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Financing a green startup?
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While starting a new company is challenging, many entrepreneurs out there are wondering if the rules are any different for starting a green company. Although the government has committed a great deal of financial resources and incentives for entry into the renewable energy industries, the ground rules are still the same. The fear, trepidation and even the thrills are still intact for you to encounter.
Let’s start by setting up a road map for where we are going. There are three main phases that developing businesses go through: idea, development, and commercialization.
The first stop on our trip is investigation, during which we explore the possibilities of our
business idea. We look to the potential viability of that idea and look to find initial ways to finance it. During this stage, you are probably going to be working alone and spending your own money. In connection with this stage, you are likely to spend at least 6 months exploring the feasibility of your business in more focused terms. You will spend more of your money here and whatever you can raise from family and friends.
The next stop is the development phase. In this stage you will likely spend at least 6 months and more funds developing your business as a functioning entity. The choices of entity type depend upon protection, tax consequence, and personal liability. Research these potential choices closely. The money at this stage is likely to come from commercial financing sources. At this point you should have some semblance of an interim management team in place, even if that team consists of only two or three individuals. The second leg of the development stage is the actual introduction of your product into the market. Here you are likely to spend more funds, which you can raise from strategic partnering, vendor financing, and private loan sources. By now, you should have a full management team in place and be ready to do business.
In the final stage, commercialization, your company operates as a complete business and even has the ability to raise money from the public markets in the form of stock offerings. Although many businesses choose to operate without selling stock initially, the goal should be to be able to build your business in a way that allows you to expand and grow through equity securities.
So you see whether you are just starting out as an Energy Auditor or a Solar Photovoltaic installation firm the rules remain the same: create a strong business model, develop your concept and operating entity, and finally get out there and do business.
