Can 'green' companies stay out of the red?
With the failure of green energy poster child Solyndra – after the California-based company received a $528 million taxpayer investment – the question being asked in many circles is whether the green industry is a smart investment for either the public or private sector.
Scottsdale-based reNature, which recently received a grant from ASU's Edson Entrepreneurship Initiative, believes its venture and green industry as a whole is a worthy investment for multiple reasons.
reNature has a founding team made up of six ASU students who are studying in a wide variety of disciplines. They came together based on common interests of sustainability and business and applied for the Edson Student Entrepreneur Initiative in April. They were accepted into the initiative and subsequently given a grant, office space for one year in the SkySong building in Scottsdale, and mentoring services connected with the university.
Like many in the “green industry” CEO David Metoyer, a finance and sustainability major, and his team at reNature want to take something traditionally seen as a liability – like trash – and through natural processes turn it into an asset.
“We want to work with nature’s systems and add value to something that is usually worthless,” Metoyer said. “We want to industrialize natural processes.”
In recent years there have been numerous companies that have had a similar creed to that of reNature. However, like Solyndra, a large number of them have not been able to make it through the hurdles that every start-up business faces.
At a hearing last week, Jonathan Silver, director of the Department of Energy’s energy loan office, said that factors such as China flooding the market with cheap solar panels and a tough European buying market have caused solar-cell prices to drop sharply, significantly hurting companies such as Solyndra.
The loan office has given $35.9 billion dollars in loans and created 64,776 jobs according to its website. When Solyndra filed for bankruptcy earlier this month the company was forced to lay off more than 1,000 employees. So, the question that remains to be answered is: How can green companies stay out of the red?
Metoyer and his team at reNature believe that they have a green model that is truly sustainable: economically and environmentally.
First of all, reNature is “going for the low-hanging fruit now,” Metoyer said.
In other words, the venture is entering the industry carefully, fully aware that there are some “green” business models that can survive now, and some that cannot, Metoyer said.
“We need to make sure that any new green company makes business sense,” said Will Heasley, director of business development for reNature.
“It has to be economically viable – you have to find a method that makes sense financially,” Metoyer said.
According to Metoyer, this type of cautious entry into the market is something that other companies should mimic. He believes that the American consumer may not be ready for all of the green products that are being introduced.
“They (consumers) say, ‘as much as I want to be environmentally conscious, I have to make sure I have enough money to simply keep living,’” Metoyer said.
And as for companies that “go green” as a way to look good in the public eye, Metoyer said: “It has to be more than doing something green to get good press. It has to be more than PR.”
Another question that green ventures need to ask themselves is, “the technology may exist, but does it exist at the right scale?” said Metoyer. “Many times the answer is no, it doesn’t.”
The failure of Solyndra and other companies like it shows that even with massive help from the federal government, being green does not guarantee profitability.
Nevertheless, many believe there is a market for clean and sustainable industry, but like any other market it’s one that must be entered cautiously.
“Every new company has to look at the triple bottom line,” Metoyer said. “What effects will it have economically, socially and environmentally.”
Taylor McArthur is a journalism student in ASU's Walter Cronkite School of Journalism and Mass Communication. He can be reached at firstname.lastname@example.org.
Jonathan Silver: https://lpo.energy.gov/?page_id=19