It has been another active year for renewable energy sectors; the first half of 2011 was another evidence that renewable energy & green economy are indeed our future industries.
More types of venture capital & private equity investment firms have joined the investment; including the following:
· Conglomerate backed investment funds such as those backed by Schneider Electric, Chevron Energy, Honda, Intel and GE.
· Energy companies are also expanding their investments into renewable energy projects; we have seen all big energy companies both in US and outside US becoming the largest renewable energy investors.
· Utilities companies taking strategic interest in various renewable energy companies including wind, solar, geothermal or clean coal projects.
· Government investments; led by 3 types of investors: sovereign wealth funds, state sponsored funds or university / community sponsored funds
· International funds such as Asia Development Bank’s latest announcement in creating new fund to invest in renewable energy projects in Asia.
In short, there are much more types of investors to choose from compared to 12 months ago, and the trend is likely to continue further.
Here are 10 strategies you can consider if you need to raise capital for a renewable energy related opportunity:
1. Debt financing: Consider both traditional and investment banks: The banks are now willing to provide funding for infrastructure projects, one advantage to debt finance your renewable energy projects is to enjoy the low interest environment, which is debt financing is very attractive option at moment.
2. Government loans: There are various types of Government loans available in the US specifically for green related projects. Many of such loans are interest-free loans. Most of these loans would require the company as an established company; or have raised capital elsewhere; and the Government provides the balance of investment.
3. IPO: The timing for IPO/ listing is very good in the current environment. 2011 has been a strong year of IPO activities where renewable energy and cleantech companies are able to tap into financial markets, which is also a reason why venture capital investors also want to participate. North America remains the most favorite choice for listings, both in the US and Canadian stock exchanges.
4. Ask utilities companies: Utilities companies, especially those in North America and Europe have participated in various renewable energy projects since 2005. Solar, hydro and wind energy as well as energy efficiency technologies are the sectors they consider the most as strategic investors.
5. Mutual funds: There has also been creation of new investment funds, including mutual funds, exchange traded funds; these are now being offered to both institutional and retail investors. These funds primarily invest in public listed companies; but may invest in companies at pre-IPO stage. This is another added advantage if you are a public listed company.
6. Local incentives: There are different local incentives, including State or City managed venture capital funds which invest in projects that can create job opportunities for the State. Examples include managed by New York City, New York State, State of Illinois or Connecticut. If you are involved in technology development, your universities are also good starting point to find investment capital.
7. Oil and Gas Companies: These are the companies who do not wish to miss the renewable energy. Companies like Shell, BP and Chevron have allocated significant capital each year for investments into renewable energy projects; some are through their subsidiary investment firms, some are through their internal funds. BHP, for instance, the world largest mining company, has also invested in wind energy projects as well as natural forests.
8. Tap into international markets: Some renewable energy projects have more appetite for international investors. Chinese investors like clean coal, hydro and solar energy opportunities. Middle Eastern investors have been actively investing in desalination and solar energy projects; while Japanese, Israeli and Taiwanese investors have invested in nuclear power and management opportunities in the past.
9. Technology companies: Renewable energy investment is not just exclusive to energy related corporations and investors. In fact, some of the recent investments made into renewable energy opportunities include Google, Intel Capital and IBM and Microsoft related entities. Technology companies also operate their own venture capital and private equity funds; they do invest in a wide range of opportunities.
10. Pension Funds: Pension funds, or sometimes known as superannuation funds are also active investors that participate in renewable energy projects. Although, they prefer to invest in infrastructure related opportunities with prediction of consistent cash flows. Pension funds have participated in large-scale hydro, solar and wind energy projects across North America and in international markets as well.