Perceived Higher Cost a Barrier for Introducing Green Products
Builders who are seeking at least $1 million in funding from venture capitalists to help them bring new green products to the marketplace need to come to the table with a professional business proposal and be prepared to show how their respective products or services stand out from those from their competitors, said panelists at last month’s International Builders’ Show in Las Vegas.
“When writing a proposal to venture capitalists, you must be able to specify in great detail the description of your technology, why it’s better than imitators and who are your customers and competition,” said Randy Cantrell, manager of innovation research at the NAHB Research Center. “You should be prepared to show a comprehensive financing plan and present professional-level market research.”
Noting that venture capitalists review more than 1,000 products annually while funding only approximately 10% of the submissions, Cantrell said that the best way to impress potential investors is to show how your new technology offers a huge market potential, to demonstrate an understanding of your customers’ needs and that you have already attained initial sales with your new product or technology.
Venture capitalists want “to see that your show is up and running but you need money to expand the business,” said Cantrell.
He also cautioned that those who are fortunate enough to receive funding from venture capitalists will need to “play by their rules.”
Venture capitalists, Cantrell said, can be expected to recruit an executive management and sales team and other industry experts to join a business and seek up to a 50% ownership in the business venture. Their goal is to build sizable, valuable, healthy and profitable companies.
The biggest barrier to bringing a new green product to market is the perceived cost, according to Dr. Annie Pearce, assistant professor in the Myers-Lawson School of Construction at Virginia Tech.
In a 2006 study conducted by Virginia Tech, more than 60% of the respondents believed that building green would result in higher costs versus conventional building.
The actual costs were much more on par, she said. “There is a misconception. Green is not really more expensive,” said Pearce.
On the certification front, Tim Smith, associate professor and director of the Center for Sustainable Enterprise Development at the University of Minnesota, said there is a plethora of green building certifications in the marketplace.
“Independent certifications may be adding to market confusion by competing with each other in some areas,” he said.
The apparent gold standard, according to Smith, is the American National Standards Institute (ANSI), an accreditor of consensus standards, which announced last month its approval of the National Green Building Standard.
For information on green home building resources from NAHB, e-mail Kevin Morrow, or call him at 800-368-5242 x8375.
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The Future of Residential Construction Is Green
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Attend the National Green Building Conference in Dallas
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‘Building Greener Neighborhoods’ Available at BuilderBooks.com
“Building Greener Neighborhoods,” available through Digital Delivery at BuilderBooks.com, shows those involved in building new communities the advantages and rewards of saving, planting and transplanting more trees in their developments.
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‘Profit from Building Green’ Available at BuilderBooks.com
“Profit from Building Green — Award-Winning Tips to Build Energy Efficient Homes,” available through BuilderBooks.com, showcases what energy conscious award-winning builders are doing, provides innovative energy-efficient features and covers successful techniques for building this niche market.
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