Looking to make a mark on Wall Street.
Green is good. Greed is good. So then, green greed is good? According to Reuters, 2010 is expected to be a big year for Clean Tech IPOs. The industry now has a number of companies that are registering to become publically traded entities. Some high profile ones are Tesla Motors, Solyndra and Codexis.
Up to this point, the primary methods of funding green companies have been through the personal fortunes of the avant-garde rich, venture capitalists and the odd dollar from the government. The turn to Wall Street can be seen as a sign that green business is maturing. The fact that these companies feel they have enough profile to go public show that their brands are entering the mainstream.
There are hitches already for many Clean Tech companies that are trying to enter the stock market. 22 IPOs have been introduced this year, but 17 of them have been delayed or dropped for various reasons. Solyndra’s IPO application revealed some serious financial problems during its audit. The solar panel maker has lost $518.7 million dollars over the past three years, which caused the bookkeepers from PricewaterhouseCooper to raise questions over the company’s ability to stay in business. Solyndra is looking to raise $300 million through its IPO, to bolster the venture and government funding it has already received.
The Solyndra case is a good encapsulation of the overall problems facing the green businesses. Start-ups lose money in their first few years. That is just the nature of the economic beast. Investors want a return on their money immediately. For the overwhelming amount of innovative green companies with large potential markets, raising the initial capital to survive is the biggest hurdle to jump.
The mixing of culture between green entrepreneurs and the Wall Street crowd will be interesting to witness is the coming months. Many green business where started by savvy businessmen looking to make money, but in many cases, green companies have been started by people with priorities other than amassing wealth. Naiveté can hurt green entrepreneurs with great ideas and motivation, but little in the way of business acumen. In order for many start-ups to be successful, they will adapt to more traditional Street Capitalism. “Accessing capital to start a business can be a daunting process, especially for entrepreneurs who start out with a great idea, but have no real familiarity with the business world,” says the mayor of San Francisco Gavin Newsom.
What is clear is that more money needs to flow into green business if the sustainable economy is to prosper. Government needs to supply the initial capital as a lifeline to Clean Tech, because it is the only investor with deep enough pockets to foster rapid growth in the sector. There are only so many angel investors and venture capital funds out there to develop companies in their very earliest stages. Their capacity is limited. Once the training wheels of government subsidies can be taken off, the companies can enter The Street to be bough, traded and consolidated.
[photo by Acampada @ flickr]