Angels, Venture and Strategics: How to International Biomass - PowerPoint PPT Presentation

Angels, Venture and Strategics: How to International Biomass Conference 2019 Savannah, Georgia

• Entrepreneurial law firm • No Associates • Former Big Firm Partners, in-house and regulatory lawyers • Strong growth and project finance background Avisen Jules: I don't wanna hear about no ifs. All I wanna hear from your ass is, You ain't got no problem, Jules. I'm on it. Go back in there, chill them out and wait for the cavalry which should be coming directly. Marsellus: You ain't got no problem, Jules. I'm on it. Go back in there, chill them out and wait for the Wolf who should be coming directly.

Tod odd d Taylor aylor

Roadmap STARTUP FINANCING DEVELOPMENT PROJECT FINANCING FINANCING

Investors want to make money They only care about your Remember: technology, product or project if it makes them money Investors want lowest risk, highest return

Mass Balance of Project Finance Project • Equity • Equity return • Debt • Debt repayment • Revenue • Feedstock • Salaries • Technology • Feedstock costs • Construction • Technology costs • Offtake • Construction costs • Grants Inputs Outputs

Developers do this though…

Angels: Start up financing • Usually up to $5,000,000 • Friends, Family and local investors • More risk, more reward (theoretically) • Business plans, early engineering, working capital…does this even make sense?

• “Valley of Death” financing • Too much for angels, not ready for project financing • Corporate or Venture Financing. Some early Private Equity • Grants • Use Money for engineering, site preparation, working capital Development Financing

Venture Finance • Not as much VC as before • Biomass usually too capital intensive • VC’s tend to invest in technology companies close to revenue • Investment structure is preferred stock with significant financial upside and control • Corporate VC’s generally the same, but if strategic, may take more risk

Private Equity Structure • If Developer doesn’t have Operating much money, expect Private Company Equity to get approx 90% distributions until IRR Target hit • After IRR hit, distributions JV LLC equal • PE will have significant control • Developers don’t make much PE SPE Developer money first project

Project Financing Operating Company Technology Contractor Feedstock Offtake Equity Lenders

Lenders • Lower risk, lower rate • Long term contracts • Independent engineer review • Technology and other insurance • USDA or other guarantees

Equity • Higher risk, higher return • Control • High rate of return (15% or more) • Private Equity • EB-5 • Qualified Opportunity Zone investors • Hedge Funds • Local Community

Contractors • Engineering • Procurement • Construction (sometimes together as EPC) • Lenders will want a “wrap” with price and time guarantee • Warranties

Feedstock and Offtake • Both terms for at least as long as loan, if not longer • Credit-worthy companies • Backup plans • Feedstock that works with technology • Feedstock that is reliable in quality and supply • Offtake that has predictable pricing • As little regulatory variability as possible • As much regulatory pricing as possible, i.e., RINS, LCFS, Carbon

• First of kind adds risk • Technology guarantee, either by provider or insurance • Clear understanding of technology risk stops and balance of plant risk starts Technology

Todd Taylor Avisen Legal CEO and Attorney 612 325 5036 ttaylor@avisenlegal.com Thank you