Don’t rely on a strong environmental benefit, or any “green” factors to help you get investors, unless those factors help drive the market for the product.

Don’t get me wrong, I am all for being green. What I am saying is that being green is not a reason in itself to attract an investor. Nor, for that matter, is it a reason to attract customers.

Even venture capital funds that have a green philosophy still aim for target ROI, and the same criteria as other investors (management strength, market, marketing, exit strategy). In these, green is just the price of entry.

In marketing and sales, all things being equal, customers may choose a green product over a “standard” product. Hopefully, all things being slightly unequal (ie a higher price), they will also choose a green product. But reality is that as soon as the price differential grows too large between self interest and world-interest, people will choose self interest. Of course everyone has a different profile, and some will be prepared to go to extreme lengths to protect the environment, and as such may be willing to pay a higher premium.

Investors are the same – they may choose a green investment over something else, but rarely at a premium.

The exception is that if “green” is the reason for driving consumers, and is part of the overall competitive advantage of the company and its offering, then this will have a positive benefit. Keep in mind that in this case, it is a strength not because of the investors concern for the environment, but because of how they see that influencing the market.

So, in creating your pitch for investors, remember their driving motives. And, if your customers are driven by environmental concerns, and this helps the investor get what he wants, then it is an appropriate strategy. Keep in mind that a decision to invest is driven by commercial aims, not environmental concerns.

(Coming soon – blogs on businesses which are in essence propped up by or dependent upon government subsidies for environmental and economic stimulus. Eg the recently (Feb 2010) cancelled insulation scheme, and the impact this types of artificial demand can have).

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