Starting Your Own Clean Energy Business - What Does It Take?
- Nov 8, 2022 6:23 pm GMT
Clean energy project development is an entrepreneurial venture, with significant risks and unknowns, and it requires an immense amount of time and financial resources to complete projects. But individuals are launching their own companies every day, bolstered by clean technology trends. What does it take to start your own renewable energy development company? This article offers some insight into that question and includes advice from Matt McMonagle, CEO and Founder of NovoHydrogen. Prior to founding NovoHydrogen six months ago, Matt served as the Vice-President at Dimension Renewable Energy and oversaw all the firm’s energy storage projects. He also worked at ForeFront Power and SunEdison.
So you want to launch your own clean energy business, what should you know? Here is a list of the top ten suggestions.
- Make sure you have the right temperament.
Matt talked about the importance of passion in what you do and having an ability to weather uncertainty and ambiguity. “When you start your own company, you must do many different things and often there is not a clear precedent. If that excites you, then great, but if not, you may be better off working for an established company, in a mature market, with clearer responsibilities”. Matt worked for five previous companies – four of them start-ups - so that gave him comfort in understanding the culture, its evolving nature, and the lack of a clear job description.
- Understand the competitive landscape and where you fit.
Be laser focused on the market and where you show up in the value chain. Matt left Dimension Renewable Energy, a company that develops solar and storage projects. Solar and storage are known technologies and serve more mature markets. Starting a small company focused on solar and energy storage can be harder because large companies operate in these mature markets. Green hydrogen, on the other hand, is not a mature market, especially in the Americas. Matt “could be early but not too early.” In that way, there is less risk.
Hydrogen technology has been around, but has not been cost effective yet. Countries in Europe have been in the field a bit longer, and are a few years ahead of the U.S. in green hydrogen. As a result, Matt felt the timing right to start a green hydrogen company here in the U.S. because the green hydrogen market is new, evolving, entrepreneurial and development is inherently local.
- Figure out your niche — pivoting from one technology to another should not be considered lightly.
Matt’s ambitions differed from his former company’s path, which gave him more impetus to do his own thing. That said, moving from energy storage and solar to green hydrogen was not something he considered lightly. He spent many hours researching the green hydrogen market. He notes, when you pivot from one technology to another, it may be even harder because you must bring knowledge and expertise to something unfamiliar.
- If your niche includes the same business as your current company, understand the non-compete clause.
If you are leaving an established renewable energy company to launch a new firm in the same market/technology, it is important to understand any non-compete clause. One employee leaving to start a new firm may not be controversial but several employees looking to branch out is a common litigation scenario. Non-compete agreements are enforceable if restrictions are reasonable in duration/scope/geography.
- There is risk in anything you do.
Even though starting a new company is risky and uncertain, Matt noted there is risk in everything – including staying put. An established clean energy company may decide to lay off an entire division, or merge with another firm. Though he knew it would be challenging, Matt decided creating his own path was worth the risk. At worst, he could still get a job elsewhere even if his venture didn’t work. Starting his own green hydrogen company would build marketable skills and allow him to work in a field he was passionate about.
- Acquire any necessary capital.
Every business succeeds or fails based on its ability to sustain itself financially, but it could take some time before revenues exceed costs. Although there are several financing options for new businesses and startups, research shows that almost all entrepreneurs invest some personal savings at the early stages of their business. Some entrepreneurs obtain financing from banks, venture capital, or other development capital providers like Leyline Renewable Capital. The first two options may be harder to obtain in the early stages as they tend to want to see an existing company with strong growth potential before lending money.
Matt launched his firm without any other co-founders and had enough money committed from investors that he felt comfortable taking the leap. Beginning a firm on your own versus with others is a choice to weigh carefully. For some, starting up alone is easiest. However, it may pose challenges when it comes to gaining investors, if the investor isn’t willing to risk it all on one person.
- Hiring people in a small company is hard.
Matt started his company without another co-founder. He knew that he had to hire staff immediately but noted that finding the right people in a small company is crucial. But it is a two-way street: while he is hiring for the company, that person is also taking a chance on him. Wrong decisions are costly.
- There is more development capital today than ever before.
There is much more development capital available for companies today than there was 3-4 years ago across all different stages of development. The good news is that it is easier to get money from lenders, which makes starting a company less stressful than in the past. When capital is committed and mentors are available to guide you, this is one less thing to worry about.
- In the end, betting on yourself is worth it.
Matt said it was a “no-brainer” to start his company and in retrospect, he would have regretted it if he didn’t take the plunge. In the end, everything is in flux, and you must evaluate what is right for you. Betting on himself, Matt said, was well worth it.
10. Be willing to accept help and leverage your network.
No one person or company can do everything on their own. Check your ego at the door and take advantage of help that others are willing to provide. Matt credits a big part of his conviction to start NovoHydrogen to the amazing mentors, leaders, and bosses he has worked for and with throughout his career. They have shown him how this is done and remain trusted advisors.
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