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Sustainable venture finance

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Solutions to environmental and social problems (be they technologies, products or services) are being touted as the next wave of hopeful monsters for investors. Is such enthusiasm for the business benefits of sustainability justified? Others perceive sustainability as equalling high risk and lower returns. But are their risk/return models simply too narrow to see the opportunity? A forward looking workshop was held at Fontainebleau, France in June 2002 to explore the broad theme of whether and when it is profitable to invest in sustainability-oriented venture capital funds and entrepreneurial ventures. This conference report will remind participants of the event and the outcomes and the ideas generated by the group. For those who were not there it will give an overview of the presentations, a flavour of the discussion, a description of the next steps for the research network and highlight what participants felt to be the most pressing issues. In preliminary investigation into the field, INSEAD and UNEP FI found that there was a real knowledge gap between stakeholders active in the sector. For example, few entrepreneurs or investors knew what SVF funds already exist nor what environmental criteria are already being used by some mainstream VCs. Nonetheless, the authors found many instances of new funds being launched, new ventures financed and new techniques for selecting deals - all being developed with a sustainability agenda. It was this gap that led the authors to create an event that would bring together relevant groups to exchange information, research and network with one another. Their aims for the workshop were thus to stimulate participants' imaginations, to take a rigorous look at the up and down-sides of this type of investment field and to provide a framework for inspired people to meet, exchange and fast track their learning and competence.

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