We all want to uncover the next billion-dollar (unicorn) company in the making.
And be able to invest nice and early… long before they become a household name…
There are countless factors I consider when evaluating a startup.
I’m talking things like:
- TAM (Total Addressable Market) – If everyone was using this product/service, what would it be worth?
- Team – “Is this team capable of taking this company to the next level? Do they have a proven track record of success?”
- Time – Timing can make or break a startup. Is the market ready for this product/service?
This Monday (28th) at 2PM ET I’ll be breaking down The Three Traits of a Potential Startup Unicorn in a special event for Angel Investing Insiders.
I’ll then interview the founder of our current startup deal––this CleanTech startup has a patented fuel additive that uses nanotechnology to improve fuel efficiency by up to 8% and cut emissions by 50%.
By joining, you’ll receive the details to attend Monday’s live event and see our lineup of current (open) and past (closed) startups.
Want to see what else is happening in the Clean Technology (CleanTech) sectors? I’ve got you covered.
Clean Technology has been going and growing for decades now. Since the turn of the millennium, anything clean, green, and sustainable has been a top choice for investors.
Did you know that green startups have a few secret weapons? I’m talking about three unique factors that grant them access to funding and push them towards success. And these are things you won’t find in other industries.
Later on, I’ll show you some of my favorite recent acquisitions in the CleanTech space, and I have to believe these factors played a role in almost all of them.
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1. Pressure From Governments and Regulators
Apart from regular market demand, the push for CleanTech also comes from government incentives and regulation.
Not only do local and federal governments support and fund green initiatives (more on that later), but they often make them mandatory.
This is great for CleanTech, as environmental regulations generate demand and lower uncertainty for startups.
In the U.S., EPA regulations constantly shift what’s possible for businesses and spur green innovation. And this is doubly true in Europe (where they take sustainability a bit more seriously).
Think about it — when regulation banned companies from dumping vats of chemicals into the oceans, there was a burst of activity and innovation in waste management and recycling. Businesses were born to manage the waste while others brilliantly developed ways to repurpose and reuse those unwanted materials into new products.
2. Access to Green Finance
As I touched on before, governments across the world support sustainability through funding.
Grants, bonds, and loans are created and issued to stimulate sustainability. This gives CleanTech startups a special source of funding that others can’t get.
Governments are prioritizing sustainability more and more each year, so you can be sure that access to sustainable funding will continue to grow.
In the private sector, there are many private equity firms, venture capital firms, and angel investors that specifically focus on green investments. Some of them maintain a portfolio of only clean technology.
Investors specialize in this field for many reasons. Some are simply experts in the field and thus have the best chances of profitability here, while others deeply care about the environment and want to back the movement. Whatever their reasons, there is a large and healthy network of green investors, hunting around for that next big green opportunity.
3. Fervent Public Support
Finally, we have the power of public demand.
CleanTech gets a huge boost from the constantly growing support of regular consumers and voters. For millions of them, sustainability isn’t a trend or an option, it’s something they live by.
People are considerably more in-tune with environmental issues than they were ten years ago, and ten years from now, I have no doubt they will be even more knowledgeable and passionate.
While the public continues supporting the green movement with their wallets and their votes, the entire space will grow and flourish, lifting the CleanTech market to new heights.
Now — the fun part. Let’s check out some of the biggest and baddest moves in CleanTech today.
As you know, acquisitions are usually some of the easiest and quickest exits you will ever get from a startup investment. This industry is ripe with acquisitions, as energy-giants expand their capabilities, waste management companies take on new solutions, and Big Oil gobbles up clean fuel products to sustain them through the carbon-transition.
Here are some of my favorite recent acquisitions that highlight the incredible opportunities green startups have to offer.
FinCo Fuel Acquires GoodFuels
FinCo Fuel is a diversified petroleum distribution firm that just picked up biofuel-producer GoodFuels.
