The Important Role of Venture Capital in the Development of the Recycled Art Industry

Waste is being generated by the human societies since ancient times. Ironically waste was not a problem for the environment when men were primitive and uncivilized. Waste is a problem of the modern civilized society. Materials used and waste generated by the traditional societies were little and ‘simple’ while those by the modern human societies are large and ‘complex’. With modernization in development drastic changes came in our consumer habits and life-style and in every activity like education, recreation, traveling, feeding, clothing and housing we are generating lots of wastes. So, to encounter this problem several organization has start their pace to utilize the waste to produce a product which contribute to their economic growth. Venture capitalist (VC) has a key role in nurturing entrepreneurship and a new venture. As such venture capital may be viewed as an important catalyst to develop sustainable business . Role of finance is the most crucial part in promoting sustainability and cleaner production in business more broadly. One of the common misconception has been rise by the public is that the cost for creating sustainable business are quite expensive. Due to unawareness of venture capital role by the public will tend a slow movement of achieving goal toward preservation of environment. This will create a challenge as a venture capital who prioritize environmental, society and economy goal rather than having intention in maximizing economic return.

Venture capitalist are key in the emergence of business where they can make start-ups grow faster, create more value and generate more employment and innovation. Venture capitalist may be view as the pioneer to the emergence of new business, as their role is to select ideas presented to them by entrepreneurs. They influence entrepreneurship by acting as ‘scouts’, identifying and selecting future potential and as ‘coach’ who can help realize that potential. Venture capitalists typically invest in ‘riskier’ businesses and support start-ups financially through their expertise and networks, typically after angel investors or ‘friends and family’ have made their initial investment in the business and before banks or private equity, which might find investment too risky. The hope is to make a profitable deal through mergers and acquisitions or initial public offerings (IPO), where the venture capitalist typically sells its shares in a venture. The relationship between venture capital and entrepreneurs is long-term and therefore important. So, this paper investigates the contribution of the specific niche of sustainable venture capital investors in encouraging sustainable entrepreneurship. These investors deliberately invest in sustainable businesses, because they are aware of the opportunity and necessity of creating business with triple bottom line return.

There are several contribution of venture capitalist towards recycled art industry. One of the contribution is provide fund to an eco-friendly company that required some fund to create an art product. The company that well known as company that produce product using recycle material is ROTHY’S company where they use recycle plastic to make fashionable shoes that are designed for women on the go . This shoes were knitted from strand of plastic woven together which help customer avoid walking around in wet shoes all day. The bright side from this business is this business provide employability to homeless where they can contribute by collecting trash and separate the useful part from trash. From this initiative, homeless can generate their self-income, thus reducing homeless problem and create a society that can stand by its own. Fund from venture capitalist can aid economy growth of a company. This is due to product from recycled material have its value if enhance with creativity. For example, Adidas company collaborate with non-profit organization which is Parley to tackle marine plastic problem by creating a shoe that made up from recycled plastic. Currently, this shoes brand was sold globally and make more billions of dollar revenue for just intend to save the ocean. Impact from this achievement is the network of business chain will emerge thus, increase income for the pioneer company.

But there is a challenge that venture capitalist may face during developing the recycled art industry, one of them are globalization of the industry. Globalization of recycled art industry and worldwide market share is not playing in American and European country favor. This is due a country like China offer low-cost manufacturing as well as abundant of government subsidies and incentives. So, the impact from this scenario is the share price drop gradually as the public and private investor shift their intention to invest in more profitable company.

Secondly, the challenge that may face by venture capital are financial gap. Even government have a scheme that can aid the venture capital to develop recycled art industry, however government financial scheme not able to match the investment costs required for scale-up recycled art projects. Lenders and investors alike will impose more stringent lending and investment criteria, making the cost of financing higher than that of government financing scheme. Also local banks are not familiar with green projects and have insufficient capacity to evaluate them. As a result, they offer few, if any, financial products that specifically to finance renewable energy projects and require more substantial technical assistance to develop such products from art and technology experts. Financial institution not only prefer green projects with high certainty of profits but also require greater collaboration between borrower and industry forwarder to ensure feasibility of a project. Moreover, lack of ‘near cash’ collateral and poor credit standing also contribute to the difficulty of obtaining credits by many green investor. That’s mean financial issue is the main hindrance for venture capital to invest in recycled art industry.

In conclusion, role of venture capitalist very paramount in developing recycled art industry in conjunction to improve the life quality of society, keep the environment safe in long-term period as well generate income from business chain. When implementing green growth effort, it is normal that every pioneer of the mover will face a lot of challenge and hindrance in make a change in global epidemic in environmental problem. However, once the project succeeds, it will give a lot of benefit to society and high return of investment for prolong time.