Greentech Angel Investing for Everyday Investment Strategies

An investor looking for mid to low risk investment strategies might find it difficult to make investments that generate good returns. Even the best-performing funds return under 10% and investment money can be tied up for many years before a company exits and shareholders reap the benefits. Diversification is especially difficult for eco- or sustainable investors looking to put their money in higher risk clean-tech or green energy companies. In addition, investors without accredited status have few better places to put their money; their only options are public stocks. Private investors need a solution that offers liquid investments with reasonable returns at a lower risk. A public vehicle that invests in private green- and clean-tech companies could offer an interesting solution – enter GreenAngel Energy.

The increasing interest in green- and clean-tech companies and green investment is producing demand for investment opportunities. With so few green-tech or green energy companies being traded publicly, retail investors have few choices. In BC, where clean-tech is booming, and green energy is becoming more important, small companies still struggle for funding due to strict securities regulations. A gap is growing between the companies that want to innovate through clean-tech and the investors who want to support them. GreenAngel Energy is building a bridge that will allow any retail investor to put their money into tech companies developing methods to use alternative energy and enjoy returns averaging 27%.

Small clean-tech and green energy companies in BC often rely on Venture Capitalists or Angel investors to fund their growth. Unfortunately, the amount of VC investment pales in comparison to the funds that are invested by the general public, and most VCs don’t invest in clean-tech (though VC Green Investment is predicted to rise in 2011). As a result, small companies struggle to gain access to funds they desperately need to grow their businesses. The lack of funding is hampering the growth of the clean-tech industry in BC and preventing it from having an impact on a much larger scale.

For those angel investors who have accredited status and do invest in clean-tech, returns are generally higher: with that comes an increased risk. Approximately half of BC’s clean-tech startups fail. In addition, exits in clean-tech are still rare, so even when companies do succeed investors often have to wait several years to see a return. The fact that clean-tech investments are not very liquid is a major investment deterrent. To maintain investor interest in clean-tech despite this high risk, angel funds are becoming more popular. Investors can put money into a fund with a diverse portfolio of companies, thereby increasing the chances that investors will get a strong return with lowered risk. This does not address the problem of the lack of access to funding from private, non-accredited investors who want to support the growth of clean-tech companies. GreenAngel’s goal is to solve this problem.

GreenAngel Energy started as a Capital Pool Company (CPC), which allowed it to create a means to go public without undergoing a full-scale IPO. GreenAngel, a public green-investment vehicle owns a significant percentage (generally 10-20%) of six promising clean energy technology companies in British Columbia, all at different stages of growth. The companies have been hand selected by a veteran group of energy and technology Angel investors and are required to fit into the investment criteria of GreenAngel’s clean energy fund. The selected green energy companies have a hightened likelihood of making an early exit. They have all been successful at fund-raising, and in turn have increased GreenAngel’s asset value substantially since 2009. Now trading publicly on the TSX, Green Angel’s shares are inexpensive (trading at a slight discount to the net asset value of the portfolio) and accessible to anyone. Any investor can purchase a number of shares of the company and in turn be an angel in their own right – helping to build BC’s clean-tech industry.