With global economic dependence on natural resources at an all-time high, and the growing scarcity/price of key commodities, industries are increasingly looking to clean technologies to respond to competitive challenges and improve margins. 
Clean technology (also known as "Cleantech") is a rapidly emerging investment sector, with more than $2.3 billion invested through the first three quarters of 2006, making it the third largest venture investment category in North American. Cleantech currently represents over 13% of all venture capital invested in North America, a sharp rise from the mere 1-2% invested in 1999, according to the Cleantech Venture Network.(1)
What is Cleantech?
Clean Technologies offer dramatic improvements in resource efficiency and productivity, creating more economic value with less energy and materials, or less waste and toxicity. These innovations generally deliver equal or superior performance as compared to incumbent technologies. Clean Technologies are clustered in six diverse industry sectors: Energy (the largest by far), Water & Waste Water, Manufacturing, Advanced Materials, Transportation and Agriculture. Applications range from energy efficient lighting, to wind and solar energy, to water filtration, to next generation batteries, to advanced materials to make products lighter/stronger/cheaper, to non-toxic pesticides. While the Cleantech sector is very broad, the IT sector is equally broad, yet venture funds are forming to address specialized slices of this diverse investment sector. Importantly, the market for these technologies continues to expand, as more and more businesses realize the positive impact that Cleantech can bring to the bottom line.
Why Are Investors Increasingly Looking to Cleantech Venture Opportunities
There are a number of factors that have contributed to the mounting interest in Cleantech, including:
1. Geo-political risks to energy supply/price reliability,
2. Commodity and materials price inflation in diverse areas, such as wood, nickel and silicon,
3. Increasingly supportive global energy policies,
4. Major corporations, like Walmart and BP, looking to "green" their business operations,
5. A wave of technology innovation which is market ready, based on synergistic technology developments in areas including IT, chemistry, advanced materials, biomimicry, wireless communications, biology and physics.
6. An exceptional improvement in the quality of the management teams within the sector.
7. A series of strong profitable exits, such as the solar company IPO's of Q-Cells and SunPower, plus a wave of successful IPO's on London's AIM exchange.
8. Broad acquisition activity, such as GE's 10+ water industry acquisitions, under the Eco-Imagination strategy of its CEO Jeff Immelt.
9. The over-supply of capital in other VC sectors, such as IT, yet the relative undersupply in Cleantech when compared to the deal-flow quality, and
10. A critical mass of Cleantech investors has emerged, supported by specialized industry meetings and expanded market research.
Over the last few years, Cleantech has moved away from being perceived as environmentally friendly, "responsible" investments, which provide sub-par financial performance. Today, Cleantech is widely viewed as imperative to growing successful larger companies. The "tipping point" convergence of market demand and technology innovation has provided exceptional entrepreneurial opportunities to generate venture-grade investment returns...
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