Greentech Startups – Why Are There Huge Seed Investments Growing?

Greentech Startups – Why Are There Huge Seed Investments Growing?

Seed investments in Greentech Startups are increasing. Seed capital or seed money, also commonly known as seed funding – it is the earliest stage of the capital raising process of a startup. In general, investors usually commit their capital in exchange for an equity stake in a company. This is a less formal approach compared to other forms of equity-based financing such as venture capital. 

Why do startups need seed funding? In any business venture, companies need to rent an office, purchase equipment and hire staff etc. Expansion is the natural course of starting a new business. Therefore, companies will require external financing to do these things and that is when seed funding comes into play. 

Without seed funding, it is very safe to say that the vast majority of startups will not survive. The amount of money needed to take a startup to profitability goes beyond the ability of founders, their families and friends etc. Bootstrapping can only take them this far. Startups are built to grow fast and more often than not, high growth companies need to burn capital to sustain their growth prior to achieving profitability. 

Greentech Startups

Greentech Startups

Greentech startups are organizations that have positive environmental impact at its core. They are founded for a purpose and it can range from reducing CO2 emissions or minimizing waste etc. Greentech companies use science-based technology, ideas and methodologies to solve global challenges that the community faces. 

Their business models are financially, socially and environmentally sustainable. Profit is generated as a way to keep and scale the business as well as increase its positive impact on the planet. Greentech companies often lead by example and reduce their own carbon footprint as much as possible. 

Greentech startups face additional challenges due to their inherent triple bottom line – social responsibility, economic value and environmental impact. Usually the founders of such business ventures have the passion and drive to rise above challenges and they can grow fast while adhering to their core values. 

Greentech Startups

Though venture capital (VC) funding has become more stringent in recent years, one of the fundamental conditions is that startups must have a stellar and experienced management team because expertise and experience will be able to pinpoint issues as well as resolve them quickly. 

More than ever, the focus of the world is directed towards critical issues such as global warming, climate change, poverty, education and of course COVID-19 etc. Investors are moving in this direction to solve real world problems as they affect the global economy. 

Greentech Startups

Impact Investing

Real world problems are called “impact investing”. This is where investors provide capital to address social and/or environmental issues, with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return. Hence investors are much on the lookout for greentech startups. Additionally, greentech startups are incentivized by the government in various ways including tax cuts.  

Impact investing has actually grown from a small investing niche to one with massive opportunities for financial returns just like traditional investing. Statistics also show that impact investments perform well too with at least 66% hitting market rate returns. Greentech startups not only solve a global challenge but also have an edge in the investing market. 

In summary, investing in greentech startups not only helps investors to make an impression on the world but also helps them to contribute to humanity by solving real world problems. Furthermore, investors pretty much have access to the same type of opportunities for good financial returns, giving the traditional investment market a run for its money. Impact investing is the new trend in investing, we hope the information has been useful and cheers to a greener globe!

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