Green Business – Technology vs Consumer Products

Perkins Kleiner Caufield and Byers, a large Silicon Valley venture-capital firm, recently announced that it is doubling its investment into green technologies. If you were thinking of approaching them or any VC with your new biodegradable dog leashes, you may want to re-think that. Look carefully at what they Perkins Kleiner is investing in:

KPCB Partner John Doerr said “The largest trend on the planet is urbanization as the number of people living in megacities triples from 2 billion to 6 billion. There are enormous needs for clean water, power, and transportation. The partners of KPCB are doubling their commitment to Global Greentech Innovation (GGI) at the Clinton Global Initiative with $200 million over the next two years. We’re already backing 11 Greentech ventures with breakthrough technologies in biofuels, solar cells, fuel cells, storage, energy management and conservation. And we look for many more. Now 19 KPCB partners are applying our 35-year track record of start-up success to the biology, chemistry and physics of ‘Greentech’. The power of entrepreneurs can make a big difference in our prosperity and our planet’s precious environment.”

I don’t know if urbanization is THE largest trend on the planet. After all, how do you measure “largest” when it comes to trends?

green technologyBut urbanization is obvious and has been documented. For instance, the BBC has a fascinating interactive map that graphically shows the trend of urbanization. The Institute for the Future lists urbanization as a major trend in its 2005 Map of the Decade.

The type of products that a VC firm like Kleiner Perkins is planning to invest in, are technologies designed to address the impact of the larger urbanization trend. For the most part they are technologies that might be used in public works projects such as water filtration systems and clean energy buses.

As to green consumer products, that’s a different story.

In fact, Joel Makower, the author of The Green Consumer, notes on his blog that today, aside from health-related products, there are no mass-market green consumer products in the United States. He then goes on to ask a question: will it be small firms that lead the way toward green consumer products, or large retailers?

One realistic scenario that I can see playing out is small businesses creating and manufacturing the green products, and large retailers like Wal-Mart and Home Depot selling them.

Small businesses often are better equipped than large firms to come up with the breakthrough ideas for green products and to pursue them. Yet, to reach the mass market today, entrepreneurs need to tap into the retailing machine of the huge retailers. Getting into Wal-Mart can make or break your consumer product.

Of course, all of this presupposes that the green products are high quality, attractive to consumers and not prohibitively expensive to produce. Otherwise, consumers won’t want the products, retailers won’t sell them, and it is all a moot point anyway.

Hat tip to Jim Hopkins at USA Today’s Small Business Connection, for the link to the Kleiner announcement.

Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.