Clean Technology(Cleantech) financing refers to the funding or investment activities directed towards clean technology companies or projects in order to combat Climate Change.
Cleantech covers all the products, services, or processes that can aid to reduce environmental impact by increasing efficiency, or by conserving/substituting natural resources.
As Cleantech is linked to evaluation of novel methods, it requires patient capital that is averse to the risk linked to it. The various avenues through which funds are raised are as follows:
- Venture Capital (VC) Funding: They invest in early-stage or startup companies with high growth potential, including those developing cleantech solutions.
- Private Equity (PE) Funding: They provide funds at the various stages of growth, including mature companies seeking expansion or restructuring.
- Corporate Investments: Large corporations may invest in cleantech startups or projects that align with their strategic objectives, potentially providing not only financial support but also access to resources and markets.
- Government Grants and Subsidies: Governments often offer grants, subsidies, or tax incentives to support cleantech innovation and deployment, encouraging investment in renewable energy, energy efficiency, waste management, and other sustainable technologies.
- Project Finance: Cleantech projects, such as renewable energy installations or energy efficiency upgrades, may be financed through project finance arrangements – where lenders provide funding based on the expected cash flows of the project.
- Impact Investing: Investors seeking to generate positive social or environmental impact alongside financial returns may invest in cleantech companies or projects that demonstrate potential for both profitability and sustainability.
- Crowdfunding: Fund may be raised through online crowdfunding platforms, allowing individuals or groups to invest in projects or companies they believe in.
With Climate Change becoming a daily reminder, organizations around the world are pooling in to support new-age approaches to mitigate the climate impact caused due to human activities.
Cleantech financing is assisting to drive innovation and make the human civilization resilient to the changes happening in the climate patterns due to Climate Change.
Do Follow this space as more posts linked to Climate Action are in the pipeline.
Lateral Thinking 