Big money enters the chat
The GreenTech market is one of the fastest progressing sectors right now, with new companies coming up every day and millions of investments poured into it. With bigger pressure from governments and lawmakers all around the globe, more policies are put in place in order to ensure sustainability and a greener future for the planet and the humankind. But with the pressure on enterprises to adhere to the newly set standards, comes a big shift in the market.
Due to policies being put in place, many corporations need to rethink their strategies and undergo a transition. That’s why you have many traditional energy and oil focused companies entering the chat of sustainability. These companies switch from, as an example, generally very polluting sectors such as oil, to electric vehicle charging. They enter the space built by startups, scaleups and now post-IPO companies who worked on organizing it from the ground up.
There is a bigger issue of ethics in situations like this, but this is not what we really want to discuss. The main question today is: are big companies entering the Greentech space a positive, or a negative? Let’s investigate it together.
Pros: Big money = big investment in technology
With big, well-funded companies coming into the picture, the capital that stands behind them is beneficial to the development of technology in the market. Because these companies have been profitable for years, they can invest this money into new projects focused on either developing new, not tested before solutions or coming up with new ones, without that much of a risk like in the case of a small start-ups that just entered the market.
In situations where the company decides to venture out from their previous sectors and go into new ones, due to their networks and the sheer amount of market recognition and awareness, it can be easier for them to recruit the talent necessary to progress. They do so, purely based on capital capability which means they can afford to pay higher wages for the more senior and executive positions, which is something that smaller companies, startups in particular might have more issues with. With big names also comes prestige, so many might be interested to take a position based on the fact that the company is well known and well-established, which a lot of the time reduces the risks of being laid-off from a job if the business doesn’t go well.
That obviously doesn’t imply that situations like this are always the case, or that it’s hard to attract and retain talent if you’re a startup. The second one is quite the contrary if done well! But what it means is that big players can spend more on developing certain technologies, because they do not have to constantly worry about investments, equities and venture capital as much as smaller companies do. Sometimes, the well-funded companies might even have professionals already on site willing to take part in projects more focused on the GreenTech market.
After all, the market can benefit from it because it ensures that the technology is undergoing constant progress and innovation.
Pros: Competition drives innovation
The more companies in the market, the more competitive it gets. As a result, more innovation is brought in to drive the mission, but also outdo the competitors. Considering that the efforts related to the GreenTech market and sustainability, in general, need to be maximized in regard to fighting the rampaging climate crisis, it could exponentially drive the market forwards. Looking at the previous point of big companies having generally more money to invest in new technological ventures, it might seem like smaller companies are no competition to the big players, but it’s quite the contrary. It’s the small business that wants to disrupt the traditional schemes of the market, and in return, it forces the well-established companies to compete with the new innovators.
Pros: Room for collaboration
Big companies entering the GreenTech market could mean more room for collaboration between the bigger and smaller players in the market. Although like in every market ever in existence the competition is high (and as we established – that is not a negative) the unified mission of accelerating the transition to a sustainable tomorrow is a playground for collaboration, and it has already been happening. For example, at the end of July 2022, Lightyear, a Dutch solar car manufacturer entered a partnership with a hypercar manufacturer Koenigsegg, to share patented technology and help Lightyear with the development of their new models. The same happened with the collaboration between Bugatti, a Volkswagen-owned luxury hyper car manufacturer and Croatian Rimac, an electric sports car manufacturer, and these two examples are just from the EV subsector of the GreenTech market. There is so much room for collaboration, co-operation and partnership, in order to develop the most efficient ways of combating the climate crisis.
Cons: Possibility of domination and monopoly in the market
With big players entering the market, it might pose a threat to the companies that already exist within it, or potential new ones who want to participate. Because they have budgets way bigger than startups and scale ups, they might crush the competition and leave no space for others to partake. This might lead to complete domination and monopoly in the market, which can be dangerous if no alternatives are provided. Start-ups and scale-ups are necessary for the market to progress, as they’re generally the main innovators. If they get pushed out of it, the market can stagnate, and in the end, this leads to a lack of development of new technologies, which will slow the green transition to a big extent or completely halt the efforts of it. With no competition, there’s no innovation (or
at least it becomes very limited, as the companies don’t feel the threat of going out of the loop).
Con: Only focus on profit, instead of the mission
The reason why startups and scaleups are essential, is because despite, wanting to make money, they want to genuinely have an impact and bring positive change into the world. The GreenTech market space is extremely mission-driven, which means that majority of the startups are set up with the goal of advancing the sustainable transition. With big companies, especially ones trying to transition from the polluting sectors into so-called renewables, the question is if they only do it for the profits, or if it’s a genuine intention to move away from destructive-for-the-planet sectors and advance the technology necessary to fight climate change. Doing it just for the profit ignores how the market came to be in the first place, and it can be dangerous to the further innovation and advancements possible, if they’re deemed “too risky” or “too budget consuming”.
As mentioned before – startups don’t ONLY do it for the mission, but it is a main driving factor necessary for the high-level of innovation possible, especially in a market like GreenTech.
So, you may be asking – what is the general consensus of this discussion? Is it just a big no or is it a big yes? Well, the reality is, as with the majority of the things in life, that the answer is not black and white, but somewhere in the middle. Having investigated the pros and cons of big companies entering spaces such as GreenTech, it can be beneficial for them to do so, but only if approached with caution. Big companies can potentially help with the acceleration of the green ‘tomorrow’, if they don’t only focus on the profits, but on the actual reasons why they should enter in the first place.
Here at Storm4, we work with startups and scaleups in the GreenTech sector wanting to bring positive impact. Regardless of which funding stage you’re currently in, and which sector you’re operating in, we can help you with your hiring needs. As a specialized recruitment agency, we proud ourselves with working with the best talent on the market. Don’t hesitate to get in touch in case you’re looking for a growth partner in your journey to greener tomorrow!