# Perspectives on Private Investment in Innovative Remediation Technology Companies 

Prepared by the:

Environmental Capital Network

Center for Environmental Policy, Economics & Science

416 Longshore Drive

Ann Arbor, MI 48105

734-996-8387

With Support from the

Technology Innovation Office

US Environmental Protection Agency

under Assistance Agreement No. X-827254-01-0

December, 1999

## Perspectives on Private Investment in Innovative Remediation Technology Companies 

**I. Introduction**

The purpose of this report is to develop a framework for the
Environmental Capital Network (ECN) and for policy makers to
significantly accelerate the successful commercialization of innovative
clean-up, treatment and site characterization remediation technologies.
More specifically, ECN has attempted to identify and understand the
steps that can be taken to increase the quantity and speed of private
equity investments in early stage companies developing and
commercializing innovative remediation technologies.

The basic premise of this report is that the ability of small companies
to successfully develop and commercialize innovative remediation
technologies, is thwarted, to a large degree, by a severe lack of
private equity capital. A small company\'s capital needs almost always
substantially increase as the company moves a technology from research
through demonstration, to first commercial success, and finally to full
commercialization and profitability. There is, however, a dearth of
needed seed and startup private capital available to remediation
technology companies to carry them through these early stages of
development, presenting the small company with a break-down in the
supply of capital required to survive and prosper.

This early stage period in a company\'s development cycle has been
termed the \"Valley of Death\". The valley of death is the gap that
exists between the time when a company no longer has any personal
resources to draw from to support their business and the point where
professional sources of capital become a realistic option. The lack of
capital within this gap presents a real challenge for companies in
virtually every industry.

Most innovative technology companies attempt to raise startup capital
from individual, professional and corporate investors. Interestingly,
most have an extremely difficult time accessing these early stage funds.
The startup stage is characterized as a high risk period in a company\'s
development cycle. Most professional investors prefer to invest in a
company\'s later (and hence lower risk) stage of development.

The problem of the \"valley\" is particularly daunting for remediation
technology companies (RTCs), because of the near total *absence* of
individual, professional and corporate investors willing to invest in
companies commercializing technologies in the remediation marketplace.
The absence of willing investors greatly diminishes the opportunities
for remediation companies to raise the capital they need to
commercialize their innovative remediation technologies.

The trends within the capital marketplace are not encouraging. In 1993,
five percent of US venture capital firms actively invested in the
\"environmental\" field, at that time a sector consisting largely of
remediation related companies[^1]. Today, ECN estimates that fewer than
2% of venture capital firms actively consider RTCs[^2]. ECN\'s review of
the PricewaterhouseCoopers\' MoneyTree Reports, which documents many of
the venture capital investments made in 1998, yielded slightly more than
\$500,000 in venture capital investment in RTCs. While this statistic
undoubtedly understates the actual level of investment activity, because
it does not include individual investments, corporate investments, and
many small venture capital firms, it is certainly indicative of an
extremely low level of private investment today in RTCs.

A key premise of this research, therefore, is the critical need to
understand more clearly what can be done by ECN and others to enhance
the *willingness of private investors to place capital* in early stage
remediation technology companies. We believe that the expansiveness of
the valley of death can most effectively be made smaller by increasing
the number of investors active in the remediation marketplace.

**II. Research Methodology**

This report uses four market classifications. ECN considers the
\"remediation market\" to be a market within the much broader
\"environmental industry.\" The remediation market itself is divided
into several market \"sectors,\" including the clean-up, treatment, and
characterization sectors. These market sectors are divided into multiple
market \"segments\", each defined by a different cluster of customer
types. For purposes of this report, a \"remediation technology company\"
is defined as a firm that is developing and/or commercializing a
technology that will be used by customers in one or more remediation
market segments.

The industry, market, market sectors and market segments considered in
this report are listed below.

**Table 1. Classifications of the Environmental Industry and Remediation
Market**

[Industry Market Sectors Segments]{.underline}

Environmental

Remediation

Clean-up

Military

National Labs

Superfund

Non Superfund State/Local

Corporate Property

Brownfield Projects

Spills, Emergency Response

Treatment Market

On site Treatment by Industry

Off site Treatment, Storage, & Disposal

Waste Handling, Hauling

Characterization Market

Site Assessment/Investigation

Site Monitoring

Analytical/Lab Services

On site Industrial Monitoring

For our research ECN sought input directly from individual, professional
and corporate investors who have invested or have seriously considered
investing in RTCs. ECN utilized information from two complementary
sources: (1) A survey of qualified investment professionals who are
familiar with the remediation market, who have made investments in RTCs,
and who serve as \"gatekeepers\" for other investors, and (2) Internal
ECN historical information about how investors evaluated specific RTCs
within the ECN network.

ECN prepared and distributed a survey entitled \"Investor Interest in
Hazardous Waste Remediation Companies\" to individual, professional and
corporate investors. The survey was designed to enable ECN to better
understand why investors do invest in RTCs, why they hesitate, and how
third parties might help them be more willing to invest in such
companies.

A summary of the results of the survey are presented in tables provided
in Attachment A. Where appropriate, the report\'s text includes
references to tables in Attachment A which support the observations made
in the report. A copy of the survey itself is included as Attachment B.

ECN collected completed surveys from a group of 15 investment
professionals. More than 85% of those responding directly invest capital
into early and expansion stage environmental technology companies.
Nearly 45% have tracked the remediation market for 10+ years, while a
total of 80% have tracked the market for at least 3 years (Tables A.1
and A.2).

It should be noted that these results should not be considered
statistically significant, due to the non-random nature of the surveys\'
distribution, its small sample size, and the limited number of
responses. Nonetheless, ECN feels that the results are indicative of the
opinions of key people within the investment community who are familiar
with this sector and whose actions and attitudes shape the opinion of
others.

The investors indicated that they were, on average, \"somewhat
familiar\" with all of the market segments considered, with 40%
indicating that they were \"familiar\" or \"very familiar\" with the
following market segments: Superfund; Non Superfund State/local Cleanup;
Corporate Properties; Brownfield Projects; On site Industrial Waste
Treatment; Off site Treatment, Disposal & Storage; Waste Handling &
Hauling; Site Assessment & Investigation; and On site Industrial Waste
Monitoring (Table A.3).

More than 80% of the investors that had seen 11 or more investment
proposals from RTCs since 1995, had considered 3-5 of those proposals,
and had invested in 1-2 RTCs. Over half of the investors had placed
\$2-5 million of capital in RTCs (Tables A.4 and A.5).

