As I leave my role as CEO of New Energy Nexus, people have been asking me what advice I can give or what lessons I have learned from all the support we’ve provided to clean energy entrepreneurs.
I am loath to say my top three things or drop some pearls without getting to know the person and what part of the entrepreneurial journey they are on. It is not really my style to pretend there are generic truths out there for every startup or person getting on the solar coaster as we make clean energy happen.
However, it is incumbent on us to try to tease out the things that make sense to teach – that’s why we run accelerators. So, when pressed, I did think of three important realities that I don’t think get stressed enough with founders.
From right: Danny Kennedy (CEO of New Energy Nexus) and Megan Fisher (CEO of EnergyLab)
This is a play on the cliché that “cash is king” because, of course, it is important to have enough funding on hand to cover expenses.
This will be especially so in the US market as we enter a long winter of funding from other sources in the coming six months or so (uncertainty about politics is enough to chill the investment community, and if the wrong side wins the US federal election then government funding will be harder to come by too).
Cash is not just there to cover outgoings but to create opportunities, and to allow you to maneuver as an entrepreneur, as you inevitably pivot, to a variation on the initial theme of the business you thought you were starting. I have seen too many (hundreds!) businesses just run out of runway. It’s a very stressful feeling to know you have a good thing, the right team, and the right stuff, but just not enough cash to get there. And then if you go to some vendor of the commodity known as cash, like VCs, they often take advantage of you.
Be kind to yourself, your team, your vision and keep enough cash on hand to avoid that fate.
File photo from New Energy Nexus
Money matters more than you realize (and more than just cash to cover shortfalls).
Tech is key. Talent too. But the capital strategy of companies is where I have seen most fail or fail to fulfill their dreams. Too often, founders are focused on their own technical brilliance and do not develop a sophisticated understanding of the way they will pay for it to manifest IRL. It is often debt, or some combination of debt and grant, or gift capital that gets tech across the line. But we have all been brainwashed to think we can only sell equity to get capitalized.
This will become all the more important now that the energy transition has largely shifted from one of de novo invention to innovation around the deploy, deploy, deploy dilemma facing humanity. This is especially true as we aim to triple wind, solar, and battery installations as the main game of the energy transition and double the bog standard adoption of widely known energy efficiency solutions).
Clean energy companies are not tech companies in the end. They are development companies. DevCos as opposed to TechCos live and die on the creativity of their financial engineering. How they set up SPVs, adopt new instruments at low legal cost, and lever themselves smartly to build a first, second, fiftieth of their thing is what matters.
Our New York program at The Clean Fight’s summit with Cohort 1 startups in 2021
Finally, EQ is more important than IQ.
As a white man, I can say that I and a lot of other entrepreneurs out there are pretty enamored with our intelligence. What I have learned the hard way with my own startup stories, as well as supporting several thousand more, is that “people practices” are about feelings.
Emotional support for a cohort of founders, employees, and customers who are all probably suffering pre-traumatic stress from what they think they know about climate change and the paucity of their solutions is critical in our work. If you are not addressing how your stakeholders feel then you’re only dealing with the tip of an iceberg.
The act of active listening to team members does more for talent retention and iteration of your products than all the AI you can muster. And if you don’t take a moment to take care of yourself along this journey, you may not make it through the solar coasters and stress machines that are part and parcel of small businesses growing large. Even worse, you may miss an opportunity to build something of significance, by which I mean a legacy of which you can be proud.
You don’t want to look back on an apparent success at people you dropped along the way – and if you do you’ll probably be looking at a trainwreck of something that had so much promise but lost its way in the egoism of an individual.
We’ve seen that a lot at NEX with investors and others coming in to take over a profound vision from some technical founders only to lose their way on the true transformational potential.
At the end of the day, we all are passing on a better world to future generations by bringing clean energy generation in this generation! Be aware it’s a long haul and a lot harder than you think it should be.
Have cash to navigate your liquidity, a plan to stay more than solvent but able to choose your financial future, and enough humility to know that people matter more than any tech or brilliant ideas.
Thanks for playing. Shine on! ☀️
Danny Kennedy is the outgoing CEO of New Energy Nexus. After eight years of service, Danny shaped New Energy Nexus into the world’s leading organization supporting clean energy entrepreneurs. Social impact expert Henri van Eeghen will assume the CEO position effective 15 August 2024 (see here for more).
