Where Are The Green Jobs?…At Venture-Funded Start-Up Companies

Startup companies have always been the engines of growth of the American economy, and it is even more the case in the green sector.

Startup companies are more nimble and innovative and, according to a study by the Kauffman Foundation they create many more jobs annually than established companies.  The study shows that “the fraction of employment accounted for by business startups in the U.S. private sector over the 1980-2005 period is about 3 percent per year. This exceeds the 1.8 percent average annual net employment growth. This pattern highlights the importance of business startups for job creation in the U.S. economy.”

image via Shutterstock

 

To be successful, start-up companies need capital, and in new, leading edge areas like green technology, capital needs are often much higher than in more established sectors. That’s where angel investors and venture capital (VC) firms come in. In the Green industry, there are few dedicated VC firms and most investments in green start-up companies are led by leading venture capitalist firms that have created a “green” or “clean tech” side to their business. The leading Green VC’s include the following companies:

Khosla Ventures (42 green portfolio companies)

VantagePoint (31 green portfolio companies)

Kleiner Perkins Caufield & Byers (28 green portfolio companies)

New Enterprise Associates (NEA) (19 green portfolio companies)

Rockport Capital (19 green portfolio companies)

Braemar Energy Ventures (15 green portfolio companies)

Draper Fisher Jurvetson (DFJ) (15 green portfolio companies)

Sequoia Capital (10 green portfolio companies)

Of all the company profiles created on The Green Job Bank, more than one in four is a venture-funded company. Some of the ones hiring the most are funded by:

A123 Systems funded by Sequoia Capital and Braemar (30 jobs)

Amonix funded by Kleiner Perkins. (22 jobs)

Comverge funded by Rockport. (17 jobs)

EcoFactor funded by Rockport. (9 jobs)

EnerNOC, Inc. funded by Foundation Capital, Braemar and DFJ (40 jobs)

Enphase Energy funded by Kleiner Perkins and Rockport (20 jobs)

Illumitex funded by NEA (9 jobs)

Loxus funded by Braemar (11 jobs)

OPower funded by Kleiner Perkins and NEA. (53 jobs)

Solar City funded by Draper Fisher Jurvetson. (100 jobs)

As you can see in the list above, it’s quite common for startups to raise money from more than one VC, and there are several reasons for that. First, the initial round of investment (called “Series A”) is often smaller, and attracts different VC’s than the second round (or “Series B”), which is usually an “expansion” round, and is much larger. Second, some VC’s don’t like to invest alone, and want to spread the risk by asking others to participate in the round.

It is also interesting to note that while Khosla Ventures’ portfolio of green companies is the largest, the number of green jobs created by its portfolio companies is relatively small, especially compared to Kleiner Perkins.  A reasonable explanation is that Khosla invests in the first round of early stage companies that are smaller, and create just a few jobs, while Kleiner Perkins invests in the 2nd or 3rd round of later stage companies that have already proven their products in the marketplace, and are in a rapid expansion phase.

Start-up companies are where the jobs are created, and they are the most exciting jobs, at the leading edge of innovation, creativity, and risk. Salaries at these venture-funded start-ups can be lower than industry average, but the compensation package often includes stock options, so if the company succeeds and is acquired or goes public, there’s a big pay-off for all employees.

So, if you have some appetite for a bit of risk, a relaxed but fast paced environment, hard work and some fun, don’t hesitate!  Look for a job at a green start-up company!

About the author: Bernard Ferret is the founder and CEO of The Green Job Bank.  He is a software engineer and serial entrepreneur who has started several software and web companies, and has raised millions in venture capital.  He lives a very green life in Northern Baltimore County, Maryland, with his wife and 2 children.  He holds a MS in Physics from the University of Provence, France, and an MBA from the College of William & Mary, Virginia.

  • http://twitter.com/StringHub StringHub

    Just wanted to throw out some of the questions that you need to answer before applying for venture capital funding.n1. Do you have sales, users, or signed contracts? Ideas donu2019t get funded2. Do you have an experienced management team?3. Are you incorporated? VCu2019s wonu2019t invest in a sole proprietorshipu2026 duh4. Do you have a powerful business plan executive summary5. Do you have a full business plan in case your executive summary does its job?nThe rest of the top 10 questions can be found atu00a0http://www.businessplanexecutivesummary.com/2011/01/ready-for-venture-capital-top-10-questions-to-ask-before-applying-for-venture-capital.html

  • http://pulse.yahoo.com/_LUVOKWT6YIVTBG3UOWGOQOLVMY Stuart Hampton

    I appreciate the list of the green venture capital firms. It would be great to get more publicity about the successful initiatives and portfolio companies they are funding. Right now the green news space is dominated by the government-supported Solyndra debacle and the half billion dollars of tax-payersu2019 money that seems to have been lost in that misadventure. http://www.bizmology.com