ECN also examined and summarized extensive detailed comments on RTCs
that investors have provided ECN since 1997. These comments were drawn
from investor reviews of business plans submitted to ECN by remediation
technology companies that applied to ECN\'s Environmental Capital Forums
and that have submitted their business plans for our Business Plan
Review Service.

**III. Research Findings**

This section presents the key findings of this research effort, along
with some analysis associated with the findings.

**Finding #1: Investors\' assessment of overall investment opportunities
in the remediation industry is not optimistic.**

Although a number of investors feel bullish or somewhat optimistic in
their assessment of investment opportunities in the remediation market
over the next 3-5 years, eighty percent of investors indicated that they
were neutral, not optimistic or pessimistic regarding the market\'s
clean-up and characterization sectors, and more than 60% felt the same
way about the waste treatment sector (Table A-7). Not surprisingly,
investors tend to invest in growing markets and industries that they
feel positively about. This finding suggests that the challenge to
bridge the valley of death, inherent within the remediation market, will
be significant.

**Finding #2: Investors see poor prospects for growth in the remediation
market.**

It is of primary importance to investors that the companies in which
they invest grow in sales and profits. Investors are successful only
when their interest in a company is sold to another party for a
significantly higher price than it was purchased for. Future stock
prices are, to a large part, driven by a company\'s growth in sales and
profits. Without such growth, the investor stands to lose all or a major
portion of his investment.

As a result, investors, particularly venture capitalists, are attracted
primarily not only to companies that are growing, but to industries that
are growing. As stated by Bob Zider in his article \"How Venture Capital
Works\" in the Harvard Business Review,

> Venture capitalists must earn a consistently superior return on
> investment in inherently risky businesses. The myth is that they do so
> by investing in good ideas and good plans. *In reality, they invest in
> good industries \-- that is, industries that are more competitively
> forgiving than the market as a whole*. (Italics added)[^3]

Given this perspective, it is instructive to note that approximately
three quarters of the investors surveyed felt that the market growth
prospects for ten of the market segments[^4] were declining, stagnating
or slowing. Roughly two thirds of the investors felt that the Non
Superfund state/local, the corporate properties and the brownfield
market segments were also declining, stagnating or slowing.

Investor perceptions appear to be well supported by historical evidence.
The overall environmental industry grew rapidly in the late 1970s and
1980s, driven in large measure by new environmental regulations. This
expansion spanned numerous rapidly growing businesses, many of which
received considerable investment capital. In the 1990\'s, however, the
market began to steadily contract. The reasons for this are well known.
They include a fundamental shift in U.S. environmental policy, a growing
emphasis on economic instead of regulatory drivers to improve
environmental practices, increasing emphasis on pollution prevention
instead of pollution control, and a focus by manufacturers on cutting
costs.[^5]

As an example, revenues in the hazardous waste management and the
remediation/industrial services industries actually declined from a
total of \$17.4 billion in 1990, to \$17.1 billion in 1998. According to
one measure, market share within the broader environmental industry
declined from 11.6 percent to 8.9 percent over this same period.[^6]
Indeed, the market sizes of the hazardous waste treatment and
characterization shrunk in absolute terms throughout most of the
1990\'s.[^7]

**Finding #3: Investors are reluctant to invest in RTCs primarily
because of concerns about the remediation market and the market\'s
potential negative impact on the profitability of their RTC
investments.**

The decline of market demand for remediation technologies combined with
growing, and now excess, remediation capacity in the market has created
a situation in which firms can grow significantly only through
consolidation. As a result, the primary business strategy for growth in
the remediation market has been and still is through consolidation, not
technological innovation. The pace, scope and opportunity of
consolidation in the industry is considerable.

The remediation market is dominated by highly fragmented end-users
serviced by large, mature companies which have staked out market share
in a stagnant market and are growing themselves primarily through
consolidation. This reality can be seen in the market\'s clean-up sector
for example. The world\'s four largest firms (Bechtel, ICF Kaiser,
Fluour Daniel-GTI and OHM/IT) have combined worldwide sales of nearly
\$2 billion, according to Mary Anderson, a consultant with the McIlvaine
Company. The worldwide market consists of more than 1,000 companies with
annual remediation revenues of more than \$1 million, and 14,000
companies worldwide have remediation clean-up revenues of more than
\$100,000.[^8] Consolidation is likely to continue given the market\'s
limited growth and highly fragmented nature.

Given this situation, RTC\'s (and their investors) have two options for
growth: (1) Merge or license technologies to other RTCs or to larger
companies in the industry which already have significant market share;
or (2) Focus on relatively small niche markets where they can profitably
sell their products and services.[^9]

Not surprisingly, when asked to identify the primary reasons they
hesitate to invest, nearly half of the reasons given were related to the
ability of RTCs to *gain entry and grow in* the market place. Investors
were most concerned about the potential of the RTC to penetrate the
market, the high barriers of entry for a startup into the market, and
concern for the overall lack of market growth (Table A-9).

Closely connected with concerns about the remediation market itself were
concerns about the actual investment opportunity. Nearly 30% of the
concerns cited revolved around RTC profitability and the ability to
\"cash out\" of the investment either through an initial public offering
(IPO) or acquisition. The concern investors have about the profitability
of RTCs is well founded. According to recently conducted analysis, gross
profit margins in the industry have declined steadily from 28.1% in
1988, to 18.3% in 1997. Net profit margins have declined from 10% in
1988, to 2% in 1997. This compares very poorly with many other
industries where gross profit margins typically range from 40 to 60% and
net profit margins range from 20 to 30 percent.[^10]

This concern is also based, in part, upon particularly visible and
unfortunate investor experiences with RTCs. In 1993, five RTCs
(Catalytica, Energy BioSystems, Ensys, Purus, and Molten Metals
Technology) went public only to see their stock prices plummet from
their original IPO prices because their lengthy technology development
processes caused their earnings to fall far below initial projections
and analyst expectations. The experience of these companies remains with
investors as roughly ten percent of the concerns cited were related to
remediation technology itself, particularly the difficulty and costs
associated with verifying technology performance, costs that directly
reduce a firm\'s profitability.

