Startups Encouraged after engaging with panel of active investors.

Startups Encouraged after engaging with panel of active investors.

The other night was an amazing workshop for the packed crowd at 801 K Street with incredible insights into building constructive relationships with investors.  So much was covered it is hard to do a summary that does the session justice. The discussion was particularly lively, with lots of questions from the audience.  

Matt van Leeuwen set the stage with a soup-to-nuts review of what investor are interested in during a fund raise and what terms they may seek in a Term Sheet and the final documents.  He gave a good perspective on what is negotiable–and what is not. He also warned about terms that can turn out very unfavorably for startups.

Matt discussed different types of financing options for companies, terms startups might hear,  standard terminology and special types of agreements that you might here. The Q&A led to an attendee to announce he had just been saved a great deal of time and stress in the near future.

Next from the panel lead by Chris Chediak we got to hear perspectives form a star-studded panel.  The panelists were Elizabeth Dodson, Co-founder of HomeZada, John Peters, the Board chair of the Sacramento Angels, and Roger Akers, Co-founder & Partner of Akers Capital. All of them emphasized communication with investors and industry stakeholders.  Entrepreneurs should realize good investors are there because they believe in the Company and the team. Good communication with investors helps with everything from fundraising, to growing your company, and even building a successful team — be forthright, respond quickly, answer directly, build a reputation that investors and advisors can trust.  

They discussed how much equity of options you should give up to advisers, what you can ask of investors, and the best ways to leverage those relationships. Based on the enthusiasm of the crowd, we are likely to do a second round of this workshop with new panelists and presenters.  It is a big and very important topic.

“The stronger the relationship with you and your investors is, the more you can leverage it for more opportunities.” –   Roger Akers

 

LACI Companies Visit the Capitol

LACI Companies Visit the Capitol

What kind of companies? Don’t worry I’ll bring you up to speed. Rated as one of the top 10 global incubators, the LA Cleantech Incubator (LACI) is the City of Los Angeles’ official business incubator for clean technology and provides key support to high profile teams on the rocky road to commercialization. Though based in LA, the impact doesn’t stop at the county lines. Many LACI portfolio companies are shaking things up across California and around the world. A local example, CarbonBLU, is mixing things up right here in Roseville. The Incubator can  connect with our own growing cleantech hub as they collaborate with other regional incubators like BlueTech Valley (a CleanStart Partner) and internationally with Clean Tech Open. CleanStart works in parrallel with LACI by bringing more companies to its attention and expanding the opportunities we can provide to companies here in Sacramento.

Last Wednesday, nine of these companies visited our capitol for a day of meetings with legislators and agency staff. CleanStart was able to catch up on all the hype at the company showcase to cap off the day. From aviation to roadways to kid’s play toys, LACI companies are taking on massive industries and long standing practices to help pave a green future.

See a full list of the Sacramento visitors below:

Ampaire  – Revolutionary Commercial Electric Aircraft

Advanced Paving Technologies – World’s First 3-D Asphalt Paving Machine

Advanced Vehicle Manufacturing – Reinventing Transportation

Bears for Humanity – Worlds First 100% Certified Organic Stuffed Toy Collection

CarbonBLU – Empowering Proactive Decision Makers (Check out their profile)

Rain Systems – Save 50% off your current landscape water consumption

Repurpose – Sustainable Tableware

Tiny Farms – Hardcore Nutrition, Easy on the Environment

Xtelligent – Traffic Signal Control for Today and Tomorrow

ABOUT THE AUTHOR

Kate is a recent graduate of Cal Poly, San Luis Obispo and has a strong background in entrepreneurship and global politics. After helping launch an AgTech startup on the central coast, Kate is back in her hometown looking to take her experience into the world of Cleantech and help grow the Sacramento region.

Recap: Grant Workshop Highlights New Funding Opportunities

Recap: Grant Workshop Highlights New Funding Opportunities

To date, nearly $3.4 billion has been appropriated by the Legislature to State agencies to implement Greenhouse Gas reduction programs and projects. Much of this is allocated in the form of various grants. Agencies are inviting proposals from teams and companies to use these funds, you can see some at California Climate Investments homepage. Recently, CleanStart had presenters from California Air Resources Board (CARB), The Grant Farm, and Terzo Power Systems talk about the process and potential of using grants to finance a startup.

 

Attendees learned that through AB 32 over $1.6 billion had been allocated to fight global climate change. Ryan Huft, an engineer at CARB, outlined all of the agencies receiving funding available for 2018 and 2019. He shared California Climate Investments  as the location of many opportunities. These investments support a variety of state interest but all have common goals: supporting the reduction of greenhouse gases, helping underserved and disadvantaged communities, and helping all of California take the lead in creating a sustainable future. Ethan Hanohano shared his and The Grant Farm’s considerable experience in forming partnerships to win grants and how companies should approach the grants. He recommended starting by building a solid team, creating a purpose, and connecting with grants that are in your companies field.

All the speakers emphasized two things: write exactly what the grant says it wants and connect with disadvantaged communities. Huft’s and Hanohano’s presentations kept going back to one major point, “Grants explicitly lay out what they want. Have your proposal follow that.” There may seem like there is duplication in grants, but everything is there for a reason. So even if you have said it before, say it the same way again. It is important to keep it simple and connect to each requirement.

Connecting with disadvantaged or underserved communities is important and is a good practice for any growing company. Connecting can mean creating jobs, improving quality of life, or connecting a community to more resources. When creating a clean tech or sustainable solution, understanding connections and benefits to communities is not only important for grants but also the general company development. These communities are potentially future customers and partners in new tech development.

