Cleantech investor: algae and investors are alike
Debra Guerin Beresini, CEO of Invencor Inc., a company that manages a debt and equity fund and also acts as a consultant to the cleantech sector, has a simple message for algae project developers seeking investment funding: “Go back to the basics.” Her message, which she delivered at the 2011 Algae Biomass Summit during a panel discussion on what investors find attractive today, was based on the premise that in this tough economic time of unstable markets, simple strategies like knowing your competition or identifying a market are the keys to getting funding.
Beresini formed her ideas on the “basics” on a March 2011 Wall Street Journal article that identified the 50 companies most likely to succeed. “Because I have a debt and equity portfolio,” she said, “I really looked at these companies to see if there was some kind of trend, and how these companies were raising money, so that I could go out to our companies and tell them this is what you need to do.” So what did she find? “There were trends,” she said, “but none of them were new.”
To describe her findings, she coined the trends as the “ABCs” every algae-based entrepreneur needs to know and remember. First, she pointed out the importance of a company having a management team that includes someone at some level of the company who has gone through a similar cleantech business situation. She pointed to the success of Solazyme, explaining that the company would have never made it without the initial management team behind it.
Next, she said, a company needs to have an identifiable market. “You have to have a billion dollar market, and I don’t mean one billion and one dollar.” In addition to a large market, the company needs to have a compelling opportunity that allows investors to see that a potential company has some kind of proprietary position in that market. And, along with the ability of a company to form strategic partnerships if possible, she also drew on a basic term often used to infer an idea of creativity, telling companies that are both seeking funding and looking to make money to “think outside the box.”
For Beresini, that means find customers, even though it may be difficult, and selling them something. “Make organic fertilizer,” she said, or something an investor can see is earning money. As for the company that is looking to make money, or to find money in places other than the capital markets, she offered the idea of technology leasing. “I know that there are banks and financial institutions that will provide leases for your equipment so that you can get started earlier.” And, she added, “If you think that it is too late and you already bought your equipment, there is something called the sale lease back where the bank will actually buy the equipment back from you for cash, and then lease it to you gain.” Those, she said, “are thinking outside the box options.”
To end her talk, Berensini made a comparison between algae and investors. “Algae, they don’t like to give up their oil,” she said. “Investors are that way with their money.”