In an earlier post No More Solyndras? I noted that the concept of solar power is popular in this country. Not even chocolate has such high approval. And Republicans, whom the media portray as being opposed to anything but fossil fuels? The poll I cite indicates that 75% of them agree that solar power is important or very important for the US. So why don’t we have more of it?
Solyndra, of course, is a solar company that went bankrupt even after receiving huge government subsidies. I have since come across other companies offering promising sustainable technologies, that, like Solyndra, have received large handouts from the federal government but have not yet built themselves into financially viable businesses.
The first lesson is that the federal government is not a good venture capitalist. I would venture to say that the Obama administration has thrown borrowed money at companies without checking to see if they have a workable business plan. In other words, this administration has taken government from the category of inept venture capitalist to an extravagantly incompetent one.
But wait, as the informercials say, there’s more.
Venture capital as it is
Just about every industry segment has started as an entrepreneur’s new idea. The entrepreneur needs money to turn the idea into a product and a company to sell it. Venture capitalists provide money and, in return, gain significant control over the new company’s decisions.
Venture capitalists risk their money with the expectation of getting a good return on it. Their interest, therefore, is to make small, struggling startups into companies large enough and well enough known to launch a successful initial public offering or comparable realization event.
In other words, venture capital is all about growing large companies and getting the quickest return on investment as it can. Traditionally, that has resulted in concentration of industry after industry into a few large, centralized bureaucracies trying to use their capital as efficiently as possible. These in turn provide an abundance of standardized, relatively inexpensive products that rely on vast distribution networks.
Our food industry, for example, relies on industrial scale farming operations that require massive amounts of petroleum-based fertilizers and water. Or for livestock, more antibiotics than doctors offer their human patients. And because fewer and fewer people take time to cook for themselves, most agricultural output goes to factories that prepare food either for consumers at the grocery store or various restaurants. And as it turns out, industrial food is physically addictive .
In example after example, efficient use of capital by large corporations requires inefficient, even wasteful use of natural resources. Economically and environmentally, this model is not sustainable. Venture capital as it is now practiced, really doesn’t know what to do with companies that plan to produce small-scale solutions to environmental problems designed to have a long-term impact.
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Venture capital as it needs to become
The so-called slow food movement began as a protest against fast food restaurants, with their limited menus of tasty but unhealthy food. It became much larger and more significant than mere protest. Now it stands not only for the importance of slow, but small and diverse.
Money seems to know only one speed. Current investment models demand that it be fast. Meanwhile, sustainable technologies aim at slower, steadier, and local outcomes. Green companies, like any other companies, need money—capital—in order to grow from good ideas into viable businesses. Fast money will pass them by.
In other words, our society needs a slow money movement, something that must probably start from the bottom up and not as some kind of government program.
The barrier to sustainable technology, therefore, is not primarily technical or political. To a large degree, it is simply financial. Teaching at least some capital to slow down seems prerequisite for companies like Solyndra to succeed instead of fail.
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