When David Miller and his three partners founded the Boston-based Clean Energy Venture Group in 2005, the plan for this hands-on coalition of angel investors was to focus on one start-up a year. By April, CEVG was working on its fourth investment of 2016, which will bring the grand total to 29.  

“We’re really amazed with our deal flow,” says Miller, who serves as the organization’s executive managing director. “We’re seeing great entrepreneurs coming into the space, whether it’s because they care about climate change or see business opportunities or both. We’re seeing new technologies and new business models being developed, which is creating more and better companies.”

The coalition—made up largely of entrepreneurs and investment professionals, with some capital from family offices—focuses on companies in the Northeast that have the potential to substantially reduce environmental damage from the production or use of energy. Energy efficiency makes up a big portion of CEVG’s realm, the low-hanging fruit as Miller puts it, but the group also invests in a number of clean-energy-enabling technologies. For example, VCharge enables energy storage, Solantro creates semiconductors for renewable power and EnergySage is an online comparison-shopping marketplace for solar PV systems.

Betting that the world’s transition to a low-carbon economy will not only benefit society but also their pocketbooks, a small but growing number of wealthy investors have begun pouring serious money into clean energy. And the opportunities they’re finding go far beyond renewables, encompassing a wide range of enabling businesses and technologies. This new breed of impact investor challenges the conventional wisdom about impact and profit, arguing that the mission and the money go hand in hand—if you’re making concessions on returns, then you won’t actually fix a problem, they say.

“If it’s a company where there’s a tradeoff with returns, then that’s not a company we’re going to invest in,” says Miller. “There’s absolutely a roll for nonprofits and philanthropies to play, but we don’t like the murky area in between, where you’re investing to make money, but the returns are lower because you’re doing greater good.”

Venture capital, which provides the seed money for risky start-ups, is one of the two broad categories of clean-tech investment, along with project finance, which funds the likes of utility-scale wind and solar farms, water-desalination plants and energy-efficiency projects. Additionally, a smaller number of funds and private equity investors include “energy access” in their portfolios, investing in financial services that provide microloans to individuals and small businesses in emerging markets. Like the start-ups CEVG invests in, these companies are enablers. 

“We’re looking at how inclusive financial systems can enable the growth of renewable energy in emerging markets,” says Adam Wolfensohn, co-managing partner of New York’s Encourage Capital along with Jason Scott. “Much of the renewables growth in these markets is restrained not by technology but by financial barriers, like credit evaluation and currency.”

The duo formed the money management firm roughly a year ago by merging Wolfensohn’s private equity fund, which specialized in financial services and clean energy in developing countries, with Scott’s Eko Asset Management Partners, which focused on environmental markets such as sustainable fisheries, carbon and water. Encourage manages money for wealthy investors and foundations interested in solving critical environmental and social problems. To do so, Wolfensohn says, scale has to be part of the equation. 

“These are massive issues we are dealing with, and from an impact perspective, the only way we actually get to the scale to make a difference is if the investments are commercial” he says. “You can use philanthropy and concessionary capital to get there, but the end goal has got to be commercial”

So what sorts of returns can investors expect?

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