Venturing into a CleanTech Business

Before a successful clean technology business plan is written and a new clean tech venture is successfully launched, the answers to the following questions must be determined:

  1. What is the true market demand for your clean technology solution?        http://issuu.com/blacksonville/docs/cleantechreport2007

  2. Competition analysis

    - How has someone done it in a great way?

    -What are the key problems I could face in successful implementation?

    - Has any project similar to mine in some form obtained VC funding? If yes, can I contact that firm and understand a bit more about how they went about getting the funding?

  3. How will you prove the feasibility of your clean tech venture?

  4. Does your business require heavy upfront cost - The heavy upfront investment required in certain sectors, principally wind and biofuels, may foster an environment where fewer players may succeed (at least relative to other clean tech segments) and large multinational corporations, such as ADM in biofuels and GE in wind, may have an early advantage?

  5. What kind of financing(e.g. debt, equity, etc.) will you need, and how much?

    Does your CleanTech venture seek debt or equity financing or a hybrid of both? What are the “Market Terms” for such financing? For example, interest rates, warrant coverage and related issues such as registration rights, anti-dilution protection and the warrant strike price for shares of the venture are all terms that should be addressed in any financing deal structure.

  6.  What sources will you seek capital from? 

    http://www.mbbp.com/resources/business/clean-tech-VC.html

  7. Outside of the traditional financing avenues, are there any models available for my domain? Also, what are the government incentives, concessions and subsidies that I can utilize?

  8. Intellectual property protection - Does your method, process or product have intellectual property protection? How is it distinct and unique from competing or similar technologies? Will it serve as collateral to any debt financing deal to the benefit of a lender in the event of default? 

    IP litigation has become one of the most prolific and hotly contested areas of law, with grievances and lawsuits filed almost daily across theU.S.over who owns the rights to technical minutiae and against monopolistic behavior by competitors. 

    Ensure that if there are legal issues related to your product or opportunity, you get help from outside right from the beginning to factor these; if you are developing IPs on which your business success will be based, ensure that you get the required legal protections such as patents etc.

  9. What relevant alternative energy experience does your management team have, which you can leverage to impress investors?

  10. What strategic partnerships (technical and implementation partnerships) will you forge? As cleantech is a new area, there are so many unknowns. Is it a good idea to go it alone?

  11. If this is a venture that requires a good amount of research, how do I ensure that I do not reinvent the wheel? Are collaborations with academia and related institutions required?

  12. How will you market (and/or distribute) your product/service? – In the scenario that I have limited resources and in the scenario that I have reasonable amount of resources?

  13. How can I use the fact that this is a new industry and use the early mover advantage to quickly build a great brand?

  14. How are others in related domains marketing their products in the first few years of their operations? How useful would it be to attend seminars, conferences and other such places where the industry congregates?

  15. Licensing - In terms of technology, there is a distinction between integrated products, those products that combine technologies into systems, and component-based products, illustrated by example as renewable batteries, photovoltaic membranes, or nanochips.  The degree of licensing to third parties will depend on how your product is characterized, the applied business model and the nature of the market in which it's being introduced.  If your product is a component, licensing will be a primary way to engage customers and clients since it cannot be economically viable unless it’s utilized in other computing, industrial or communication hardware or software aggregated on a systemic level. 

  16. Where to set up your business?

  17. Which are the best locations to set up a factory? Note that for new industries, locating the company in the right “cluster” could really be the difference between success and failure. Are there geographical clusters for my industry, in this context?

  18. How will the inability to “transport” energy impact geographic market analysis? For instance, wind turbines must be placed in locations that have certain wind flows, and the converted kinetic energy cannot be “shipped” very far, at least not until smart grids are more fully developed.

  19. Are pilot projects required before the commercial implementation? And if it is a highly research oriented domain, do I first need to set up a lab before I can go ahead?

  20. What are your future financial projections?

  21. What is your "exit strategy"?

    http://eai.in/blog/2010/06/exit-strategies-for-investors-in-indian-renewable-energy-sector.html

  22. What are the best ways to get the best talent? For any innovative area, getting great talent to begin with could put you at a significant advantage. How do I ensure that I get that great talent to start off? Where is such talent available? What will make them join a startup?

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