Perspectives for cleantech companies raising capital

photocredit: Jason Guille
photocredit: Jason Guille
By: Joel Solomon (Lifetime of achievements category)

There is a new global investment passion changing the face of business.

Clean economy sectors like organic food, healthy households, and climate technologies are lifting far more diverse, creative, and committed entrepreneurs into prominence. This massive wave of entrepreneurs sees business as a powerful tool to contribute to a safer, cleaner, and equal future world. They are passionate about building products and services that help solve the negative side effects of “business as usual” that have dominated the investment market for centuries. New players see the advantages of smart business, innovation, efficiency, and meaningful problem-solving to help fill gaps in society and  the economic landscape. This perspective is being inhabited by a rapidly diversifying and empowered  new generation of founders who believe their hard work can solve big and small societal issues. Entrepreneurs from underserved communities deserve and need attention and support. We have enormous challenges to humanity and ecology that require re-balancing access and power. 

And it’s about time!

Once considered a fringe concept, the financial world has finally awakened to the power of mission-based investing. It’s a new world from when I started investing in environmentally and socially responsible businesses in the mid-1980s. Even back then, it made no sense to invest in companies that worked against my deeply held values and beliefs. It made me ill to consider how much I didn’t understand about where, how, and who was affected by my consumer whims or evolving standards of expectation of “the good life.” For me, a child of the ‘60s, the message was so clear. I must see and embody the reality of how my money, my consumption, my choices affect people, ecology, and marketplaces, around the world. Once I saw these concepts, there was no choice but to focus on the fringe of innovation in new, cleaner, safer, more fairly produced products and services that might contribute to a better future for everyone, including our entire ecosystems. As one of the overly privileged minorities of humans, I’m clear that my responsibility is to leave the world better for future generations.

The premise that money can be a powerful force for good has grown into a powerhouse growth sector in Canadian business. Today, mission venture capital is a robust premise in Canada and worldwide, proving that environmental and social responsibility is compatible with economic sustainability. Money aligned with our deepest values can positively influence for ecology, justice and a clean, safe, more fair long-term future for humanity. 

As the Co-Founder of Renewal Funds and  Hollyhock’s Social Venture Institute of mission-driven entrepreneurs, I meet many passionate, shrewd and thoughtful founders and senior teams who are starting new businesses from organic foods to climate solutions and everything in between. They often ask me, “how do I get some early start-up capital to build out my heartfelt vision of how to make the world better?”

Photo Credit: Jason Guille

When asked the best way to attract capital from investors, I focus on the emotional resilience of the founder, along with their instincts for adaptive re-invention, people skills, integrity, and actual depth of values, meaning and purpose. I will bet on the more values driven people, over the pure money focused individuals. We need our evolving world to be grounded in honesty and authentic caring. 

The first step is to know, in your brains and guts, why your product makes a real difference. From the smart premise to compelling metrics, and most crucially, “what, why, who and how,” will I succeed? New entrepreneurs seeking investment need to take extra steps to differentiate themselves from many competitors while proving their financial success potential, their environmental and social commitments. 

From there, articulating a compelling message that shows you understand your sector and possess a persuasive model of just why you will succeed is a must. You have to convince stakeholders that there is a market segment waiting for your product or service. As a leader, you have strong potential to navigate the uncertainties and anomalies of building a successful company. You must convey the emotional and resilience skills to assess, adapt, learn, and embody the quite large demands of building a business. Our emotional and psychological abilities are more essential than we might realize. Finally, you must convey a well-thought-through strategy, demonstrate your adaptive skills, and show how you will succeed in a world full of competitors.

Who we are as people is perhaps the most important. Most investors will bet on their judgment of entrepreneurs as resilient, emotionally intelligent, and with deep integrity. They want to see how you might balance your great product or service idea to advance and improve something in society while also having the wisdom for lifelong learning as an influential person. It’s rare that what the founder assumes will happen is actually how it all unfolds. The world is too complex for every product vision to happen how we think it will. 

It’s invaluable to pursue diverse networking opportunities where an ethic of “help each other” is the baseline. To locate sympathetic investors in your field, do research, go to the places they go to learn and collaborate.

Photo Credit: Sara Dent

Get clear on your goals, prepare your pitch, get feedback, study up on people you want to meet. Continually refine and improve your pitch. Do it in front of colleagues, friends, experts, and perfect your ability to be open to feedback. Most of us are turned off by excess confidence and invulnerability. Be your authentic self. Investors tend to have an instinct for authenticity. 

There are different qualities of money, as there are with humans. When looking for an investor, go for integrity, transparency, and track record. You must do your due diligence on them, as they will you.  

Be relentless while being respectful. Remember, “prospects” are humans who have feelings, insights, judgments, blind spots, biases and may have more experience than you. The ones you most want, care for who you are, who your team is, and sense your integrity and hard work. Know that the experienced ones have strong abilities to grasp our emotional and psychological insight and instincts. The mission venture capital space has matured in the past few years, and a good investor will be adept at sniffing out overinflated ego or greenwash. 

At Renewal Funds, we first engage in a stringent mission-based screening process before moving on to a rigorous review of the financial aspects and growth potential. We want to get to know our potential partners. We invest and enter a multi-year and serious relationship with you. We want to know that a company we partner with is run by profoundly caring humans whose mission and product are compelling and will advance solutions that matter. We want to know you are adaptive, have good people skills, make quick shrewd decisions, and make tough calls for when things go wrong. A very attractive talent is to be able to handle harsh feedback with grace.

Certain aspects of the venture capital world have become warped in recent years and have created a culture that values only astronomical growth, big egos and hollow missions. That approach isn’t sustainable. Entrepreneurs who are engaged in their businesses, involved in problem-solving, making connections, and have adaptive skills, will be more likely to allocate money for follow-on financings and step up to the plate on short notice if there’s an emergency. 

Remember always to think from your death bed. How will your life matter? What have you done for future generations? How will you be remembered? You are an ancestor of what comes, long into the future.