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What is Green Venture Capital?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 27 August 2016
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    Conjecture Corporation
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Green venture capital is investment capital made available to businesses that are either involved in the development and marketing of environmentally friendly goods and services, or companies that are attempting to modify their operating structure so that the efforts of the business leave less of a footprint on the environment. Capital of this type is typically obtained from private investors or venture capital groups composed of a number of investors. The goal is to provide funding to worthy business efforts that are likely to result in environmentally responsible companies.

The process for obtaining green venture capital is not very different from obtaining any type of support from interested investors. A new start-up company that has vision of manufacturing some sort of green product line will usually prepare a prospectus along with outlines of the business structure. Care is taken by the business owners to not only address the green benefits of the product line, but also identify how the manufacturing process itself will make use of environmentally friendly materials. This helps to reinforce the understanding that the company will be creating environmentally friendly products while also minimizing the impact of the business operation on the environment.

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For example, a new company seeking green venture capital may include information about how the products are manufactured using recycled wood or other materials. This helps to demonstrate how the activity of the business will help to minimize the amount of materials that are placed in landfills while also helping to limit the harvesting of new wood from forests. In addition, the presentation to investors will include information about how the company is organized and what steps are taken in the different business operations to limit emissions and the use of fossil fuels, as well as reduce the impact of the business on the environment directly around the plant facility.

Along with the emphasis on the environmentally friendly nature of the business operation, companies seeking green venture capital will also address how the company will move toward profitability, including estimates of when venture capital investors can anticipate receiving returns on the investment. As with any business projections, these estimates must be based on verifiable data so that reasonable expectations are set. Assuming that the green aspects of the operation and the chances for the products catching the attention of consumers are considered to be in line with both the risk and the potential generation of profits, those individuals and funds offering the green venture capital will likely choose to invest in the business.

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