Helping Cleantech Entrepreneurs Find Investment Capital: Watch Out for Circles

I continue to refine my role in helping entrepreneurs find investment capital. The flow of deals, of course, takes care of itself; I get dozens each month. The investor side, understandably, takes more work. Some find us through the site, but in most cases I’ve developed relationships proactively, reaching out to friends of friends of friends…; in several cases I’m already three or four generations deep – and still going.

I find this whole thing a very interesting challenge, for reasons that have been obvious to everyone for thousands of years: mainly, that investors want lots of reward with a minimum of risk. It’s the old truism: banks happily lend money to those who can prove that they don’t need it.

I had a conversation with a very senior manager of a private equity firm just now, the results of which prompted me to jot down my thoughts here. He told me that they don’t do solar thermal or most biomass (gasification and pyrolysis) projects because there is a doubt that the technology will scale.

Of course, he’s the man with the money, and thus he has the right to any strategy he chooses, but I gently pointed out this is rather circular: People won’t fund this technology because it may not scale, and the technology will not scale because people will not fund projects that employ this technology. He laughed politely, and admitted that what I had said was true.

I’m reminded of another investor’s response to my suggestion that he invest in a client’s company. He rejected it on the basis that the company was undercapitalized. Hey, that’s the point. It needs capital because it’s undercapitalized. We wouldn’t be having this discussion if that weren’t the case.

Fortunately, it’s a numbers game. Not every project I favor gets funding, but some do. Also, I don’t mind being both patient and tenacious. I’m not a quitter; I just keep chipping away, even in hard times. And when good times come back (or legislature creates a level playing field for renewable energy), I’ll be very well prepared indeed.

I’m reminded of a quote attributed to Tommy Lasorda, longtime manager of the Los Angeles Dodgers: “Luck is what happens when preparation meets opportunity.”