Although the Color of Money, Green Technologies Still Hard to Sell

Venture capitalists often “wear” the label “venture” without much consideration for the actual meaning of the word (venture = a business enterprise or speculation in which something is risked in the hope of profit; a commercial or other speculation; Random House Unabridged Dictionary, Random House, Inc., 2006). Rather, the venture capitalists, at least the bunch in Canada, prefer what is in the industry called “predictable money.”

Is green technology where those angel investors “fear to tread?” Apparently, green technologies, regardless of how revolutionary from the technological perspective they might be, hold very little — if any at all — interest for Canada’s venture capital gang.

According to Vicky Sharpe, CEO of Sustainable Development Technology Canada (SDTC), Canadian venture capital is still going to conventional resource and telecom industries, and still refusing to venture into biotechnology and green technologies.

Note that SDTC is a non-profit agency, currently managing five- hundred and fifty million dollars in funding from Ottawa slated solely for funding clean-technology businesses. However, since the funds were set aside in 2001, SDTC managed to invest only about half of that money. Basically, venture capitalists, who are supposed to take over SDTC’s lead once the agency gets the “green” company off the ground, are not biting.

In their defense, we should say that pools of money managed by venture capitalists are much, much smaller in Canada compared with the U.S. However, our venture capitalists are not even willing to put the effort into educating themselves about clean technologies and the role they play in global markets.

Unfortunately, the rule of thumb in this business is that you cannot estimate the risk level of what you don’t know. If you cannot estimate the risk exposure, you don’t invest, simple as that. Which is really disappointing, since Canada is becoming one of the key players in the world when it comes to biofuels, hydrogen technologies including fuel cells, and other new, clean technologies that are supposed to wean us all off the fossil fuel “juice.”