5 Things You Should Know About Cleantech Investing

Investing in Future Transport Conference  2012 - 052If you’re not heavily integrated in the world of energy efficiency or you’re not someone who is a big investor (yet), while you may have heard of Cleantech investing, you may not be exactly sure what it entails. That’s OK. In the grand scheme of things, it’s relatively new.

At the turn of the century, as climates were changing and fuel prices were soaring, Cleantech was introduced into the marketplace as a way to provide products and services that would be able to offer superior performances at lower prices, while reducing the negative ecological impact and improving the responsible use of natural resources. Therefore, Cleantech investing is simply a way for individuals to support this endeavor.

That is a highly-simplified explanation of what it is and so if Cleantech investing is something that piques your interest, we have five things that you definitely should know about it before making a financial commitment:

It’s fairly new so definitely do some thorough research. Reportedly, it’s between the years of 2000-2002 that Cleantech was introduced into the world and over that time, there have been some real up and downs in its cycles, especially over the past decade or so. The good news is that the CleanTech group has reported that there has been $1.61 billion in Cleantech investing in over 155 transactions just in 2012 alone.

Solar and bio fuel investments have seen better days. When it comes to sustainability efforts, two “hot words” are solar and bio fuel. One thing to bear in mind as it relates to Cleantech investing is the fact that there has been a lack of financing for new and emerging companies. This has resulted in more private equity than project equity being used. Plus, since solar panels are cheaper than ever, this has made making a profit challenging for manufacturers while highly beneficial for installers (so investing in solar manufacturer companies may be something that you want to wait on for now).

Clean Web is on the rise. As you may be sensing, Cleantech investing can be a bit complex. That’s a part of the reason why many people are setting their sights on a niche of Cleantech investing that is known as Clean Web investments; it puts the focus on “green” software and computing (including mobile and web devices). Basically, Clean Web uses these platforms in order to better explain the companies that use digital technology to address water, food and energy resource constraints. (This gives paper trading a run for its money.) Looking into Clean Web companies and services is a smart choice at this time.

Do you research on previous Cleantech investor stories. Aside from solar and biofuel, another market that took a hit in 2012 were electric cars. This also played a role in Cleantech investors losing a significant amount of money. The bottom line here is that before you invest in any green area, do some research on what the investors have had to say about the pros and the cons that they have encountered from personal experience.

There are “kinks” that are being worked out. You can’t make big changes without encountering some substantial challenges. This is especially the case when it comes to energy efficiency. Luckily, there is a wave of Cleantech entrepreneurs who are aggressively seeking long-term answers to big problems. Plus, moguls like Bill Gates are beginning to fund these kinds of efforts. So yes, you may want to research Cleantech problem-solving companies to invest in as well; they are projected to have substantial profits in the near future.