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Environmental business: from idea to profit

Let's make a reservation right away that this article is not about charity (although we have nothing against this type of activity, because it can also bring people not only benefits, but also a good income - Dan Pallotta, in particular, writes well about this in his book "Uncharitable" and talks at TED), it is also unlikely to be of interest to environmentalists and fans of Greta Thunberg - we are for a reasonable approach and taking into account the interests of all participants in the process, because societies on our planet are much more complex and diverse than we can imagine submit.  

So, if you are pragmatic enough, but in your soul there is a desire to sow the bright,  eternal, then you probably noticed that the last few years, the topics of ecology and the well-being of the environment have become more and more obvious on the "agenda". Strictly speaking, they have always existed, but the prospects for earning income from them are changing somewhat: it has become easier.

Everything related to human health and ecology are issues traditionally solved at the state level, since they require significant finances. However, firstly, this model is often much more flexible in developing countries  - for example, in India, an ambulance is a private investment project implemented in several regions of the country. Secondly, in many regions of the world, local communities are quite strong, which have enough authority to solve pressing problems, including in the field of improving the quality of the environment - for example, they decide on a system for collecting waste and recycling it locally. Thirdly, modern solutions in the field of the environment increasingly have flexible pricing and are well oriented to local conditions, that is, they are more affordable not only for the authorities of individual countries and regions, but can also be implemented as a private commercial project that does not require huge investments. .

Any business is an investment project that can start at different stages, depending on the amount of own funds and ready-made solutions on the market. Next, we will go through the main steps.

Direction. First of all, you need to understand the direction in which you will develop your business. Speaking about the sustainable development of the environment, most often they mean biotechnology and "clean" technologies, such as  recycling, the use of renewable energy sources, the development of sustainable transport, the production of electric motors, development green chemistry, wastewater treatment and other industries related to ecology, energy and resource efficiency. You can find examples of such solutions in the "Technologies" section in order to better evaluate possible areas of work.  

Idea. You may have nothing but the most important thing - the idea of ​​​​how to make people's lives better and make good money on it. Next, you have to find the option of obtaining  "pre-seed" financing. We reviewed the most popular fundraising tools here.  You can succeed just by selling your idea, but you can take it a step further and move on to prototyping.

Prototype. This stage is not much different  from the previous one, however, you will obviously need to attract with a high probability not only money, but also personnel and production facilities to develop a future solution. This is potentially more expensive, but is still generally a relatively low investment step. One of the interesting options for making a profit at this stage is to enter the technology transfer network. They are ideal for scientists and companies that are focused on development and do not plan to independently conduct activities using a prototype in the future.

Support for product launch and market niche expansion. If everything worked out: you and your investors liked the idea  - It's time to enter the market and look for customers. However, the idea does not have to be unique - for example, you can find it in our technology catalog or find a contractor among companies that specialize in the production of equipment, for example, for waste processing. This stage requires significant investment and still carries great risks, since the demand may not be correctly estimated, and the time for the product to be launched may be chosen erroneously. The seed round, as a rule, can also be implemented using a wide variety of financial instruments. However, it is important not to forget that banks have been actively looking at ESG technologies in recent years, which makes it possible to get a discount on loan servicing, a discount on a business loan. By the way, provided that banks usually do not finance projects younger than six months, without accumulated sales statistics, this can be done, for example, by investment management companies. It is very important to remember that often business in the field of sustainable development is built on interaction with the population (for example, to collect waste and then resell or recycle it - it is necessary to organize the population, enterprises and institutions) - we have collected for you some easy-to-implement, but very effective tools and tips that will help you succeed. Often a business or local government needs not just to organize the population, but to change habits (for example, start sorting garbage instead of throwing it away in one bag) - this can be done quite simply if you stick to the plan.

Real business. This is where the early stages of project financing come to an end, the company earns, independently and steadily generates its income. Then the next stages of attracting investment funds from funds and "angels" may follow, up to entering the IPO, but it is worth striving for there only if you have reached the "ceiling", which does not happen very often. Do not forget that in the current environment, the presence of ESG ratings is an additional tool for attracting capital and reducing costs for your business. In general, if you have reached this stage - well done!

Of course, the business in the field of sustainable development and "clean" technologies has its own characteristics: it directly forms the quality of the environment and provides its customers with its expected level, for this reason it is based on scientific achievements, is closely related to constant research, and requires, as typically a substantial investment as the complexity of the product or solution grows. On the other hand, the basis of a business should be a good business plan - a clear understanding of the business owner of the risks and threats, as well as opportunities for growth and development in various circumstances. The trend of growth in demand for such technologies is stable, which means that we will be able to see more and more such solutions in the near future. The choice is yours!
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