Investors also indicated that their reluctance was heightened because of
the market\'s reliance on government regulation, the lack of permit
reciprocity and the lack of enforcement of existing standards.
Furthermore, others have noted that the movement toward government
policies that increase \"flexibility\" primarily through greater
\"cooperation\" with regulated parties will often favor the use of
containment and natural attenuation strategies instead of innovative
technologies.[^11]

In addition, concerns about market penetration and RTC profitability are
reflected in the comments investors have made about RTCs which have
applied to present at ECN\'s Environmental Capital Forums. The most
frequently cited concerns revolved around a limited and/or very
competitive market, followed by concerns about a weak management team.
The order of this is interesting, as concerns about management are
typically the most frequent concern, followed by concerns about the
market place for technology companies in most other industries.

**Finding #4: Investors see some promising drivers in the remediation
market that could positively affect their consideration of investing in
RTCs.**

Investors felt that the three most promising drivers in the remediation
market are: (1) The emergence of new niche market opportunities that
have new potential for sales and profit; (2) The growing flexibility and
acceptance of new technologies by the regulatory community; and (3) The
availability of new remediation technologies which are better, faster
and cheaper. (Table A-10).

A significant number of the investors also felt that the growing
brownfield market, increasing remediation expenditures by Fortune 1000
companies, as well as the growing international market for remediation
services and increasing expenditures by government are helping to shape
a more promising future for RTCs and are creating new market growth
opportunities (Table A-6 and A-10). Investors also noted that the use of
remediation related technology in non-remediation applications thereby
creating new markets and lowering production economies of scale for the
RTCs.

It is important to note that investors are encouraged by growing
willingness of regulatory permit writers to accept the use of new
technologies. Increasingly, this growing willingness to find innovative
alternatives to slower and more costly traditional remediation
technologies is creating access to market opportunities for innovative
technologies that were previously not available. It is also noteworthy
that when investors considered RTCs\' strengths during our Forum
application process and in our Business Plan Reviews, the most cited
strength noted was the apparent market need for the technology, followed
by notes of a good management team and of superior, proven technology.

Interestingly, several investors identified the growing availability of
insurance policies to cover project and technology risk as a positive
factor. While liability concerns are often a reason used to avoid
innovative technologies,[^12] these new insurance policies are also
making it easier for larger firms to both use and transfer the use of
innovative technologies.

The drivers mentioned above are perceived as affecting the remediation
market over the next 3-5 years. In the long term, another driver may
emerge as a crucial foundation to the eventual recovery of this market.
The long term premium for clean water and clean land will increase as
global population climbs past 6 billion and unspoiled water and land
become scarcer. The impact of this driver is already being seen in
Europe and Asia, where demand for remediation services and technologies
is growing more rapidly than in the U.S.[^13]

These promising drivers have some interesting implications for
innovative technologies. The use of bioremediation and phytoremediation
cleanup technologies, for example, is rapidly growing. According to the
[Site Remediation World Markets Report 1998-2000]{.underline}, published
by the McIlvaine Company, worldwide demand for bioremediation and
phytoremediation will grow from \$870 million in 1997, to \$1.1 billion
in 2002. Much of this demand is overseas, where European demand for
these technologies is stronger than US demand, and Asian expenditures
are expected to grow from \$200 million in 1997, to \$300 million in
2002.

**Finding #5: Investors are more likely to invest in RTCs that focus on
certain remediation market sectors, and to avoid others.**

While investors tend not to be optimistic about the market as a whole,
many are looking closely at specific segments. Nearly 60% of the
investors surveyed indicated a \"high\" or \"very high\" likeliness to
invest in RTCs that target the on-site industrial waste treatment
segment. Roughly 30% indicated a high or very high likeliness to target
RTCs that target the site assessment and investigation, military
cleanup, corporate property cleanup and brownfield property cleanup
segments (A-6).

Brownfield property cleanup is one of the relatively \"hot\" sectors at
the moment. Nearly 20% of investors felt that the brownfield market
segment is experiencing \"rapid\" growth. Many brownfields are now being
rehabilitated with creative equity and debt financing mechanisms.
Brownfield redevelopment is increasingly approached as a real estate
transaction where remediation technologies that are better, faster and
cheaper can literally add to the bottom line. While still in its
infancy, the potential scope of this market is considerable, as there
are between 400,000 and 700,000 brownfield properties nationwide.[^14]

In contrast, very few investors indicated a likeliness to invest in RTCs
that target the analytical/laboratory, the national lab cleanup, the
Superfund cleanup, or the on-site industrial waste monitoring segments.

**Finding #6: The most significant steps the government can take to
enhance investor willingness to invest in RTCs are to: (1) Implement
stronger policy and regulatory commitments to use innovative remediation
technologies, and, (2) Aggressively consider new technologies in
government clean-up contracts.**

The most commonly investor cited steps for the federal government to
take are were to develop a stronger policy and regulatory *commitment*
to use new technologies and to *aggressively* consider new technologies
in government cleanup contracts (see Table A-11). The investors surveyed
clearly indicted that they want government to become a much more
proactive \"player\" in the market place by backing its good intentions
with stronger actions.

In support of this overall desire, investors felt additional steps
should include facilitating the transfer of accepted new technologies
among regulators; accelerating the use of performance based permits and
contracts; facilitating and certifying technology verification; and more
aggressively enforcing existing regulations.

The investment community generally perceives the government as part of
the problem primarily because it sends mixed signals to the marketplace.
For example, government regulatory \"flexibility\" in some cases allows
responsible parties to \"remediate\" property through natural
attenuation and avoid the need for innovative technologies, while in
other cases \"flexibility\" enables regulators to accept the use of an
innovative technology that they would otherwise not allow. Such contrary
actions create confusion in the marketplace, confusion that enhances
investor risk thus, keeping investors away. Investors will become more
comfortable with RTCs as they more clearly understand where and how
specific government policies and practices affect specific market
segments.

When federal and state government send clear and consistent signals to
the marketplace on *a segment-by-segment basis*, private capital has
demonstrated its willingness to invest. An example is Brownfield
Redevelopment where federal and state governments have developed new
flexible and consistent policies and regulatory approaches to innovation
solutions and provided public funds as a catalyst to facilitate cleanups
and redevelopment.

**Finding #7: Investors indicated that the most useful information that
ECN could provide them, to enhance their willingness to invest in RTCs,
would be information focused on industry investment and
merger/acquisition activity. For example success stories, and
identification of promising investment opportunities.**

Investors generally value information that reduces their investment
risk, i.e. information that increases the probabilities they are going
to make the \"right\" decision. Accordingly, investors indicated that
the most important information for them to be more active in this market
is to know more about who is doing what and who is being successful.
They also want to know of new promising RTC investment opportunities,
case studies about past investments, and more accessible and objective
information about the performance and costs of technologies being
developed and verified (see Table A-12).

