Funding Sources for Hot Environmental Companies

I've got a solar energy business plan in the works. My impression is you can have the best biz plan in the world, but the VCs just don't like us solar energy people and deny the seriousness of the energy situation. These VCs need to wake up! In spite of no media coverage for solar, how do I get VC attention?

Isn't it true the worst kind of negative feedback involves the ideas that are closest to our heart? I think so. For entrepreneurs, our businesses represent our best thinking and creative spirit. That's why VC rejection is especially hard on entrepreneurs. We take it personally when investment professionals don't agree with our business vision.

As you approach the venture markets for funding, I suspect you will be more productive if you focus on areas of common purpose. A VCs role in the venture building process is to invest in companies that one day can be sold for a profit.....hopefully a whopping profit. Most entrepreneurs I know are driving for that big payday too.

A VCs job description doesn't include any obligation to solve public policy problems. Even VC funds that invest in women or minority-run companies do so not for altruistic reasons but to reel in attractive deals that might be overlooked by larger funds.

Over the years, the better VCs have learned that innovative ideas have the best chance of commercial success if large, preferably commercial customers are willing to pay for them. It's not enough to have a good idea. Business plans that establish a persuasive case of 'need' but fail to prove strong market 'demand' probably won't get much VC attention.

As such, VCs will ask if your technology is cost-effective and practical to deploy. They will also want evidence of strong customer demand to sustain the business and generate profits for the investors and the founding management team. It's best to hold off talking to VCs until you can nail both questions with facts.

Are VCs awake? I think so. A few months ago, I had a conversation with Nancy Floyd, general partner of Nth Power. Nth Power has been a leader in funding energy-related technologies for over 10 years. Floyd noted more generalist technology funds were now edging into Nth Power's well-established turf.

In addition to Nth Power, Mohr Davidow Ventures, Technology Partners, Battery Ventures, Braemar Energy Ventures, Accera Venture Partners, Rustic Canyon Ventures, OPG Ventures, Perseus LLC, EnerTech Capital, DTE Energy Ventures and many other seed and early stage venture funds have an active interest in promising energy technologies. Each fund has their own investment criteria so read their web sites carefully. Also include energy corporations and angels who have worked within the energy industry as potential funding resources.

The mood is changing on university campuses too. Recently I was a judge at a University of Washington student business plan competition. One of the prize winners was a solar technology concept. The team of rookie entrepreneurs did their homework and identified large retail chains with big utility bills as their target customer. With over 10,000 larger size retail stores in sunny regions of the US, the students convinced a panel of mostly elite venture capital community judges they had an economically viable sales strategy.

Unfortunately, no matter how well you present to VCs, you will get some rejection. Yet, a negative VC response doesn't have to be the last word on your business building dream. You have to power forward with your own positive energy.

Money is starting to flow to alternative energy businesses. If you continue to improve your technology's cost saving business model, educate potential investors with facts, and explore relationships with potential partners, one day you will succeed.

TakeCommand Action Step

After you have sent your business plan to VCs, be patient. VCs do a lot more every day than just review new business plans. Wait two weeks before lobbing your first phone call to request a conference call or meeting with a fund manager. Be brief. Don't tell your entire company history on the call. You can also reach out to the fund manager's administrative assistant for help. Be personable and upbeat; never critical. In large funds, administrative assistants help coordinate meetings anyway, so it is worth establishing a good rapport with them early on. You can do it!

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