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Friday, 9 December 2011

Clean cash: finding funds for environmental technologies

The Engineer
Nov 28, 2011

Clean-tech covers a variety of sectors and business types, including marine energy

The green-technology sector needs to access private capital in order to become more energy efficient, says Adam Workman of the North West Fund for Energy and Environmental

The clean-technology sector is the most significant growth opportunity for the UK’s engineering industry. With the economy no longer self-sufficient for its oil and gas needs, we must invest now into developing new sources of energy and becoming more energy efficient.

Although clean technology and the ’green economy’ are high up on the political agenda, over the next few years investment will be driven largely by the private sector. However, a lack of understanding of how to access capital alongside limited resources could leave the UK trailing behind.

For this transition to occur, we need to appreciate the hurdles facing energy and environmental businesses in accessing private finance. First, the clean-technology sector covers an extremely wide variety of sectors and business types, which can be confusing to generalist investors. Overlaying this with a market reliant on public policy typically places the sector in the ’too difficult’ box for all but the specialist investor.

To decrease this knowledge gap, companies seeking investment need to appreciate this information asymmetry when engaging any investor for the first time.
Second, with competition for funding becoming more intense, any business that applies for funding needs to get it right first time. Businesses need to invest in their own management teams if they are to have the best chance of succeeding in securing finance. Taking on external advisers, or even an experienced non-executive director, will help a business to make a quality proposition for funding, but also aid in strategy and positioning the firm for long-term growth.
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