“Making a virtue out of need” Review and outlook: Alternative financing strategies for our green industrial start-up- Insight from Claus Lamer,Co-Founder, Carbon Recovery
Here at Smithers as part of our Recovered Carbon Black event, taking place 21st 22nd May 2019 we interviewed Claus Lamer, Co-founder of Carbon Recovery GmbH .
We explored the interesting topic of securing investment and finance, the challanges and solutions when it comes to start ups within the Recoverd Carbon Black Sector.
Hear more from Claus and join your peers by booking your ticket here today
Claus explains that the starting position for Recovered Carbon Black companies is likely to be the same for industrial start-ups worldwide: there is a good idea for a technically, economically and ecologically sustainable solution to a problem (often even a proof of concept), but limited equity among the founders. Venture Capital and Business Angels find your solution "interesting", but they invest (usually) only if:
- the solution has already been implemented and patented
- the technology works well and
- "customers are queuing in front of the door" (this also applies to many "funding agencies for EU subsidies").
After all, the Venture Capital ultimately determines the corporate strategy, which is often enough to grow as fast as possible and exit as quickly as possible (with the highest possible profit).
The problem is simply that you must prove something (in order to get money and to start), that you can only prove with this money!
How do you break out of this vicious circle? And how can you still retain control (as the founder)?
Our key was / is:
- to break out of this "big vicious circle" and create more “smaller circles” (which can be managed /resolved more easily and with less money)
- else we quickly expanded our network with internationally renowned industry (ELT and pyrolysis) experts, and finally
- we acquired equity (against minor company shares) and loans (repayable after 5 years) by two renowned crowd-funding agencies (accompanied by good AdWords campaigns, pitching as often as possible, countless meetups and participation in Start-up competitions).
Pleasant side effects:
- that we were able to compensate our (partially existing) lack of know-how, through our highly experienced new and friendly shareholders, and
- the pre-money-valuation was rising from round to round
But there are also downsides and pitfalls in alternative financing strategies: these are e.g. complex financing structures, high transaction costs and inflexibility in need for adjustment.
What is your view and experience? Join us at Recovered Carbon Black to share ideas, meet new partners and gain critical insight into the latest industry developments.