Transitioning to Private-Sector Financing: Characteristics of Success;

The purpose of this paper is to help entrepreneurs commercialize clean energy, technology-based products. We hope that by shedding light on the private capital investment process and the characteristics and strategies of entrepreneurs who obtain financing, we can assist and encourage others to do the same. Entrepreneurs often assume financial hurdles will be significantly lower once they haveperfected their technology. Many are surprised to learn about the business requirements that must be addressed - beyond having a great technology - to attract the interest of the venture-capital community. In a classic chicken-and-egg scenario, energy entrepreneurs need private financing to turn their new technology into marketable products; but private financiers often want marketable productsand a well-rounded business plan before they risk any funds. How can these hurdles be overcome? What do successful entrepreneurs have in common besides a good technology? We have found that successful clean energy entrepreneurs: 1) Take time to understand and involve the financial community early in the developmental process, 2) Strengthen business fundamentals early in the commercializationprocess, thereby significantly increasing value in the enterprise, and 3) Are focused and driven by market considerations. These characteristics do not guarantee success, but they definitely give the entrepreneur an upper hand in attracting private-sector financing. Moreover, the chances are the strongest when firms have all three characteristics; one or two is rarely sufficient. The mostsuccessful companies tend to have key managers that develop comprehensive strategies around these areas and are well schooled in making the business a success.