Green Options

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In past posts, we’ve covered how to write a business plan and even how to pitch a professional investor such as a venture capitalist. However, there is a missing step between those two activities, which an Ecopreneurist reader wrote in to ask about, and that is: How do you even get an investor to return your call (or email)?

Although this answer is an over-simplification, I’ll recommend to you: Personal Contact.

A few days ago, a venture capitalist told me that he, with the other three partners in his firm, look at 1100 companies a year. These people have a lot of other things to do as well, such as attending board meetings of portfolio companies, conducting detailed due diligence for the few firms they choose to seriously consider for investment, speaking on panels at conferences, etc.

If you send an email to someone who gets hundreds of emails a day, you really need to stand out. Ideally, your subject line would say, “Referral from X.”

Making it Personal

Keep in mind that investors in early-staged companies are investing in people. Before it is really up and running, a Company doesn’t have much value. Ideas are a dime a dozen.

The value is built by executing on a vision and creating a brand, a customer base, a strong team, revenue streams, etc. It is as important to be seen as a trustworthy, capable person as it is to have your business idea be judged as sound.

You’ll have a higher rate of responses from potential investors, if you make use of introductions.

We received an email last week from an inventor in upstate New York, who has designed a green product that she wants to bring to market, and she would like some ideas of how she can raise money to manufacture and market the product.

I am going to present several ideas, not all of which may be perfect for her situation, but which are generally options for ecoentrepreneurs. Please comment on this post if you have additional ideas or questions about financing a green startup.

This will be a relatively long post, so here is a summary of potential sources of cash for green businesses:

• SBA loans
• Social-venture venture capital funds
• Friends-and-Family financing
• Partnering with a nonprofit organization

Another option, which would not work for this inventor, would be to bootstrap a company, as I described in a previous post.

And another option that is off the table is licensing: This inventor looked into licensing the product to a larger company, which would put up the money for both production and marketing and would then pay the inventor a licensing fee, presumably based on the volume of sales. The downside of the arrangement would be a loss of control over the production and marketing, as well as the fact that the company who is willing to license the product would have the production done in China. Because the inventor lives in upstate New York, where there is significant unemployment, the inventor wants to find some way to raise the money to manufacture the product in a factory within her community.