From the August 2009 issue of Entrepreneur
With billions of dollars being thrown at clean technology by private investors, and the federal stimulus package injecting $8 billion in loans for renewable energy projects, green investing opportunities suddenly seem like low-hanging fruit just waiting to be picked.

Everywhere you look, there are windmills turning and solar panels being installed on homes and businesses. Then there's the $11 billion earmarked for building a "smart grid," a nationwide network of high-voltage transmission lines that promises to do for clean energy what interstate highways did for cars in the 1950s.

So why are many experts cautioning investors to slow down on the clean-tech superhighway?

Not feeling green? Give in to sin

Some sectors will probably always be more recession-resistant than others. (Believe it.) And since humans will never stop being, well, humans, regardless of the economy, so-called vice investments often boom the more people seek comfort in their bad habits. The most common "sin stocks" fall into the categories of alcohol, tobacco, gaming, defense and-ahem-adult entertainment. So if green's not your thing-or if you're just looking to truly diversify your portfolio-pick up a good book (we recommend Investing in Vice: The Recession-Proof Portfolio of Booze, Bets, Bombs and Butts, by Dan Ahrens) and go to vicefund.com to do some research. -Jenna Ulicki
"I think there are opportunities for investors in the long term," says Glenn Croston, author of 75 Green Businesses You Can Start to Make Money and Make a Difference and founder of Starting Up Green, which helps entrepreneurs start and grow green businesses. Short term, however, "the supply of capital is uncertain, especially for businesses that have been VC funded and don't have an immediate exit strategy," he adds. "Being green doesn't make anybody immune to market forces."

In fact, green investing, like other once-hot technology sectors, has already seen some of the air escape from its balloon. Greentech Media Inc. reported that VC firms invested $836.1 million in 59 green technology deals in the first quarter of 2009--roughly the same level of investment the industry saw in 2007. Despite the stagnation, however, venture capitalists remain bullish on the sector and hopeful that they'll see some of their saplings thrive.

Where are the hottest opportunities in green investing right now? Solar, wind, smart grid and biofuels, the pundits say. However, many of the companies in these sectors are small, early stage ventures with products that may not hit the market for several years.

How can you, as an entrepreneurial investor, cash in? One way is by investing in large public companies that are throwing big bucks at green initiatives (think Google and its renewable energy projects). Another is to invest in a VC fund that invests in early stage clean-tech businesses. While they're often risky bets (they have to work out the technological kinks and win market acceptance before they start making money), the ROI could be enormous if one of them hits the jackpot.

Finally, you may want to make an angel investment in a local clean-tech company and join the firm's board of advisors. Not only will you get the fulfillment that comes with using your entrepreneurial skills to help a small business grow, but you'll also be able to put your money to work at a rock-bottom valuation and possibly end up making hundreds of times your original investment if the company takes off. Of course, it's also possible that the business will fail and you'll end up with a big tax write-off.

"There are a lot of entrepreneurs who are very committed to the environmental cause, but they still need help to make a business of it," Croston says. "Whether they're green or not, at the end of the day, they have to make money."

Rosalind Resnick is founder and CEO of Axxess Business Consulting, a New York City consulting firm that advises startups and small businesses, and author of Getting Rich Without Going Broke: How to Use Luck, Logic and Leverage to Build Your Own Successful Business. She can be reached atrosalind@abcbizhelp.com or through her website, abcbizhelp.com.