Plan B Ventures
The Last Call…
The true measure of a man is not how he behaves in moments of comfort but how he stands at times of adversity” — Martin Luther King Jr.
Problem Summary
Venture Capital (VC) is a tricky business:
- Less than 1% of all submitted business plans ever get funded
- Less than 10% of all funded ventures ever succeed
What pattern do I see among the VC-funded failures?
- BRILLIANT TEAMS — WITH LOUSY BUSINESS MODELS
Solution Summary
How do I plan to improve the odds? By redirecting failed ventures toward AI enhanced renewable energy:
- Estimated Climate Change investments: $5 to $7 trillion a year — the biggest capital markets spending in the last 100 years!
- As Richard Branson says: “Always shoot for the moon — even if you miss, you’ll land among the stars”
VC — The Good, The Bad & The Ugly
I have already written on this subject in my previous posts, entitled:
- Corporate Venture Capital — The Most Underutilized Factor Endowment Of Corporate Giants
- Is Thought Leadership Dead?
Recently, I have noticed a new phenomenon: “throwing in the towel!” I am referring to early-stage VC-backed startups — that are still a going concern. Such startups operate without any threat of liquidation for at least another 12 months — and yet: call it quits. They quit in defeat, admit failure, and return whatever cash they have left to investors.
The Towel-Throwers (TT)
In general, I see the following commonalities behind such ventures. Our website at Canada Green ESCO (CGE) describes TT’s predicament as follows:
- Your Seed-Stage Investment is about to run out in 9 to 12 months….
- Your Business Model doesn’t work…
- You’re out of ideas and out of time…
- Your Company is sinking…
- Your BOD agrees: it’s time to quit, fire everybody and return the remaining capital to investors….
In a nutshell: the company is running out of time AND out of money!
Asking The Right Questions — The Rest Is Commentary
More than 2000 years ago, Hillel The Elder, provided the most succinct summary of the Old Testament’s meaning. His short answer is commonly known as The Golden Rule and is quoted as: “don’t do to others what you wouldn’t want others to do to you — the rest is commentary”
Since “the rest is commentary” is one of the most widely used business quotes of the 21st century — I also asked myself a few questions and you will find my “commentary” — below:
- Given the amount of my expertise in AI linked to Technology, Finance & Renewable Energy — how can I help and save TT’s from “drowning?”
- Is it even possible to throw in a rope AND a lifeboat — instead of a towel?
- Given their circumstance, how likely can I help guiding TTs to hope & prosperity?
IMHO, it is never too late to pivot. Not only can we introduce TTs to alternative business models linked to Renewable Energy — but we can also bring a fresh perspective to struggling ventures and show how to generate multiple revenue streams. Internet of Energy (IoE) is a good example of Disruptive Innovation. The electric grids are facing the largest energy sector transformation in 100 years and new Business Models are created every day. It has been done in the past — just read my post on Keyword Spotting — The Art of Listening & Observing.
Why Am I Motivated?
As a result of COP 21 , 174 countries already signed the agreement and began adopting it within their own legal systems. In his latest speech in Toronto — Mark Carney — was blunt: given the enormous funding needs for clean infrastructure — we will see between $5 trillion and $7 trillion investments taking place, a year.
Carney is one of the most respected and influential governors of Bank of England and the previous governor of Bank of Canada. And when Mark Carney speaks about green bonds — the world listens.
But Carney is not the only one. In his latest book: Creating Climate Wealth: Unlocking the Impact Economy, Jigar Shah, makes it also abundantly clear that “Creating Climate Wealth is about how climate change — the biggest challenge of our time — can be turned into a $10 trillion dollar wealth-creating opportunity.”
And yet, according to Bloomberg, clean energy investment in the second quarter of 2016 totaled $61.5bn, 32% below of $90bn in the equivalent period of 2015. VC industry is slowing down, too. So I made a conscientious decision: to do something about it, in my own way.
The more I thought about it, the more I realized that I can also help accelerating the advent of AI enhanced sustainable energy — in a meaningful practical, and EXTREMELY INNOVATIVE way.
What Can Canada Green ESCO (CGE) Do for TTs?
