How to convince a VC partner to invest $100M without having the $500K Feasibility & Associated Studies?
We are seeking a venture capital partner for a renewable start-up that has exclusively licensed 3 types of incredible 'waste-to-energy' technologies. The project team is made up of very qualified process engineers, managing directors, mergers & acquisitions specialists etc who together have completed a significant level of baseline assessments.
At this point we need $500K minimum for the environmental impact assessment, social impact assessment, constraints and siting study in order to complete the actual feasibility study for presentation to the VC partners. But we don't have $500K to start with?
So we are struggling to convince anyone to invest $500 for the required studies but know from 3 years of global research that the technology stacks up... What do we do?
Venture Entrepreneurs Seed Funding Capital
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I don't understand your question. Ask the same people for less money, e.g., $1-10M. After you do your study, if everything works out, ask for $100M. – Kekito 13 years ago
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If the team is made up of "mergers&acquisition specialists" and "managing directors" and you need to ask for basic advice here, I'd say something is wrong. Sorry to be rude, but that will be how investors see it too. – Alain Raynaud 13 years ago
2 Answers
"The project team is made up of very qualified process engineers, managing directors, mergers & acquisitions specialists etc who together have completed a significant level of baseline assessments." If this is all true, you should easily be able to raise the $500k. If you mean MDs and M&A execs, from IBs, they'll all be paid millions of dollars, so raising the money should be trivial. My M&A MD friend and business partner earns $1M a month at an IB.
It seems to me that if you guys believed in the project, you'd find the money somehow. Or, you'd convince an Angel to give you the money for, say 10%.
Do you know for sure that you need these studies to get VC funding? They will probably do their own study anyway, as part of due diligence, if you need $100M.
What about the owners of the technology you licensed? Why don't they pay? Presumably they will fire you and get someone else pretty quickly if you don't move ahead with this quickly.
Unfortunately VC investment follows fads. Your kind of company was hot 5 or 6 years ago. Right now, VCs are licking their wounds from other companies that needed to raise $100M in future rounds that never materialized. I don't think they're in the market any more for that kind of company.
If you can build a business plan that doesn't require the $100M plant, you will probably find them more receptive. For example, if you can change it into a license play, or a technology play, if you can show a live customer you will probably get investment.
