Top 5 Things Cleantech Entrepreneurs Fail to Understand About Raising Capital

Source: David Gold, CleanTechies, September 27, 2011.  David Gold heads up cleantech investments for Access Venture Partners. He is also the author of the GreenGoldBlog.

David Gold

After decades of venture capital investment, growth and exit, the traditional focus areas of venture capital (such as IT, web and software) have developed strong entrepreneurial ecosystems. A high percentage of start-ups in these traditional areas come to market with one or more experienced entrepreneurs or with a strong and active network of investors/advisors who have “been there, done that.” They know what it takes to raise capital and to build a great fast-growing business. Cleantech companies, however, are much more likely to be led by first-time entrepreneurs who often struggle to create an ecosystem of experience people around them.

As a venture capitalist, I review hundreds of business plans each year and physically meet with roughly a hundred entrepreneurs seeking capital. I have the advantage of doing this through the eyes of someone who has been on the other side of the table, having raised venture capital for my own start-up before becoming a VC.  And while there are certainly numerous exceptions, there are themes I see across cleantech start-ups that are not specific to their technology or market but which nonetheless impede their ability to raise capital. Here is the top five…

  1. Technology is necessary, but not sufficient.
  2. Your 50-page business plan is a waste of time.
  3. A real advisory board isn’t just a list of cool names.
  4. 25% gross margins and growth to $20M in seven years aren’t exciting
  5. Last, but by no means least…raising capital is a social sport.

Read the whole story here.