What is a Cleantech Venture?

John Lister
John Lister
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Businessman giving a thumbs-up

A cleantech venture is one that incorporates "clean" technology. This is a variant on environmental or green tech, but has some key differences. The main principle is that a cleantech venture is designed specifically to be a profitable exercise in its own right rather than primarily driven by environmental concerns. The precise definition of cleantech is somewhat debatable.

The Cleantech Group, a US limited liability company, defines cleantech as having three goals. The first is to improve performance while reducing costs, thus being an attractive business proposition. The second is to either reduce or remove the damage the tech users do to the environment. The third is to make better use of natural resources.

It is the distinction between the second and third reasons that is arguably the key unique factor in a cleantech venture. In the past, "environmentally responsible" technology often aimed simply to reduce the harmful impact of existing techniques. Cleanteach is often explained as being more about new technologies, particularly those which mimic natural biological processes.

Part of the potential for confusion over cleantech is that the term covers so many potential types of activity. Clearly manufacturing is the most obvious target for reducing environmental harm, particularly on an industrial scale. Less obvious areas include packaging and transport. Cleantech can also cover the way some very large firms are able to produce their own electricity, often in more sustainable ways, to power their factories.

As well as being a concept, cleantech venture can also refer to venture capital. This is the practice of companies with money to invest providing funding for smaller companies with potentially profitable ideas. Cleantech is becoming more popular among venture capitalists for several reasons. The industry sector appeals to those venture capitalists who want to take a social or political stance by supporting environmentally beneficial projects. In some locations, such projects can benefit from tax breaks, which can either benefit the venture capitalist either when putting the cash in to the company, or increasing their potential returns.

It has been claimed that the United States is the home of the cleantech venture. One study in 2010 reported that 81 percent of venture capital investments in cleantech took place in the US. It's important to note this may not be accurate as not all countries may have been equally well covered by the study and the definition of cleantech may have affected the results.

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