Most people think of smartphone apps and software companies when they hear the terms "venture capital" (VC) and "startups," but in the past several years there has been a significant increase in the number of investments that VC firms have been making in green business. The reason is fairly simple: eco-friendly companies are attracting more customers, which means there's significant potential for profit by gaining equity in such firms.
A recent piece in the Washington Post highlights New Atlantic Ventures, a VC company that has put millions of dollars into green startups with inventive new ideas for bringing environmentally friendly products to customers. The article examines their involvement with Bambeco, a furniture manufacturer that uses sustainable materials for their pieces.
Thanasis Delistathis, co-founder of New Atlantic, tells the Post that he invested in Bambeco because their management team had previous experience in e-commerce, and because personal experience told him that there was significant demand for green consumer products. He shared an experience in which a friend who was shopping for outdoor furniture wouldn't even consider items that weren't made using environmentally responsible processes and components.
VC investment in green businesses is certainly a positive development for consumer goods, as these companies are typically more tolerant of risk and taking chances on new ideas. Particularly in this age of tight credit markets, it is harder for entrepreneurs to take out loans to start their own businesses, and companies like Bambeco required extensive capital in order to get off the ground.