While many venture capitalists want to see returns on their investments within five to seven years, an emerging group of venture capitalists is investing in green technologies that have much longer wait times and are potentially unproven. However, this move to investing in environmentally friendly technologies may be a harbinger of positive changes to come as the world moves away from carbon-based fuels. These new green venture capitalists include some of the most major players in the world.
Form Energy and its backers
One startup that has attracted a deep bench of green venture capitalists is Form Energy. The company was founded in 2017 and is developing a new battery technology that will extend the life of batteries to days. By contrast, large lithium-ion batteries currently offer charges for about four hours. Form Energy’s backers include Bill Gates’s Breakthrough Energy Ventures; Eni Next, the venture capital arm of the oil company; and The Engine, a fund from the Massachusetts Institute of Technology.
What is driving interest in green technology?
The move of venture capitalists into the green energy sphere reflects a growing interest of investors in green technology. For example, investors invested $17 billion in green energy in 2015. By 2019, the amount invested had more than doubled to $36 billion. During that year, 50% of the investments flowed to startups in the U.S. The goal is to encourage innovation and make climate-friendly technology more affordable to decrease the reliance on carbon-based energy. Instead of being focused on a limited number of technologies, green venture capitalists are now focusing on clean technologies in many sectors, including plant-based foods, electric cars, solar and wind technology, clean hardware, and others.
The increasing interest of venture capitalists in green technologies is positive. Due to the negative impact of climate change, taking action to reduce emissions and the global reliance on carbon-based fuels can help reduce some of the long-term negative effects on the environment. The investments of green venture capitalists may help encourage further innovation so that more progress can be made towards protecting the environment.