Investment intelligence on RTCs and the remediation industry was once
provided by Wall Street investment analysts. It chronicled a rapid rise
of fortunes in the 1980s and an even more rapid decline of fortunes in
the 1990\'s. RTCs and the remediation industry are not followed by
investment analysts today to any significant degree, leaving potential
investors with little guidance or sense of what broader investment
activity is happening in the remediation market. In a situation where
investors have many opportunities to fund innovative non-remediation
technology companies, the lack of such information makes it more
difficult for investors to feel comfortable with analyzing and placing
capital in RTCs.

Investors also indicated an interest in marketing information related to
future government activity and contracts, specific niche markets, and
international market opportunities. Clearly there are growth
opportunities for RTCs in the remediation market. Investors sense them.
However, ECN suspects that investors will not be inclined to act until
these opportunities are much more clearly presented in their terms.

**IV. Summary and Conclusions**

The \"valley of death\" faced by remediation technology companies is a
manifestation of the absence of private investors willing to invest in
small remediation technology companies. Private investors are absent
because they see little opportunity to profit from their investment.
This situation effectively stifles the ability of technology developers
to successfully commercialize innovative remediation technologies.

Private investors have a less than positive view of investment
opportunities in the remediation market. This view is primarily fed by
concern about the ability for RTCs to successfully grow and become
profitable in a market that has stagnated growth, shrinking profit
margins, dominated by consolidation and which is very competitive.

While the overall remediation market exhibits little growth, niche
market opportunities are developing which offer potential for sales and
profit. These opportunities combined with better technologies, a more
flexible regulatory environment and new market opportunities create a
basis for optimism that the valley of death, though still wide and deep,
may be bridgeable.

Both the federal government and third parties like ECN can take steps
that might increase their willingness to invest in remediation
technology companies. Investors feel the federal government\'s actions
should revolve around a stronger policy and regulatory commitment to use
new remediation technologies. ECN feels it is very important that the
federal government also focus on sending clear and consistent signals to
the marketplace on *a segment-by-segment basis*. Investors will become
more comfortable with RTCs as they more clearly understand where and how
specific government policies and practices affect specific market
segments.

Investors also felt that the most important information ECN or other
third parties could provide is information about investment transactions
and success stories in the remediation market. Investing in the
remediation market is clearly a high risk proposition. Yet, ECN believes
investors will be more comfortable with the risks when they have access
to high quality information about:

• The \"Hot\" Remediation Market Segments - i.e. the market segments
that are growing and where innovative RTCs have a solid opportunity to
rapidly grow their revenues and profits. Investors invest in market
niches that are growing. They need better information about the nature
and dynamics fueling these niches, who to contact for more information,
what reports and magazines to read, and other critical information.

• Key Trends, Drivers and Successful Business Models - to better
understand the underlying reasons *why* an RTC may be successful, and
*how* the RTC can achieve success. In addition, investors need more
information to clearly understand where and how specific government
policies and practices affect specific market segments. Investors need
to understand the \"fundamentals\" why a company may grow, and the
\"business models\" for how a company can grow.

• Profiles of Major Industry \"Players\" - to better understand who has
market power in the industry, and who *controls* and *manages* the
market and technology-adoption decisions that will directly impact an
RTC\'s ability to grow. Investors need to know who the market,
technology, and financial players are, what are their interests, what
they look for in RTCs, and how they operate.

• Recent Private Investment Activity - who else is placing capital in
RTCs, what kinds of capital they are placing, company valuations, who is
buying RTCs, and which Wall Street firms are brokering private placement
or merger/acquisition RTC deals. While some investors prefer to be on
the leading edge of an industry, most prefer to follow the lead of other
investors.

• Case Studies of Successful RTCs - Investors want to know who has been
successful and why. Investor sentiments about this industry are informed
mostly by a number of notable RTC failures. Investors need to learn more
about RTC successes.

Such information, which currently does not exist in a coherent fashion
aimed specifically at investors, can provide investors with clues about
what is happening in the market and how they might be more successful as
investors.

After working with hundreds of investors for more than five years, ECN
has observed that investor sentiments are a dynamic interplay between
perception and reality. Based upon historical experiences, most
investors do not believe they can make sound investments in RTCs, and
the valley of death will persist as long as this is the case.

ECN has also observed, however, that investor perceptions can change as
new information is presented. One critical pathway to changing
perceptions is to fill some crucial investment-related information gaps:
investors need current intelligence about investment activity in the
remediation market, RTC success stories, high potential RTCs raising
capital, and new emerging markets for RTCs.

The lack of capital available to remediation technology companies will
be mitigated only as more private investors feel they can be successful
in betting on innovative technology companies in the remediation market.
While this research has underscored the challenge involved, it has
hopefully also illuminated some real opportunities for ECN and others to
take some very positive and effective steps to accelerate the bridging
of the valley of death for RTCs.

## Attachment A: Summary of Findings of Survey

The survey consisted of 13 questions divided into three sections. A
summary of the results for each question is provided below. ECN\'s
approach to this effort was to seek input directly from individual,
professional and corporate investors who have invested or have seriously
considered investing in RTCs. Accordingly, this survey was sent to
investment professionals ECN felt are familiar with the remediation
market, who have made investments in RTCs, and who serve as
\"gatekeepers\" for other investors.

Surveys were sent to 31 investors and responses were received from 15
investors. It should be noted that these results should not be
considered statistically significant, due to the non-random nature of
the survey\'s distribution, its small sample size, and the limited
number of responses. Nonetheless, ECN feels that the results are
indicative of the opinions of key people within the investment community
who are familiar with this sector and whose actions and attitudes shape
the opinions of others.

#### I. Investor Backgrounds

**Capitalization Role.** The investors who responded to the survey were
all professional investors who characterized their capitalization
functions as:

*Table A.1. Functions of Responding Investors*

[Capitalization Role % of Responses]{.underline}

Capital Fund Managers 25%

Investment Bankers 21%

Financial Consultants 18%

Corporate Investors 11%

Individual Investors 11%

Project Financier 7%

Other 7%

**Investor Experience.** Nearly 90% of the investors had three or more
years of experience tracking this industry; nearly 45% had tracked the
industry for ten or more years.

