Investigating the Roles, Influencing Mechanisms, and Outcomes of Private Equity and Venture Capital on Companies in High-Tech Renewable Energy Sectors

Authors

  • Julie Wang

DOI:

https://doi.org/10.54097/j2fpy550

Keywords:

Private equity; Venture capital; Energy transition; Green finance, Renewable energy startups

Abstract

Along with many environmental issues arising, such as climate change and extreme weather disasters, there has been a gradual increase in recognizing the importance of promoting green practices. Venture capital investors evaluate significantly more the environmental impacts of the business, and what the company has done to have a positive impact not only socially, but also on sustainability. Therefore, today, when analyzing a firm, the Environmental, Social, and Governmental (ESG) framework is considered in-depth. In this paper, the mechanisms behind PE/VC investment in renewable clean energy sector startups will be investigated. In addition, the influencing mechanisms, factors considered by PE/VC investors, and the characteristics of successful clean energy startups will be covered. Investors will then be able to make more informed decisions about prospects, potential growth, and development of this industry, while also examining why certain startups are successful as opposed to the countless others that collapse, aligning with the high-risk return balance of such an industry that has relatively greater levels of risk than others.

Downloads

Download data is not yet available.

References

Van den Heuvel M, Popp D. The role of venture capital and governments in clean energy: Lessons from the first cleantech bubble[J]. Energy Economics, 2023, 124: 106877.

Bürer M J, Wüstenhagen R. Which renewable energy policy is a venture capitalist's best friend? Empirical evidence from a survey of international cleantech investors[J]. Energy policy, 2009, 37(12): 4997-5006.

Inchauspe J, Ripple R D, Trück S. The dynamics of returns on renewable energy companies: A state-space approach[J]. Energy Economics, 2015, 48: 325-335.

Polzin F, Sanders M. How to finance the transition to low-carbon energy in Europe?[J]. Energy Policy, 2020, 147: 111863.

Petkova A P, Wadhwa A, Yao X, et al. Reputation and decision making under ambiguity: A study of US venture capital firms' investments in the emerging clean energy sector[J]. Academy of Management Journal, 2014, 57(2): 422-448.

Islam M, Fremeth A, Marcus A. Signaling by early stage startups: US government research grants and venture capital funding[J]. Journal of Business Venturing, 2018, 33(1): 35-51.

Cumming D, Henriques I, Sadorsky P. ‘Cleantech’venture capital around the world[J]. International Review of Financial Analysis, 2016, 44: 86-97.

Gaddy B E, Sivaram V, Jones T B, et al. Venture capital and cleantech: The wrong model for energy innovation[J]. Energy Policy, 2017, 102: 385-395.

Hegeman P D, Sørheim R. Why do they do it? Corporate venture capital investments in cleantech startups[J]. Journal of Cleaner Production, 2021, 294: 126315.

Kolte A, Festa G, Ciampi F, et al. Exploring corporate venture capital investments in clean energy—a focus on the Asia-Pacific region[J]. Applied Energy, 2023, 334: 120677.

Team, Communication. “What’s a Start-up? What Are Its Characteristics? How Is It Financed?” Telefónica, 25 Feb. 2023, www.telefonica.com/en/communication-room/blog/whats-a-start-up-what-are-its-characteristics-how-is-it-financed/.

Acp. “Renewable Energy Project Development Facts and Statistics.” ACP, 22 June 2023, cleanpower.org/facts/project-development/.

“Enpal: A Rooftop Revolution.” Environmental Finance, www.environmental-finance.com/content/focus/sustainable-transformation-progress-not-perfection/case-studies/enpal-a-rooftop-revolution.html.

“Enpal.” World Economic Forum, www.weforum.org/organizations/enpal.

“Enpal Grows by 277 Percent in 2022 and Reaches 415 Million Euros in Revenue.” Solaranlage Kaufen, www.enpal.de/pressemitteilungen/enpal-grows-by-277-percent-in-2022-and-reaches-415-million-euros-in-revenue.

Alkousaa, Riham. “German Renewables Firm Enpal Hits $2.4 Bln Valuation with New Funding Round.” Reuters, Thomson Reuters, 9 Jan. 2023, www.reuters.com/business/energy/german-renewables-firm-enpal-hits-24-bln-valuation-with-new-funding-round-2023-01-09/.

Königsfeld, Jerome. “From Vision to Green-Tech Unicorn: Lessons from Enpal.” McKinsey & Company, 8 July 2022, www.mckinsey.com/capabilities/mckinsey-digital/our-insights/from-vision-to-green-tech-unicorn-lessons-from-enpal.

Ennomotive. “4 Renewable Energy Challenges for Startups (100 K USD for Piloting).” Open Innovation Hub for Companies, Startups, and Experts, www.ennomotive.com/renewable-energy-challenges-startups/.

Iea. “Ten Years of Clean Energy Start-Ups – Analysis.” IEA, www.iea.org/articles/ten-years-of-clean-energy-start-ups.

Downloads

Published

22-01-2024