Where To Find The 'Missing Middle' Of Capital For Sustainable Innovations

, I invest in and write about private equity and sustainability. Opinions expressed by Forbes Contributors are their own.

GRAFTON, MASSACHUSETTS – DECEMBER 4: Employees from a Radian Generation’s operations and maintenance team change out a faulty solar inverter along a row of solar panels December 4, 2017 at the family-owned Knowlton Farm in Grafton, Massachusetts. The 3.7 megawatt solar array is owned and operated by BlueWave Solar which feeds the generated electricity to homes and small businesses in nearby municipalities. (Photo by Robert Nickelsberg/Getty Images)

</div> </div> <p>I had heard of “Too Big To Fail”. But “Too Big To Succeed” was a new one for me.</p> <p>It was early in my investing career, and I was talking with a senior investor at a large sovereign wealth fund, the largest type of investors in the world. These and other large players have tens – if not hundreds – of billions of dollars to invest. And they are seen by many as a crucial part of the ultimate answer to the question: “Who will invest the trillions of dollars into sustainable technologies and infrastructure that are needed.”</p> <p>After all, from my vantage point as a direct investor into these types of solutions, I see a wide and deep pool of breakthrough ideas waiting for the necessary capital to become a reality, and also a lot of investible solutions that are already “ready for prime time,” with great economics, &nbsp;just waiting for investors to help roll them out en masse.</p> <p> </p> <p>From my perspective it seemed that for large institutional investors like this sovereign wealth fund manager, there would be endless investment opportunities. So I was surprised to hear he didn’t see things the same way, that in fact he saw his available investment options as being quite limited.</p> <p>It wasn’t that he doubted the effectiveness of sustainability solutions in sectors like clean energy, water, food, and waste-recycling. And it wasn’t that he doubted the market opportunity overall.</p>

<p>The surprising problem? Their minimum size of investment.</p> <p>When you are responsible for investing billions of dollars per year, you need opportunities to put significant amounts at work into each transaction. “If I even bring a fifty million dollar investment idea to my investment committee,” he told me, “they ask me why I’m bothering them with it.”</p>” readability=”47″>

GRAFTON, MASSACHUSETTS – DECEMBER 4: Employees from a Radian Generation’s operations and maintenance team change out a faulty solar inverter along a row of solar panels December 4, 2017 at the family-owned Knowlton Farm in Grafton, Massachusetts. The 3.7 megawatt solar array is owned and operated by BlueWave Solar which feeds the generated electricity to homes and small businesses in nearby municipalities. (Photo by Robert Nickelsberg/Getty Images)

I had heard of “Too Big To Fail”. But “Too Big To Succeed” was a new one for me.

It was early in my investing career, and I was talking with a senior investor at a large sovereign wealth fund, the largest type of investors in the world. These and other large players have tens – if not hundreds – of billions of dollars to invest. And they are seen by many as a crucial part of the ultimate answer to the question: “Who will invest the trillions of dollars into sustainable technologies and infrastructure that are needed.”

After all, from my vantage point as a direct investor into these types of solutions, I see a wide and deep pool of breakthrough ideas waiting for the necessary capital to become a reality, and also a lot of investible solutions that are already “ready for prime time,” with great economics,  just waiting for investors to help roll them out en masse.

From my perspective it seemed that for large institutional investors like this sovereign wealth fund manager, there would be endless investment opportunities. So I was surprised to hear he didn’t see things the same way, that in fact he saw his available investment options as being quite limited.

It wasn’t that he doubted the effectiveness of sustainability solutions in sectors like clean energy, water, food, and waste-recycling. And it wasn’t that he doubted the market opportunity overall.

The surprising problem? Their minimum size of investment.

When you are responsible for investing billions of dollars per year, you need opportunities to put significant amounts at work into each transaction. “If I even bring a fifty million dollar investment idea to my investment committee,” he told me, “they ask me why I’m bothering them with it.”

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