Thread by @d_gershenson

We've now talked to over 100 #climate #startup #founders for @enduring_planet and we're seeing a pattern. A 🧵

(1) First and foremost, there is incredible innovation happening in the space. The pace at which new #climatetech is entering the market and getting validation is staggering. We are truly at the early days of a New Climate Economy. I AM SO EXCITED 🍿🚀

(2) unfortunately, most #founders in #climatetech don't think holistically about the capital they're raising to finance their businesses. The vast majority (over 90%) are going exclusively after VC, without considering non-dilutive options

(3) the somewhat frothy #vc environment is sending a few signals that lead to sub-optimal outcomes: that there's a LOT of money for everyone and valuations are HIGH so it's cheap and easy. Except this is FALSE

(4) #VC capital, if you're even moderately successful, has IRRs north of 50% for individual deals. Here's a @cartainc piece on how VCs think about IRR (note NET IRR targets are 30%) carta.com/blog/internal-… and another from @KruzeConsulting kruzeconsulting.com/blog/post/what…

(5) don't get me wrong, #VC capital is amazing, but it shouldn't be your only source of funding. If you're raising $3M for your next round, getting even $250K in non-dilutive $ can be very valuable for your team. Plus every VC on your cap table wins, since they get diluted less

(6) not to mention that, spending those hard-earned expensive #VC dollars on things like marketing, channel partner development, etc (short term value) is not a good idea when you have alternatives

(7) people also seem to have an allergic reaction to #debt, which I think is a narrative that needs to go away. #founders should be encouraged to weigh options not in silos, but across the board. Raising money? Look at the full stack of options side by side

(7) Debt/alternative credit is a FANTASTIC way to capitalize your business (often without giving up ANY ownership), as long as you consider all the parts: cost, payment schedule, covenants, warrants/dilution, reporting requirements, etc.

(8) it sounds complicated, but in the end, it's a worthwhile exercise. And not all #nondilutive capital is built the same; every "lender" approaches the process differently. Diligence requirements, timelines, etc are all unique.

(9) Fortunately there are starting to be more options outside of #VC. We (at @enduring_planet) offer RBF today for post-rev climate startups. @laincubator has a new debt fund with a few compelling products. @UrbanUsCo offers asset-backed loans to #urbantech/climate startups.

(9) it's still early, but #founders, YOU HAVE OTHER OPTIONS. If you're looking to grow your #climatetech startup without dillution, hit us up. My DMs are open.