“Cleantech” has become a buzzword for venture capitalists over the past few years. In fact, many if not most venture capital and private equity firms have decided to devote considerable time and resources to this burgeoning industry. While often the subject of heated debate among experts, entrepreneurs and journalists, the meaning of the term “Cleantech” and the scope of the industry remain somewhat unclear to many of us. Cleantech, which is often viewed as synonymous with sustainability, can be defined as “technologies that harness renewable materials and energy

sources, dramatically reduce the use of natural resources, and significantly cut or eliminate emissions and wastes.”

This article seeks to shed some light on some of the key attributes of the Cleantech industry from a venture capitalist’s perspective. There are a number of important aspects of Cleantech investing which are not obvious to those who have not been involved with this field for a significant period of time – which, due to the nascent nature of the industry, includes most of those interested in

Cleantech. Importantly, there are significant differences between the Cleantech industry and other industries with which venture capitalists may be familiar, such as information technology (IT) and life sciences. Understanding these differences and Cleantech industry trends generally is critical to entering and succeeding in this field.