Raising Capital for Cleantech Businesses — Not 100% Straightforward
The merit of most of the business plans I receive is fairly obvious. Would-be entrepreneurs who expect investment capital for clean energy projects that are just ideas are unrealistic.
“Hey, here’s a country with a lot of wind. Let’s get investors to fund wind studies, feasibility studies …” It won’t happen. On the other hand, if you have the equity and development capital in place, and want project financing for a shovel-ready deal with a signed power purchase agreement, that’s not a problem.
Sounds simple, doesn’t it? In truth, this isn’t as crystal clear as I implied.
I just had a talk with an investor who turned down a deal in which my client needs capital to expand an existing business, with signed contracts to buy his product (eco-friendly paper) coming at him from all directions. We’re talking about capital to buy inventory that won’t stay on the shelves for 10 minutes.
“His customers love him. They’re standing in line to do business with him. He just needs working capital so he can take on more of them,” I explained. “What’s the matter with the deal?”
“Sorry, I’m not interested. His business is under-capitalized.”
I kid you not.