Why aren't robots cleaning our landfills yet?
Startups that have received venture capital funding grow demonstrably faster than those that have not. It is a little bit of a chicken and egg story, though – do they grow faster because they are just better businesses, and hence receive venture funding, or do they grow faster because of the benefits that the funding and relationships with the venture capital firm is so beneficial?
Moreover, why do venture capital firms not invest in startups that are in a large, scaleable market, like cleantech? Even if the VC does not necessarily care about the impact, since they are running a business after all, it could make good financial sense to back the early adopters and innovators in the space, especially with the growing push towards sustainability and clean energy in society.
Take the case of landfills, for example. Everybody that has seen the movie Wall-E will remember the robot cleaning up the enormous pile of waste that humans have left behind. But why is that not a reality yet? Compared to other initiatives that have been created and funded, this seems like a relatively achievable goal, especially with venture funding to help the business grow.
Well, arguably, venture capital firms have been shy when it comes to funding cleantech startups, for a variety of reasons:
VCs have been burned before.
In the 1990s in the United States, there was a big push of venture capital money into clean technologies, which ended up costing the firms a lot of money as the businesses ultimately failed. However, timing is everything – and venture capital firms should know that better than anyone. The time now, with people pushing for sustainability, is better than ever.
CleanTech is not ‘hot’.
Whether they want to admit it or not, venture capital firms are inherently interested in ‘hot’ industries. Nowadays, it’s artificial intelligence, blockchain and internet of things. Clean technology does not get much attention, because it’s not sexy. Don’t get us wrong, the aforementioned industries are very interesting, but that does not mean that cleantech should be left behind – on the contrary!
The scalability of the business has yet to be proven.
While robots are incredibly efficient and useful, they can only perform one task at a time, which is not very scalable. VCs, on the other hand, are looking into business models that are inherently scalable across geographies and product lines, which might prove a hindrance for robot-related cleantech startups.
Hence, we argue that startups should focus on finding a way to make the cleantech industry even more scalable. This, which will lead to higher potential returns as the world becomes more health and nature conscious, which will attract venture funding – no matter how ‘unsexy’ the industry is.