Investment in the Environment

The Supreme Court has now stepped into the debate over global warming via a lawsuit filed by 12 States and 13 environmental groups against the EPA, charging that it is the EPA’s duty to regulate greenhouse gasses (Article). Initial debate as been over whether or not the EPA has the right or the responsibility to limit greenhouse gas emissions, but at some point the debate will ultimately have to be changed to how to limit greenhouse gas emission. All this got me thinking; what will be the implications on private investment if any sort of law or regulation is put into place?
We’re all aware of the huge push that has been made already into alternate fuels such as ethanol, but those investments have not been as profitable as first imagined and demand could be wavering. Consider the recent ethanol IPO withdrawals. What I’m more interested in is how investments in environmental companies have fared in the recent past. That is, companies that are engaged in promoting the preservation and protection of the environment and wildlife by addressing issues such as clean air and water, global warming and conserving and developing natural resources. According to my sources, since 2000, $1.04 billion of PE money and $120 million in venture funding has gone towards such companies (in the US). And since 2000, these combined investments have had an unexciting return of -3.98%. Now, obviously, any sort of regulation would most likely have a positive effect on overall number of dollars invested and future returns, but since the turn of the century, investment in the environment has not been profitable. Since 2000 investment in environmental companies by VC and PE firms as accounted for just four-tenths of a percent of all total investments. What can be done to increase this number? In an ideal world, these are the sort of investments that would yield the most profit, where environmental profit and monetary profit would go hand-in-hand. I really hope I live to see such a day.

WAYN

Not sure if anyone out there uses the service WAYN (www.wayn.com). I joined over a year ago after I was traveling around in Australia and many of the people I met there recommended it to me. Now, I was doing a lot of backpacking, so keep in mind these are people that travel a lot more frequently. The service is very much like Facebook, or MySpace, but with an added twist. The site focuses on younger people who travel a lot by allowing them to, in addition to maintaining a profile, list paces that they will be traveling to in the future and then being able seeing who else within the network be at that same location when they will be visiting. To be honest I haven’t used this feature to meet people in places that I have traveled to, but more so to keep track of where my friends will be traveling to. The reason I bring this up is that yesterday the site received $11 million in funding from Esprit Capital Partners. Makes me wonder if Esprit is trying to cash in on the web 2.0/user generated content craze much like Sequoia did with Youtube, VantagePoint and Redpoint did with myspace and Accel and MeriTech hope to do with facebook. I absolutely hate the commercialization of all these social networking sites. I do believe WAYN is and can be valuable however, given its broader market scope, but its important to keep in mind that its much more of a niche market so to speak because of its focus on travel. Surely will be interesting to see where this all goes. I’ll try to get an update in a few months.