Green startups find it harder to attract investors and funding opportunities because short term expected return on capital is often lower. The real added value of a green startup will only be apparent after some time.
The focus of investors in green startups should therefore not be on short-term return expectations, but on the long-term benefits that the green startup generates with its product for society. For founders of green startups there are various alternative funding opportunities and investors to realize their business model.
Crowdfunding – all for one
In crowdfunding, a large number of private individuals each invest a small amount, which brings together more money to finance a project or startup. In which project the individual invested is up to each one. The crowdfunding process is mostly done through internet portals, such as Seedmatch, where investors, ie private individuals, choose a project or startup they want to invest in.
Green startups have a high chance of crowdfunding as most private investors are young and attach great importance to sustainability, environmental protection and innovation. In addition, there are also special crowdfunding platforms for green startups, such as Ecocrowd and Green Rocket or the donation and crowdfunding platform Betterplace.
Financial support from the state
Financial support from the state and the countries is essential for green startups. A startup based on sustainability even has the advantage of public support programs that are often advertised for green startups. For example, KfW (Kreditanstalt für Wiederaufbau), whose mission is “Bank aus Verantwortung,” is committed to sustainability and the promotion of environmental and climate protection.
KfW promotional loans include favorable interest rates with long maturities, fixed-term interest payments, grace-free start-up years and flexible combinations with other subsidies. The funding is requested by the founder of a green startup at his own bank. The federal states also offer funding opportunities for green startups. You will find a list of funding institutes of the federal states here.
Sustainable banks, such as the GLS Bank, which offer sustainable investments, also provide funding opportunities for green startups.
Venture capital for green startups
With venture funds specifically for green startups, founders with sustainable business ideas have the opportunity to start their venture capital finance venture. For venture funds, several investors pay into the fund to provide the venture capital. Even classic venture capital companies that focus on sustainability are a source of support for green startups, such as BASF Venture Capital. BASF Venture Capital focuses on innovations in the area of sustainability, digital innovations, new materials and new business models.
Corporations as investors
Even large corporations are interested in supporting innovative startups. Again, green startups are at an advantage, due to the booming Green Economy. The large corporations benefit as well as the financially supported founders in the financial support of green startups. By encouraging green startups, the corporations acquire fresh, innovative and young ideas and approaches that can reshape the old structures.
Although conventional investors are often discouraged from promoting green startups, there are many funding opportunities and investors specifically designed for green startups. Founders of green startups have the opportunity to realize their innovative ideas. For a deeper insight into the various funding opportunities and investors, the Forum Sustainable Investments offers in its presentation “Financing opportunities for green start-ups,” sponsored by Greenup Invest.