“Making a virtue out of need” review and outlook: Alternative financing strategies for our green industrial start-up
In the lead up to the Recovered Carbon Black 2019 conference, we interviewed Claus Lamer, Co-founder of Carbon Recovery GmbH to explore the interesting topic of securing investment and finance, and the challenges and solutions when it comes to start-ups within the Recovered Carbon Black Sector.
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:
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:
Pleasant side effects:
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.