VCs Need To Examine China Sustainable Investment Opportunities

Filed in archive Innovation on March 26, 2006

With the political "China shock" outcry in Washington reaching higher decibel levels daily, fostered by bullying efforts of select members of the U.S. Congress to pressure the world's rising economic power to revalue its currency, the timing seems perfect for Sand Hill Road VCs to do the right thing by examining investment opportunities in sustainable environment opportunities. Too many of my colleagues have been writing about the 'dark side of China investing, while others continue to worship at the altar of China's web growth and increased consumer demand. On both sides, there is a gulf in perceptions.

The priority of China's leadership is to develop and modernize a China that still faces significant internal challenges. While proud of their accomplishments, there are many inherent weaknesses that the Great Wall cannot hide: its rampant and painful rural poverty, nearly 250 million people live on less than a dollar a day, and the ever increasing damage done daily to the environment to feed the energy appetites of the world's most populous nation.

It's time to part with some of the present Washington-Beijing ominous political clouds, examine the trickle down benefits of tech- consumerism investments, and shed much needed natural light shine on China's anxious future still driven by polluting generated coal-fired power plants.

Don Ye, president of the China Environment Fund believes there is limited investment in clean energy technologies. Do VCs need a reminder of last year's Suntech IPO, China first solar play in the U.S. which yielded the company and investors over $450 million.

China is now actively encouraging and providing incentives for venture capitalists to invest in environmental technology companies. Thanks to the efforts of the
New Ventures program of the World Resources Institute, which supports sustainable enterprise creation in emerging countries, responsible global investors are witnessing the Gradual transfer of some venture capital funds to investment opportunities that incorporates significant social and environmental benefits.

For example, Tsinghua Venture Capital Ltd. manages the China Environment Fund, which invests largely in non-listed companies based in China. IHT has also indicated that Tsinghua is now raising an additional $50 million for its latest fund.

Next week, the China Daily CEO Roundtable is scheduled to be held in Beijing on the pressing theme of 'Business and Sustainable Development in China. Perhaps, some VCs might take a lesson and learn more about the modern commercialization of new renewable energy technologies which are now being developed. Sustainable development investments may just help break down the escalating protectionist sentiment on both sides of the Great Wall.