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

Angels, Venture and Strategics: How to

International Biomass Conference 2019 Savannah, Georgia

Avisen

• Entrepreneurial law firm
• No Associates
• Former Big Firm Partners, in-house and regulatory

lawyers

• Strong growth and project finance background

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

• dd

d Taylor aylor

Roadmap

STARTUP FINANCING DEVELOPMENT FINANCING PROJECT FINANCING

Remember:

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

Mass Balance of Project Finance

• Equity
• Debt
• Feedstock
• Technology
• Construction
• Offtake
• Grants

Inputs

• Revenue

Project

• Equity return
• Debt repayment
• Salaries
• Feedstock costs
• Technology costs
• Construction costs

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?

Development Financing

• “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

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

Operating Company PE SPE Developer JV LLC

• If Developer doesn’t have

much money, expect Private Equity to get approx 90% distributions until IRR Target hit

• After IRR hit, distributions

equal

• PE will have significant

control

• Developers don’t make much

money first project

Project Financing

Operating Company Lenders Equity Contractor Technology Feedstock Offtake

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

Technology

• First of kind adds

risk

• Technology

guarantee, either by provider or insurance

• Clear

understanding of technology risk stops and balance

• f plant risk starts

Thank you

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