*Table A.2. Number of Years Responding Investor s Have Tracked the
Remediation Market*

[Years Tracking Market % of Investors]{.underline}

10+ Years 44%

6-10 Years 13%

3-5 Years 25%

1-2 Years 6%

0 Years 13%

**Investor Familiarity with Remediation Market Sectors and Segments.**
The responding investors were, on average, \"somewhat familiar\" with
all market segments. Investors indicated if their degree of familiarity
on a 1-5 scale, ranging from \"Not at all Familiar\" (1) to \"Somewhat
Familiar\" (3) to \"Very Familiar\" (5). Average ratings were is shown
below, with market segments where at least 40% of responding investors
were \"Familiar\" or \"Very Familiar\" highlighted.

*Table A-3. Investor Level of Familiarity with Selected End Markets*

+------------------------------+---------------+----------------------+
| *Market Sector*              | Average       | Segments Investors   |
|                              | Rating        | where 40%+ of        |
| Market Segment               |               | investors indicated  |
|                              |               | 4-5 rating           |
+------------------------------+---------------+----------------------+
| *Cleanup Market*             |               |                      |
+------------------------------+---------------+----------------------+
| Military                     | 2.93          |                      |
+------------------------------+---------------+----------------------+
| National Labs                | 2.80          |                      |
+------------------------------+---------------+----------------------+
| Superfund                    | 3.47          | \*                   |
+------------------------------+---------------+----------------------+
| Non-Superfund State/Local    | 3.00          | \*                   |
+------------------------------+---------------+----------------------+
| Corporate Property           | 3.23          | \*                   |
+------------------------------+---------------+----------------------+
| Brownfield Projects          | 3.25          | \*                   |
+------------------------------+---------------+----------------------+
| Spills, Emergency Response   | 2.89          |                      |
+------------------------------+---------------+----------------------+
|                              |               |                      |
+------------------------------+---------------+----------------------+
| *Treatment Market*           |               |                      |
+------------------------------+---------------+----------------------+
| On-site Treatment by         | 3.27          | \*                   |
| Industry                     |               |                      |
+------------------------------+---------------+----------------------+
| Off-site Treatment, Storage, | 3.47          | \*                   |
| Disposal                     |               |                      |
+------------------------------+---------------+----------------------+
| Waste Handling, Hauling      | 3.33          | \*                   |
+------------------------------+---------------+----------------------+
|                              |               |                      |
+------------------------------+---------------+----------------------+
| *Characterization Market*    |               |                      |
+------------------------------+---------------+----------------------+
| Site                         | 3.40          | \*                   |
| Assessment/Investigation     |               |                      |
+------------------------------+---------------+----------------------+
| Site Monitoring              | 3.27          |                      |
+------------------------------+---------------+----------------------+
| Analytical/Lab Services      | 3.13          |                      |
+------------------------------+---------------+----------------------+
| On-site Industrial           | 3.07          | \*                   |
| Monitoring                   |               |                      |
+------------------------------+---------------+----------------------+

**Investment Activity in Remediation Technology Companies.** As shown
below, more than 80% of the investors had seen 11 or more investment
proposals from remediation technology companies since 1995, had
seriously considered 3-5 investment proposals, and had invested in 1-2
of the companies they considered. Most investors who had invested had
placed \$2-5 million in capital.

*Table A-4. Investors\' Investment Activity in Remediation Technology
Segment Since 1995 (Percent of Investors and Level of Activity)*

Number Since 1995

[31+ 11-30 6-10 3-5 1-2 Zero]{.underline}

Proposals Seen (% of Investors) 31% 38% 13% 6% 7% 6%

Proposals Considered (% of Investors) 60% 33% 7%

Investments Made (% of Investors 75% 25%

*Table A-5 Amount of Capital Placed in RTCs by Investors Since 1995*

Capital Placed (millions)

[\$2-5 \$1-2 \$0.5-1 \$0.25-0.5 \<\$0.25]{.underline}

Percent of Investors 55% 9% 18% 0% 18%

#### II. Investment Opportunity Perspectives

This section presents an overview of investor perspectives on the
prospects for market growth, investment opportunities in the remediation
market in three remediation market segments, the reasons they hesitate
to invest, and the promising market trends that may positively affect
their willingness to invest.

**Market Growth Prospects.** Generally speaking, investors were not
optimistic about growth prospects in the remediation market.

*Table A-6. Investor Characterization of Market Growth Prospects*

  -------------------------- --------------- ---------------- ---------------
                             Percent of      Percent of       Percent of
                             Investors       Investors        Investors
                             Indicating      Indicating       Indicating
                             Declining,      Moderate Growth  Rapid Growth
                             Stagnant or                      
                             Slow Growth                      

  *Cleanup Market*                                            

  Military                   73%             18%              9%

  National Labs              73%             27%              

  Superfund                  78%             9%               9%

  Non-Superfund State/Local  64%             27%              9%

  Corporate Property         60%             30%              10%

  Brownfield Projects        64%             18%              18%

  Spills, Emergency Response 100%                             

                                                              

  *Treatment Market*                                          

  On-site Treatment by       46%             46%              8%
  Industry                                                    

  Off-site Treatment,        77%             23%              
  Storage, Disposal                                           

  Waste Handling, Hauling    75%             25%              

                                                              

  *Characterization Market*                                   

  Site                       100%                             
  Assessment/Investigation                                    

  Site Monitoring            83%             17%              

  Analytical/Lab Services    92%             8%               

  On-site Industrial         75%             17%              8%
  Monitoring                                                  
  -------------------------- --------------- ---------------- ---------------

**Assessment of Investment Opportunities in Cleanup, Treatment and
Characterization Remediation Market Segments in Next 3-5 Years.**
Investors characterized their assessment of investment opportunities in
the three remediation sectors as follows.

*Table A-7. Investor Overall Assessment of Investment Opportunities in
the Clean-up, Treatment, and Characterization Segments in the next 3-5
Years*

[Assessment Clean-up Treatment Characterization]{.underline}

Bullish/Somewhat Optimistic 19% 38% 20%

Neutral 44% 31% 47%

Not Optimistic/Pessimistic [37%]{.underline} [31%]{.underline}
[33%]{.underline}

100% 100% 100%

Interestingly, the greatest overall level of optimism is for the
treatment sector, a sector that is and has been in a major consolidation
phase. This consolidation has benefited many investors in remediation
technology companies that target this sector.

