
Green Entrepreneurs face is that the vagueness or overlap of these two definitions
is because VCs tend to pigeon-hole technology to their mould of CleanTech
rather than distinguish between them. If it does not fit the mould or
definition, it is not clean enough. To be honest, it works vice versa as well.
IMO, the litmus
test to invest in a company or product is this: How does the technology or
process mitigate the fractured or damaged Carbon/Krebs cycle.
Most
entrepreneurs who pitch their company or technology find a hard time getting
this pitch right or completely tone deaf to the fundamental idea of Climate Change Mitigation.
Interestingly, most
VCs that I have met in Green or Clean rarely ask the start ups this simple fundamental
question: How does your
product or technology contribute towards mitigating the ruptured Carbon Cycle? Instead, they zero in on profitability and
scalability right away.
IMO, the
Financial Math of long term climate change outstrips the short term economical
viability of the Company promoting the product or process. Most entrepreneurs I
have met don’t know how to model this.
Green Tech is all
that is naturally sourced or mostly agrarian or biologically derived. CleanTech
is all the rest.
This is a subtle
distinction that needs to be understood as both entrepreneurs attract the right
dollars while VCs that seek good operating assets to invest in as we move
towards a sustainable planet.
Now that’s a nice
word: sustainable. What the difference
between sustainable and renewable? I would love to hear from you what you
think…