As I wrote before, with my 35 years of combined expertise in TECHNOLOGY, FINANCE & RENEWABLE ENERGY (TFE) sectors — I view TFE as the intersecting pillars of a modern business world. The triple expertise allowed me to look at challenges and opportunities in multiple sectors and it sharpened my senses.
Aristotle was right: “The whole is greater than the sum of its parts.” And as a dedicated practitioner of pattern recognition, I learned not to focus only on how to make things better — but also on how to identify what is missing.
And since CGE facilitated Project Financing of Over $1B, all over the world — I had my share of experiences leading to:
- Identifying attractive renewable energy projects
- Developing bankable financing and construction solutions
- Mitigating risks
- Structuring take-outs and acquisitions
So if finding the right business model is difficult even for a well capitalized and thriving company, what chance do so many VC startups have? Recent HBR article: Kodak’s Downfall Wasn’t About Technology states that even Kodak was not disrupted by Digital Technology — but by its inability to understand and embrace the new Business Models that came with it.
Venture capital industry is under a lot of pressure. With less than 1% of all the submitted business plans being funded and less than 10% of all the funded ventures being successful — you have to make a lot of hard choices.
Can VCs afford time and money looking for a root cause of each failure? Or, do you focus only on “quick wins” and “bright spots” in your portfolio? If your choice is the latter, then you try to replicate the “bright spots” as much as you can — at the detriment of abandoning TTs.
I am yet to find even a single VC fund that doesn’t boast about investing in GREAT TEAMs. At the same time, early-stage seed investment is nothing but an educated guess.
As one of the most respected and inspiring VC experts, Steve Blank, says: you can call it a “hypothesis,” but it just a fancy word for “guess. So chances are, that with such a grueling vetting process in place — TTs are nothing less than BRILLIANT TEAMS — WITH LOUSY BUSINESS MODELS. I am counting on that….
According to Steve’s most elegant and concise explanation: Lean Startups should follow a simple 3-stage process:
First, you search for a repeatable and scalable business model. Be prepared for multiple iterations and pivots to find product/market fit.
Most TTs never pass the Search stage and become disillusioned by the difficulties in finding an inexpensive, predictable, scalable and profitable sales channel. Their sales force is not able to justify Customer Acquisition Cost (CAC) …… and TTs run out of money.
Why I Love Working With TTs
If you did everything by Steve’s book: Startup-Owners-Manual, and still didn’t reach the Build stage — call me before it’s too late.
Ambitious, tenacious, hard-working founders — are never at ease at admitting defeat. When execution fails and your visions turn into hallucinations — the dreams of wealth are becoming the nightmares of poverty.
You face a real possibility of losing it all, firing the entire team and closing the doors — for good. After going through such adversity, you will be much more receptive to outside-the-box thinking and open to receiving advice.
My point: don’t let emotions overrule your logic. It happens more often than you think — just look at the brilliant description of the elephant rider phenomenon by Heath Brothers. When you spook an elephant, no amount of logic, carrots or sticks is going to help. The rider just goes with the flow and hopes for the best ….
So what are you waiting for? What have you got to lose?
The bottom line: We are ready to help….the rest is commentary!
As Carol King says in her legendary song:
“When you’re down and troubled
And you need some love and care
And nothing, nothing is going right
Close your eyes and think of me
And soon I will be there
To brighten up even your darkest night…..”
Oleg Feldgajer is President & CEO of Canada Green ESCO Inc. Oleg is positioning the company to become a leader in financing AI enhanced green energy projects and ventures. CGE’s mission is to guide DISRUPTIVE businesses in ENERGY & TRANSPORTATION toward profitable business models. Oleg is passionate about such mission, and firmly believes that without AI based innovation, we will all prematurely choke on polluted air and dirty water. CGE delivers 100% financing (levered and unlevered) to its clients — and utilizes large equity pools, and non-recourse debt. Oleg offers creative, fresh ideas to open-minded businesses — that embrace both: logic AND opportunistic intuition. CGE stands against mediocrity & its modus operandi is quite simple: If CGE is not invited to join your BOD, or Advisory Board — we failed!