**Market Segments Where Investors are More and Less Likely to Invest in
RTCs in Next 3 Years.** Investors indicated that they were more likely
and less likely to invest in the RTCs that targeted the following market
segments:

*Table A-8. Likeliness in Next 3 Years of Investing in RTCs that Target
Different Segments*

[Market Segments % of Investors Indicating High or Very
High]{.underline}

[More Likely Market Segments]{.underline}

On-site Industrial Hazardous Waste Treatment 57%

Site Assessment/Investigation 33%

Military Clean-up 31%

Corporate Property Clean-up 30%

Brownfield Property Redevelopment 30%

[Less Likely Market Segments]{.underline}

Analytical/Laboratory Services 0%

National Lab Clean-up 16%

Superfund Clean-up 16%

On-site Industrial Monitoring 17%

**Primary Reasons Investors Hesitate to Invest in Remediation Technology
Companies.** Investors expressed a range of *primary* reasons they were
hesitant to invest in remediation technology companies.

*Table A-9. Reasons Why Investors Hesitate to Invest in Remediation
Technology Companies*

[Reason/Concern Frequency Cited]{.underline}

Potential for Market Penetration 12%

Lack of Overall Market Growth 9%

Potential for Investor Profits and ROI 9%

Poor Industry Track Record on Wall Street 9%

Difficulty & Cost to Verify Technology 8%

Market Reliance on Government Regulation 7%

High Barriers of Entry for Startup into the Marketplace 7%

Lack of Enforcement of Existing Regulations 5%

Lack of Investment \"Exits\" for Investors 5%

Lack of Permit Reciprocity Among Regulators 4%

Markets are Driven More by Regulations Than Economics 3%

Higher Investor ROI Potential in Other Industries 3%

Potential Liability Exposure for Investors 3%

Lack of New, Proprietary, Cost Effective Technology 2%

**Promising Remediation Market Drivers Identified by Investors.** The
investors surveyed identified several drivers in today\'s remediation
market that could positively affect their consideration of remediation
technology investment opportunities.

*Table A-10. Promising Remediation Market Drivers Cited by Investors*

[Description of Drivers Frequency Cited]{.underline}

Niche Market Opportunities with Potential for Sales, Profits & ROI 19%

Growing Regulatory Flexibility Towards and Acceptance of New
Technologies 18%

Better, Faster, Cheaper Technologies 15%

Growing Brownfield Re-development Market Opportunities 11%

Growing Expenditures by Fortune 1000 Companies 7%

Availability of Insurance Policies to Protect Investors 7%

Technology Applications in Non-Remediation Markets 6%

Growing International Market 6%

Growing Expenditures by Government 4%

#### III. Accelerating New Investments in the Industry

In the survey, ECN asked investors to suggest actions that the federal
government and third parties such as ECN might take that could enhance
their willingness to commit capital to remediation technology companies.

**Most Significant Steps by the Federal Government.** The actions most
frequently cited by investors that the Federal Government could take
revolved primarily around developing and implementing a stronger policy
and regulatory commitment to use new remediation technologies.

*Table A-11. Most Significant Steps by Federal Government To Increase
Investor Willingness to Commit Capital*

[Step Frequency Cited]{.underline}

Develop a Stronger Policy and Regulatory Commitment to Use New
Technologies 21%

Aggressively Consider New Technologies in Government Cleanup Contracts
17%

Provide Additional Funding to Support Technology Commercialization 10%

Facilitate Transfer of Accepted New Technologies Among Regulators 10%

Accelerate Use of Performance-Based Regulatory Permits and Contracts 10%

Enforce Existing Regulations More Aggressively 8%

Facilitate and Certify Verification of Remediation Technologies 8%

Establish Better Regulatory Consistency and Cooperation Across
Jurisdictions 6%

Provide Additional Funding for Technology R&D 4%

Strengthen Company Business and Marketing Skills 2%

Provide Investors with Market & Technology Information 2%

**Most Important Types of Information that ECN or Another Third Party
Can Provide.** Investors responding to the survey also identified
information that ECN or another third party could provide that might
enhance their willingness to commit more capital to remediation
technology companies. The respondents indicated that most of the
important information they would find most important focuses on industry
investment and merger/acquisition activity, success stories and other
case studies, and promising investment opportunities.

*Table A-12. Importance of Different Types of Information To Increase
Investor Willingness to Commit Capital*

[Information Type Frequency Cited]{.underline}

Data About Industry Investment and M&A Activity 15%

Technology Company \"Success Stories\" 13%

Identification of High-Potential Investment Opportunities 11%

Case Studies (Good and Bad) About Private Investments Made 11%

More Accessible Information about Technologies Being Developed and
Verified 11%

Objective Technology Performance & Cost Data 11%

Future Government Cleanup Activity & Contracts 9%

Information on Specific Niche Markets 9%

Information on International Market Opportunities 7%

## Attachment B: Survey

+-------+--------------------------------------------------------------+
| ![](m | **Environmental Capital Network**                            |
| edia/ |                                                              |
| image | A program of the Center for Environmental Policy, Economics, |
| 1.emf | and Science                                                  |
| ){wid |                                                              |
| th="0 |                                                              |
| .5555 |                                                              |
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| 56944 |                                                              |
| 44444 |                                                              |
| 44444 |                                                              |
| 4in"} |                                                              |
+-------+--------------------------------------------------------------+

**[Return Fax Directions. Please Return by September 15,
1999.]{.underline}**

**To: Loch McCabe, ECN @ 734-996-8732**

**From:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

**INVESTOR INTEREST IN HAZARDOUS WASTE REMEDIATION TECHNOLOGY
COMPANIES**

Dear Investor:

ECN seeks to learn more about investor interest in hazardous waste
remediation technology companies. To this end, ECN is conducting a
limited query of selected investors who have placed or considered
placing capital in companies commercializing innovative remediation
technologies, specifically technologies that clean-up, treat and/or
characterize hazardous wastes.

This query is important, as it will enhance ECN\'s ability to
effectively provide guidance to remediation technology companies and to
government programs that affect the investment potential of such firms.

Please take 10-15 minutes to complete the following query and fax or
mail your response to ECN by September 15, 1999.

You may contact me at mccabe@recycle.com or 734-996-8387 with any
questions. For completing this query, we will provide you with a copy of
the findings.

We appreciate your input. Thank you for your time and attention.

