| News July 2010 US cleantech open for investment Module |  |  |  | |
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| | US Cleantech Open for Investment
By Linda Herwagen Westerlund, Intern, Danish-American Business Forum
| Never mind the COOP 15 flop. Growth within the US cleantech and green technology sector is setting off. This will arguably present a unique opportunity for Danish cleantech companies says a 2009 report from Cleantech Group and Deloitte. Even though the recession has battered investors, new data suggest that the clean technology sector was largely immune from the global economic collapse. Arguably investment is a win-win venture. |
New investment opportunities for Danish companies:
Despite the unprecedented economic downtown and tightening of credit markets, the American cleantech market has cleared through the crisis, positioning itself as the second greatest area of investment. Investment in this particular field has exceeded other strong investment areas such as IT and life sciences and is currently the target of 27% of all investment activities in the US. Numbers from Cleantech Group and Cleantech Media indicate that investment in cleantech offers amazing opportunities for investment as the cleantech and environmental technologies sectors is one of the key beneficiaries of the federal stimulus package. When the economy improves the seeds will have been planted for a "clean" or "green" economy that will continually require new technologies and services. Danish companies may not be able to directly benefit from this specific spending, however, as the hoped-for new green economy in the US materialises in the coming years, companies with outstanding technologies will benefit.
Wobbly future?
Despite positive predictions experts fear that the US is loosing its advantage as competition from China is rising. China has emerged as a clean energy powerhouse in the span of just a few years. According to the Founder and President of the Washington, DC-based think tank The Information Technology and Innovation Foundation, Rob Atkinson, China now manufactures more solar cells than any nation in the world, and recently surpassed the United States as the largest market for wind turbines in 2009. According to "Rising Tigers, Sleeping Giant," a recent study by the Breakthrough Institute, China is also a global leader in advanced transportation technologies and batteries.
Fears are that the US will not be ready for the companies of the 21century if the industry does not see more investment. According to Intel Corporation's Chief Executive Officer and Board member of Google Inc. Paul Ottellini, the narrowness of the investment focus (clean tech and high tech) and the narrowness of the investment period have been halting investment in the sector. He argues that it is crucial to the long term future of the sector that start-up companies know that the venture capital industry is open for business and the US does seem to carry more advantages for infant companies than China. The US is more tolerant to small start-up companies in comparison to China where many Danish firms typically can offer products for solar energy, wind power or other energy efficiency solutions.
Crucial competitiveness:
There is no reason why the United States should not compete passionately for the high-tech, high-wage clean energy jobs that will result from the tremendous growth of the global clean energy industry. There are very few growth opportunities large enough to serve as a new foundation of economic prosperity in the United States and according to Rob Atkinson, clean energy is one such opportunity.
In the cleantech business it’s all about competitiveness. It is something that, as a country, the US too often has taken for granted. “We take for granted that capital will flow in, we take for granted that we will have the best workforce in the world, we take for granted that capital formation is there, that start-ups can have an exit through the IPO (initial public offering) market” says Paul Otellini . According to Ottellini none of that is to be taken for granted anymore and a new mindset is in order. “If we refocus our energies on competitiveness as a country, then other good things accrue: capital accrues, jobs accrue, and investments accrue” he says. So the main ingredient is outside sources of investment and the recipe for what will make the US cleantech market keep its competitive edge and also an exceptional and largely unexploded business venture for Danish cleantech companies.
Tactical recommendations on market entry:
Although it is highly competitive the United States market is likely to remain important because of its sheer size. According to Invest in America entering the US cleantech market is quit simple.
One option for entering the market is to identify projects that will require an environmental component, and to then find out which firms are handling these projects and try to become a supplier of record for specific products or services.
Other strategies for entering the market include partnering with local firms, or regional manufacturing agents. According to Invest in America, one important point to note is that unless a foreign company has something unique to offer, most customers will want to see local representation and proven results. Partnership can be a real option for Danish companies entering this market. According to Invest in America working in partnership with a US or Canadian company to offer a complete solution to US customers is one way to access the large North American market.
Another option is to sell directly to the federal government, which is the single largest purchaser of goods and services in the United States. The government is placing more emphasis on environmental impact in its purchasing decisions, and federal agencies have been directed to give preference to the purchase of products and services that pose fewer burdens on the environment. The US Environmental Protection Agency has published a set of guidelines on federal government environmentally preferable purchasing, which are available on its website: www.epa.gov/epp/index.htm
According to Invest in America, companies seeking to penetrate the market will have to become familiar with Buy American Act when selling to the United States government, and will often have to partner with a US firm to access certain government contracts or money from the American Recovery and Reinvestment Act.
In addition to the federal government opportunities, there are also a wide range of environmental projects being undertaken at the state and local government level. Partnering with US firms can help give firms access to state and local government contracts. The Globe Foundation regularly publishes information on business opportunities, both in North America and in other key market areas around the world. Business opportunities from many sources are reviewed and summarised on the foundation’s website: www.globe-net.com/opportunities
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