GoodFuels is both a pioneer and expert in the sustainable fuels industry, specializing in shipping and heavy transportation. All of their fuels are made from certified feedstock which is a waste product. They recycle this waste, converting it into a sustainable fuel source to help the shipping industry through the energy transition.
The problem with heavy transportation, namely large ships, is that they use highly polluting fuel called bunker fuel. Bunker fuel, or heavy fuel oil, is contaminated with aromatics, sulfur, nitrogen, and other pollutants, meaning the emissions are significantly worse than other oils.
GoodFuel’s biofuel is truly sustainable and is a drop-in replacement for traditional fuels. Without major modifications, this biofuel can be used in diesel engines, bunker tanks, and fuel distribution infrastructure.
ReNew Power Acquires Ostro Energy
Ostro Energy is mainly a wind energy company that crept into the solar power industry with a tactical acquisition. Ostro acquired Prathamesh Solarfarms, adding 210 megawatts of solar fields to its portfolio.
Shortly after the deal was finalized, Ostro Energy was acquired by Goldman Sachs-backed ReNew Power. While the official numbers haven’t been disclosed, it’s estimated that Ostro was bought for around $1.5 billion.
ReNew now has 5.6 gigawatts of clean energy capacity, 65% of which is already operational. With the substantial wind power capabilities brought on in the Ostro deal, the company now leans towards wind power as its primary energy source.
Liquid Environmental Solutions Acquires FloHawks
Liquid Environmental Solutions (LES) is a national leader in liquid waste-related services. They help companies recycle liquid waste in a way that reduces their environmental impact.
A successful startup in its own right, LES raised $56.1 million in funding before it was acquired by the private equity firm Audax back in 2017.
On September 3, 2020, LES announced that it will acquire FloHawks Plumbing + Septic. FloHawks is a leading provider of septic pumping, inspecting, repair, and maintenance, as well as plumbing and drain-clearing services for residential and commercial customers.
Having a massive footprint in the Pacific Northwest, FloHawks was a perfect match for LES. This deal added a huge number of non-hazardous wastewater customers to LES.
This partnership diversifies the LES business model, allowing them to safely and efficiently recycle waste and protect the environment for thousands of more customers.
Enel Green Power Acquires Tradewind Energy
Enel Green Power has a hand in all types of sustainable energy across five continents.
By acquiring Kansas-based Tradewind Energy, Enel Green Power just added 13 gigawatts of wind, solar, and storage projects located across the U.S. In one swoop, the total green gigawatts managed by Enel grew by 40%. Not only that, but Tradewind brings crucial wind, solar, and storage expertise that will help Enel to bump up its growth trajectory.
This massive deal places Enel Green Power in all aspects of the renewable value chain in North America. Thanks to Tradewind, Enel Green Power can increase the speed at which it expands across the globe, bringing sustainable energy to millions.
Biffa acquires Weir Waste Services
On its recent startup-shopping spree, leading UK waste management company, Biffa, has picked up Weir Waste Services.
This deal earned Biffa a new successful commercial waste collection business, a fleet of collection vehicles, and waste treatment infrastructure, along with loads of data. This partnership creates a recycling powerhouse.
Biffa is a publicly-traded company set on rapid expansion throughout the UK. Over the past five years, it has acquired four other strategic CleanTech businesses.
ENGIE Acquires ChargePoint Services
ENGIE is a huge player in global energy. They operate in electricity, natural gas, and energy services. ENGIE’s mission is to support changes in society that are based equally on economic growth, social progress, and the preservation of natural resources.
To that end, ENGIE has acquired an electric vehicle (EV) public charging network, ChargePoint Services. The deal is a part of a greater goal to lead the zero-carbon transition and improve air quality in urban environments.
Before the deal, ChargePoint was already working with around 30 local authorities on charging point infrastructure and offering charging services to the likes of Microsoft and Siemens, among others.
ENGIE is another green company on a mission, having acquired nine CleanTech startups since 2018.
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