Sincerely Yours,

Loch McCabe

**I. Investor Background:**

I.a What type of \"investor\" are you? (Please check all that apply)

\_\_ Individual Investor \_\_ Project Financier

\_\_ Venture Capital Fund \_\_ Investment Banker

\_\_ Corporate Investor \_\_ Financial Consultant

\_\_ Lender \_\_ Other
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

I.b For how many years have you tracked the remediation industry?
(Please check one)

\_\_ Zero \_\_ 1-2 \_\_ 3-5 \_\_ 6-10 \_\_ 10+ years

I.c How would you characterize your familiarity with the following
[hazardous waste]{.underline} clean-up, treatment, and characterization
market segments within the remediation industry? (Please check one)

Not at all Somewhat Very

Familiar Familiar Familiar

[Clean-up Market]{.underline}

Military (US Dept. of Defense) 1 2 3 4 5

National Labs (US Dept. of Energy) 1 2 3 4 5

Superfund (EPA, PRP, States) 1 2 3 4 5

Non-Superfund State/Local Cleanup Projects 1 2 3 4 5

Corporate Property Clean-up Projects (incl. USTs\*) 1 2 3 4 5

Brownfield Real Estate Development Projects 1 2 3 4 5

Accidental Spills, Emergency Response 1 2 3 4 5

Other \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
1 2 3 4 5

[Treatment Market]{.underline}

On-site Treatment by Industrial Manufacturers 1 2 3 4 5

Off-site Waste Treatment, Storage & Disposal 1 2 3 4 5

Waste Handling, Hauling and Related Services 1 2 3 4 5

Other \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
1 2 3 4 5

[Characterization Market]{.underline}

Site Assessment/Investigation Services 1 2 3 4 5

Site Monitoring Services 1 2 3 4 5

Analytical/Laboratories Services 1 2 3 4 5

On-site Industrial Process Waste Monitoring 1 2 3 4 5

Other \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
1 2 3 4 5

\* Underground storage tanks

I.d How many investment proposals from remediation technology companies
have you seen, seriously considered, and made since 1995? (Please check
one per question)

Investment Proposals Investment Proposals Investments

Seen? Seriously Considered? Made?

\_\_ 31 + companies \_\_ 11 + companies \_\_ 11+ companies

\_\_ 11- 30 \_\_ 6-10 \_\_ 6-10

\_\_ 6-10 \_\_ 3-5 \_\_ 3-5

\_\_ 1-5 \_\_ 1-2 \_\_ 1-2

\_\_ Zero \_\_ Zero \_\_ Zero

I.e What is the approximate total amount of investment? (Please check
one)

\_\_ Less than \$250,000 \_\_ \$2 up to \$5 million

\_\_ \$250,000 up to \$500,000 \_\_ \$5 up to \$10 million

\_\_ \$500,000 up to \$1 million \_\_ \$10 up to \$50 million

\_\_ \$1 up to \$2 million \_\_ \$50 million or more

I.f Please rate the importance of the types of informational sources you
use to track the marketplace, industry changes, technology changes, and
other influences that could affect your investment decisions? (Please
circle your response, or leave blank)

Not

Important Important Critical

[Personal Resources]{.underline}

Personal and Professional Contacts 1 2 3 4 5

Personal Experience and Research 1 2 3 4 5

[Industry Resources]{.underline}

Industry Associations 1 2 3 4 5

Industry Publications 1 2 3 4 5

Industry Websites 1 2 3 4 5

[Government Resources]{.underline}

Government Publications 1 2 3 4 5

Government Meetings 1 2 3 4 5

Government Websites 1 2 3 4 5

Other \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ 1 2 3 4 5

Other \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ 1 2 3 4 5

**II. Investor Perspectives**

II.a What are the [primary]{.underline} reasons you [hesitate
to]{.underline} invest in environmental remediation technology
companies? ([Please check up to 5 reasons]{.underline}. Additional
reasons are welcomed.)

[Technology & Regulatory Concerns]{.underline}

\_\_ Difficulty and high cost associated with verifying technologies

\_\_ Lack of enforcement of existing regulations

\_\_ Lack of permit reciprocity across state and agency jurisdictions

\_\_ Lack of performance-based regulatory standards

\_\_ Other
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

[Market Concerns]{.underline}

\_\_ Lack of overall market growth

\_\_ Manufacturers\' focus on process control remedies to reduce
hazardous waste

\_\_ Questions about a company\'s potential for market penetration and
ability to achieve

significant size in a market that is mature and dominated by large firms

\_\_ Discomfort with the degree of government involvement in marketplace

\_\_ Discomfort with a reliance on government regulations that do not
provide sufficient

demand for ew remediation-related technologies and services

\_\_ Other
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

[Investment Concerns]{.underline}

\_\_ Concerns about new firm\'s potential for profitability and return
on investment

\_\_ Liability concerns with owning a remediation technology company

\_\_ Poor industry track record on Wall Street and few recent
\"winners\" in the industry

\_\_ Lack of an exit strategy for remediation technology companies into
the IPO market

\_\_ Higher likelihood of financial success in other industries such as
IT and telecom

\_\_ Other
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

II.b What are the [most promising drivers]{.underline} in the
remediation marketplace and industry that positively affect your
consideration of future funding proposals? ([Please check up to
five]{.underline}. Additional trends are welcomed.)

[Technology Advancements]{.underline}

\_\_ Many new technologies are better, faster, and cheaper

\_\_ Many new technologies have applications in non-remediation markets

\_\_ Government and other third party technology verification efforts

\_\_ Other
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

[Market Growth Potential]{.underline}

\_\_ Niche market opportunities with potential for strong sales, profits
and ROI

\_\_ Growing expenditures by federal, state, and local government

\_\_ Growing expenditures by Fortune 1000 for remediation services

\_\_ Growing expenditures by small and mid-sized manufacturers

\_\_ Growing demand overseas for remediation services

\_\_ Growing brownfield redevelopment activity by private property
developers

\_\_ Introduction of insurance carriers to protect investors in
brownfield projects

\_\_ Other
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

[Regulatory Changes]{.underline}

\_\_ Regulatory framework is becoming more flexible regarding new
technologies

\_\_ Increased receptivity to new technologies by regulators

\_\_ Increased willingness of regulators for permit reciprocity

\_\_ Increased government spending and contracting flexibility

\_\_ Other
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

II.c Please rate your general willingness to consider investing in
remediation technology companies that are targeting the following
end-markets over the next 3 years? (Please circle your response)