Mike Terzo of Terzo Power Systems won $4 million in CEC grants in 2016. He took the application and wrote exactly to it. Terzo is now working on those grants and learning a few extra lessons along the way. The big one was giving yourself time and flexibility to reach milestones and deliverables. Setting a realistic timeline is more important then setting an aggressive one. Realistic time management is important in controlling your business and connecting with investors. With grants it is no exception. Agencies administering the grants have goals they want you to achieve; make sure a proposal has a reasonable timeline for you to do that.

Terzo highlighted understanding a grants reimbursement and your incurred liabilities is important while building a successful grant proposal. Grants pay in arrears, meaning you are reimbursed for costs you have already paid. Vendors, contractors, employees and leases may be due before you receive reimbursement. You will need a way to finance the time difference between incurring the cost, invoicing the agency, and getting a check. It would be common for the grant reimbursement cycle to take 4-5 months. You likely will need a bank, an SBA loan guarantee or alternative financing to make a grant workable for you.

All of the work done for a grant not only benefits a startup if they get the grant, but also pushes them to better understand how their technology connects to the larger ecosystem and how they can be effectively managed. Actively applying for grants can have more benefits than funding for a company.

Thomas Hall

ABOUT THE AUTHOR

Thomas is the Executive Director of CleanStart. Thomas has a strong background in supporting small businesses, leadership, financial management and is proficient in working with nonprofits. He has a BS in Finance and a BA in Economics from California State University, Chico. Thomas has a passion for sustainability and a commitment to supporting non-profits in the region.

CleanStart Sponsors

Weintraub | Tobin, Moss Adams, River City Bank, GreenbergTraurig

BlueTech Valley, PowerSoft.biz, Revrnt, Synbyo, Califronia Mobility Center

March 2018 Newsletter

Cleantech Meetup – Waste Conversion

Two billion tons of waste per year, the energy equivalent of 1.5 billion barrels of oil per year, or 4.5 million barrels per day.  That’s a lot.  That’s what the world creates, and mostly just piles it up.  A packed room at the new Cowo Campus coworking space heard from four speakers on Tuesday night (Feb. 27) about how they are taking this problem and making an opportunity of it.  

Dr. Farshid Zabihian showed how Sac State engineering students are using a small integrated gasifier unit to learn a lot about the process of thermochemical conversion of waste and the practical issues of operation, feedstock injection, and optimizing settings to get the best efficiency at lowest emissions levels.  Dr. Z is hoping to keep adding to the sophistication of the unit and eventually use campus waste to provide power to the campus buildings, while giving students meaningful practical experience.

Then we heard from three companies that have been working here for 15 years or more to come up with commercial products that can have a global impact in dealing with that pile of waste.  They are all headquartered here, and in the aggregate employ over 100 people here.  They are likely to become world leaders in conversion technologies, a significant feather in the cap for our area.  Along with a handful of similar companies, they represent a center of expertise unique to our area.  

One of the strategies common to all the three presenting companies was to focus on smaller units that can be placed where wastes are already accumulated, rather than incurring the transportation costs of moving wastes to much larger plants.  These companies have found that the cost penalties of converting wastes at small scale are more than overcome by avoiding the much larger costs of gathering wastes distributed over a large area to feed a much bigger plant.  Smaller is better in looking at the total costs.

Another theme of the evening was the extraordinary commitment of China to being the dominant vendor for waste conversion systems.  By one account, China has allocated $600 billion for conversion projects and product development.  All three companies are seeing serious interest in their technology and systems from around the world, but mostly from China.  It was said that only California has an interest anywhere near that of China.

Dr. Dennis Schuetzle, CTO of Greyrock Energy, explained how they have nearly perfected a modular system for creating a clean, zero-sulfur diesel fuel from waste gas.  They are about to commission a unit that will make 450 barrels of diesel per day in West Texas, and have designs for systems up to 5000 barrels per day.  They have another 450 b/d plant under construction in Ontario, Canada.  

Michael Kleist of Sierra Energy gave an update on their first demo plant now nearing operation at Fort Hunter in Liggett, CA.  It uses their FastOx technology which is a 4,000ᵒ F, oxygen-fed thermochemical conversion that can use a wide variety of feedstocks since it completely converts everything to carbon monoxide, hydrogen, and stone-like slag.  At the pilot plant, 20 tons per day of post-recycling waste from the base is converted into electricity and diesel fuel, plus the solid slag that can be used for construction or road base.  Outputs could also be a hydrogen rich synthesis gas or purified hydrogen depending on what other equipment the customer wants to feed.  Sierra is looking for a site for another, larger demo plant, and Sacramento is under consideration.

John Bissell of Origin Materials showed a very different approach involving a biologic conversion of ligno-cellulose wastes (like wood chips, pulping waste, and cardboard) to intermediate chemicals that can then be made into high-value industrial chemicals. In one of the biggest developments for the company, Origin has teamed with global leaders Nestlé and Danone to commercialize 100% bio-based recyclable plastic bottles.  Origin is beginning site selection for its first demo plant and the first bottles are expected to hit the shelves by 2020.

Most people in the audience had no idea such companies existed around Sacramento.  And that’s the point of these MeetUps–find out what your neighbors are doing in clean and green tech, and then support not only them but many others like them.  

Thomas Hall

ABOUT THE AUTHOR

Gary Simon is the Chair of CleanStarts Board. A seasoned energy executive and entrepreneur with 45 years of experience in business, government, and non-profits.