2004 Forum Report: Financing Technologies for the Environment
Financing Technologies for the Environment Panel
Venture, Commercial, Philanthropic and Cross-Sector Funding Models
- Louis Boorstin, International Finance Corporation
- Aileen Lee, Kleiner Perkins Caulfield & Byers
- Satheesh Namasivayam, Lemelson Foundation
- David Williams, Shorebank
- Facilitated by Jeffrey Steen, The Barneson Group
Jeff Steen introduced the panel and emphasized the cross-sector expertise they represented. He also mentioned the increase in interest in environmental technology from investors, but noted that the level of activity was still well below its potential. Each panelist then spoke about their organization's role in financing environmental technology:
- Louis Boorstin, International Finance Corporation: They see themselves as a merchant bank to the developing world; their mainstream investment activities are all done on a commercial basis and must meet environmental guidelines. They also have a variety of special facilities that invest directly in pro-environment projects, often on a smaller scale.
- Dave Williams, Shorebank Pacific: They are a community bank for the Pacific Northwest; they work with all borrowers around sustainability, not primarily technology. They do low risk lending but also have an affiliated subordinated debt fund that sometimes makes more risky loans.
- Satheesh Namasivayan, Lemelson Foundation: Their mission is to promote innovation; recently they have had an increased focus on sustainable development. They look for new technologies from many sources, not just "experts" and will fund at many different stages of development.
- Aileen Lee, Kleiner Perkins Caulfield & Byers: They think of themselves as "venture assistants", providing operational assistance as well as capital. They are just beginning to explore the clean tech field and see it as a potentially underserved market.
The panelists addressed the question, "what is missing from the suite of investment types available to the market?" Their thoughts included:
Additional insights from the audience and panelists included:
- By having a subordinated debt fund as well as a traditional commercial bank, ShoreBank Pacific has been able to do more deals than with just a bank - this was a good illustration of the importance of capital being available across the full range of the risk/return spectrum.
- Having multiple investors with different goals in a fund can cause difficult problems - need clear alignment around goals and investment strategies.
- The issue of assessing and influencing consumer demand for environmentally friendly products is as important as having the right types of capital available; however it is particularly difficult to assess demand for new technologies.
- The government can play a constructive role either through programs that promote investment directly (tax credits, matching capital) or through programs that stimulate demand (subsidies, direct purchases).
- The long term answer to getting appropriate amounts of capital behind environmental technologies may come from the creation of a market for "environmental services" (for example, carbon credits); until we get this, there will be a need for more "patient capital" to support the sector.