Very Low Very High

[Clean-up Market]{.underline}

Military (US Dept. of Defense) 1 2 3 4 5

National Labs (US Dept. of Energy) 1 2 3 4 5

Superfund (EPA, PRP, States) 1 2 3 4 5

Non-Superfund State/Local Cleanup Projects 1 2 3 4 5

Corporate Property Clean-up Projects (incl. USTs\*) 1 2 3 4 5

Brownfield Real Estate Development Projects 1 2 3 4 5

Accidental Spills, Emergency Response 1 2 3 4 5

Other \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
1 2 3 4 5

[Treatment Market]{.underline}

On-site Treatment by Industrial Manufacturers 1 2 3 4 5

Off-site Waste Treatment, Storage & Disposal 1 2 3 4 5

Waste Handling, Hauling and Related Services 1 2 3 4 5

Other \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
1 2 3 4 5

[Characterization Market]{.underline}

Site Assessment/Investigation Services 1 2 3 4 5

Site Monitoring Services 1 2 3 4 5

Analytical/Laboratories Services 1 2 3 4 5

On-site Industrial Process Waste Monitoring 1 2 3 4 5

Other \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
1 2 3 4 5

\* Underground storage tanks

II.d How would you characterize [your overall assessment]{.underline} of
investment opportunities in the environmental remediation, treatment and
characterization industry segments in the next 3-5 years? (Please check
one)

[Clean-up]{.underline} [Treatment]{.underline}
[Characterization]{.underline}

\_\_ Bullish \_\_ Bullish \_\_ Bullish

\_\_ Somewhat Optimistic \_\_ Somewhat Optimistic \_\_ Somewhat
Optimistic

\_\_ Neutral \_\_ Neutral \_\_ Neutral

\_\_ Not Optimistic \_\_ Not Optimistic \_\_ Not Optimistic

\_\_ Pessimistic \_\_ Pessimistic \_\_ Pessimistic

\_\_ Not Sure \_\_ Not Sure \_\_ Not Sure

**III. Accelerating New Investments in the Industry**

III.a How would you characterize the growth prospects for the following
market segments? (Please circle your response, or leave blank)

No Slow Moderate Rapid

Declining Growth Growth Growth Growth

[Clean-up Market]{.underline}

Military (US Dept. of Defense) 1 2 3 4 5

National Labs (US Dept. of Energy) 1 2 3 4 5

Superfund (EPA, PRP, States) 1 2 3 4 5

Non-Superfund State/Local Cleanup Projects 1 2 3 4 5

Corporate Property Clean-up Projects (incl. USTs) 1 2 3 4 5

Brownfield Real Estate Development Projects 1 2 3 4 5

Accidental Spills, Emergency Response 1 2 3 4 5

Other \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
1 2 3 4 5

[Treatment Market]{.underline}

On-site Treatment by Industrial Manufacturers 1 2 3 4 5

Off-site Waste Treatment, Storage & Disposal 1 2 3 4 5

Waste Handling, Hauling and Related Services 1 2 3 4 5

Other \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
1 2 3 4 5

[Characterization Market]{.underline}

Site Assessment/Investigation Services 1 2 3 4 5

Site Monitoring Services 1 2 3 4 5

Analytical/Laboratories Services 1 2 3 4 5

On-site Industrial Process Waste Monitoring 1 2 3 4 5

Other \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
1 2 3 4 5

III.b What are the three most significant steps that the Federal
Government could take to improve the willingness of investors to commit
capital to environmental remediation technology companies? (Please check
your [three]{.underline} most significant responses).

[Resources and Programs]{.underline}

\_\_ Aggressively consider new technologies in government clean-up
contracts

\_\_ Provide more funding to support more remediation technology R&D

\_\_ Provide more funding to support technology commercialization

\_\_ Facilitate verification of new remediation technologies

\_\_ Work to strengthen the business and marketing skills of young
technology firms

\_\_ Provide more relevant information about remediation markets and
technologies

\_\_ Other
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

[Regulatory Reform]{.underline}

\_\_ Develop a serious policy and regulatory commitment to utilizing new
technologies

\_\_ Establish regulatory consistency and cooperation across
jurisdiction

\_\_ Conduct more aggressive enforcement of existing regulations

\_\_ Accelerate the use of performance-based regulatory permits and
contracting

\_\_ Facilitate transfer of acceptances of new technologies by different
regulators

\_\_ Other
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_ Other
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_ Other
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

III.c What are the three most important types of information that ECN or
another third party can provide you or the industry to enhance your
willingness to commit more capital to environmental remediation and
characterization technology companies? (Please check the
[four]{.underline} most important)

[Technology Information]{.underline}

\_\_ More accessible information about technologies being developed and
verified

\_\_ Objective technology performance and cost data

\_\_ Guidelines to technology uses for specific types of applications

\_\_ Other
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

[Market Information]{.underline}

\_\_ Better information about future government clean-up activity and
contracts

\_\_ Better information about specific remediation niche markets
corporate remediation

\_\_ Better information about international marketing opportunities

\_\_ Other
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

[Investment Information]{.underline}

\_\_ Remediation and characterization technology company \"Success
Stories\"

\_\_ Data about investments, mergers and acquisitions of companies

\_\_ Better information about private and public financial transactions
in industry

\_\_ Identifying investment opportunities with high-growth potential

\_\_ Case studies (good and bad) about investments in these companies

\_\_ Other
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

***THANK YOU!***

[^1]: \"Bridging The Valley of Death: Financing Technology for a
    Sustainable.\" U.S. Small Business Administration. December 1994.

[^2]: ECN knows of approximately 10 venture capital firms that would
    consider seriously investing in RTCs. More than 800 venture capital
    firms are listed in the Pratt\'s Guide to Venture Capital.

[^3]: Zider, Bob. \"How Venture Capital Works.\" Harvard Business
    Review. November/December 1998.
    (www.hbsp.harvard.edu/products/hbr/novdec98/98611.html)

[^4]: The military, national lab, Superfund, spills & emergency
    response, off-site industrial waste treatment, waste hauling, site
    assessment, site monitoring, lab, and on-site industrial monitoring
    market segments.

[^5]: \"Seismic Shift Shakes the Environmental Industry.\" Steve
    Maxwell. Massachusetts Environmental Ventures. Fall 1997.

[^6]: Unpublished analysis conducted by TetraTech EM Inc., 1999.

[^7]: The U.S. Environmental Industry Executive Summary. Office of
    Technology Policy, Department of Energy. October 1998.

[^8]: Anderson, Mary. \"Capturing the Remediation Market.\" Prepared for
    Brownfield News.

[^9]: Tetra Tech EM Inc., 1999.

[^10]: Tetra Tech EM Inc. 1999.

[^11]: Tetra Tech EM Inc. 1999.

[^12]: Tetra Tech EM Inc.

[^13]: Anderson, op.cit.

[^14]: Anderson, op.cit.