Four Main Challenges Facing Clean Tech Companies

By StartUp City | Monday, February 22, 2021

Clean tech startups need to show that they can be capital efficient without needing large ongoing infusions of cash to become successful. Therefore an initial product or service whose profit can fund other initiatives is crucial to the corporate mission.

Fremont, CA: Clean tech companies need to be aware of the challenges they will encounter when seeking capital and growing their business because many high-profile failures before have made it more difficult for new clean tech companies to raise funding.

Here are four challenges faced by clean tech companies:

Investors will be Interested in Profit Margins

Investors will be doubtful about investing in companies with low-profit margins or are in a commodity business subject to major competitive pricing challenges. Potential investors will be mainly focused on whether the startup has substantial profit margins.

Capital Efficient of the Company

Clean tech startups need to show that they can be capital efficient without needing large ongoing infusions of cash to become successful. This can mean starting with an initial product or service whose profit can fund other initiatives is crucial to the corporate mission.

Incase venture capital funding is limited, clean tech companies need to choose alternative forms of capital such as profitable early products or services, project financing, strategic partnerships, government loans or grants, and more.

Experienced Management Team

Most venture capital investors believe that the quality and experience of the management team is crucial character in deciding whether to invest in the company or not. This rings true for the clean tech industry as regulatory, capital, and product issues can be challenging.

Manage the Anticipated Cash Flow

Investors will keep an eye on financial projections, attempting to examine the reasonableness of the numbers. Cash flow or monthly cash burn will the main metric reviewed.

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