Green Jobs at Green Start-up Companies

Start-up companies have always been the engine of growth of the American economy, and the green economy is no exception. It is growing much faster than any other sector, and wages in the green economy are 13% higher than in other sectors.

Of all the company profiles created on TheGreenJobBank, more than one in three is a venture-funded company. Some of the ones hiring the most are:

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To be successful, startups 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 (such as Khosla Ventures) and most investments in green companies are led by large venture capitalist firms that have created a "green" or "clean tech" side of their business. Here are the top 10:

Please note that the number of portfolio companies given in the list above is the number of portfolio companies that have a profile on TheGreenJobBank.

As you can see in the list of start-ups above, it's quite common for them 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 just starting, 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.

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 implies that job destruction exceeds job creation at existing businesses and highlights the importance of business startups for job creation in the U.S. economy."

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.

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