With top
Google rankings for so many technology, green, solar, biomass and renewable
terms in business planning and development, I have literally spoken with over a
hundred inventors and patent holders that have discovered a solution to the
world’s energy malaise. As a positive person by nature and a Christian that
believes is solutions, I expect there are many collective solutions that will
lead us away from carbon based economy and eventually distance us from oil and
even natural gas. We have completed many renewable energy and new technology
business plans.
The
overwhelming majority of inventors have unreasonable (from an investor’s
standpoint) expectations. Often, that means they have a patent on a concept
without a prototype tested by major third party engineering firms yet they are
looking or expecting funding for a utility grade and scope power plant.
Inappropriate expectations of running before walking to a big picture and a
related over the top capital raise expectation is typical of the majority of
entrepreneurs and business owners in all types of businesses, just magnified
with inventors and tech gurus.
Some
examples of clients and phased paths to success include:
> We consulted with a client that has raised well over ten million in three phases of prototype development of a renewable energy client over many years and is now a year away after fourth raise to get to very large utility grade capital raise. This the approach expected in new technology.
> We
worked with another Company almost three years ago that utilized many patents
to magnify power production with a fairly unique source. I saw the working
prototype the inventor developed even though did not fully understand it.
Importantly, an investor looked at it invested an initial 2M engineering
analysis of substance to get to manufacturing ready prototypes. Two years
later, there are still refining the prototypes to get to the market.
>Four
plus years ago, we did a business plan and supported a capital raise for a
truly break through small to mid-sized wind turbine. The Pentagon at high
levels supported the ability to literally fold up a small prototype into a
backpack. They got many grants including federal and university endorsed wind
tunnel testing, and a couple tiers of investments of substance with angels. We
again advised that would not be in position to fund a manufacturing plant
despite these raises in the near future and that investors would prefer much
further development of the prototype and sales of turbines should be from a
third party manufacturer. They have not yet hit the market.
> We
worked with a company that on their fourth capital raise (and a fifth during
operations) proved in a large scale plant (many thousands of tons) that there
is biomass energy source that can be profitable. After that, they partnered is
major directions including a one of top ten world economies on partnerships of
what may now be a 6th tier capital raises.
Sometimes
technology can get to the "big picture" in a two to three raises. That
said, there is no single energy answer, just many major answers and we always
hope and pray yours or others we work with are one of those major answers. But
what about a different kind of company, say one selling a single product with
some competition with 200K in revenues? They have a great marketing plan and
need operating capital and inventory to expand their marketing from just online
to retail stores and expand their product offerings. They have a multimillion
dollar annual revenue upside. Should they seek 1M in equity or a $350K SBA loan?
They sought the latter and today this client offers hundreds of products into
many markets and as they increased sales, they were turning down interest from capital
sources.
Phased
investment of the approach to attracting capital is unique to each venture.
Flexibility in the approach helps, but a phased approach demonstrates to banks,
angels and VC alike that you are prudent in your business.
