UK: Investor Readiness For Cleantech

Last Updated: 20 April 2011
Article by David Berry


This is a note of the key themes discussed during the breakfast seminar on 5 April 2011.

The seminar was chaired by David Berry, with introductions by Adrian Mayer, both partners at Charles Russell.

Our first keynote speaker, Jonathan Treacher of specialist investment bank Ardour Capital, provided some useful insights into what external investors are looking for when considering prospective projects, companies and management teams.

Patrick Caiger-Smith of Green Energy Options (GEO) addressed the issues facing cleantech companies in search of finance, particularly drawing on his own experiences as co-founder of GEO, which has raised substantial equity capital without institutional funds.

The Investment Bank perspective

Jonathan's presentation demonstrated that the willingness of investors to invest can hinge on a variety of issues. An investor is not necessarily looking for a "killer app" which is destined to dominate the global market, but it is looking for a fundable business that is transparent, simple and well-organised.

When approaching potential investors in search of finance, companies should follow these golden rules:

  • Prepare a well structured business plan: Make it easy for investors to buy into your company or project by ensuring that your business plan concisely outlines your product and shows your route to market. Keep your business plan up-to-date and be ready to attend meetings with investors at short notice. Take care not to revise your forecasts downwards however, as this can be fatal. Make projections you can exceed and then exceed them.
  • Know your competitors: Banks are likely to have seen previous proposals for similar kinds of products. Make your project stand out by emphasising your Unique Selling Proposition (USP).
  • Understand the regulatory framework: Inspire confidence by showing potential investors that you know about the industry in which you are operating.
  • Think about your management team: Show a potential investor that you have a strong and committed management committee who are ready to get involved; even if the whole team is not yet fully in place.
  • Think about your audience and the tenor of the investment: Keep in mind what kind of investment your investor is likely to be looking for. How involved will they want to be? Are they looking to invest in the long or short term? Think about their exit strategy.
  • Show contractual certainty: For example, in the renewables sector, an investor will want to see that you have secured a supply of feedstock and have Power Purchase Agreements in place for future sales. Show that you have a competent EPC contractor on board. Any planning permission should be arranged or imminent. Avoid springing last minute surprises on potential investors.
  • Respond immediately when an investor asks for further information. " Do not let your project become "shop-worn": Approaching too many investors with a poorly structured proposal (the "shotgun approach") can weaken your options in the long run.
  • Never push an investor for a "fast answer": It will usually be "No". Give investors time to get comfortable with you and your offering. Feed them a steady diet of positive news. Plan your time and money effectively to show an investor that you can do without their money, but that a boost in funds would drive you forward.
  • Maximise your fundraising budget and maintain cash flow: Start fundraising 7- 8 months before you expect to run out of money in order to maximise your bargaining position. Failure to anticipate your needs for fundraising can result in a low-ball offer (or no offer at all) and will reflect poorly on your management. Remember, the process of fundraising can itself be costly, as you may need to finance trips overseas to meet investors. Obtaining funding is a key driver to the success of your business, so do not regard time or money spent on maximising opportunities as "wasted".
  • Do not "burn your bridges": Even if you see a potential investor who cannot invest now, it is important to maintain good relations for the future. Above all, you need to invest time and money to make your project or company attractive to a potential investor. As Aristotle Onassis said, "when I see money, I do not run, but just walk very slowly towards it".

The Cleantech company perspective

Green Energy Options (GEO) specialises in the design and manufacture of energy management display systems for the domestic and commercial market.

As co-founder and Managing Director of GEO, Patrick Caiger-Smith has experienced first-hand the challenges facing Cleantech companies in search of finance. Although GEO's pre-revenue efforts to approach venture capitalists proved unsuccessful, GEO has raised substantial equity capital (7 figure sums) from high net worth individuals and angel investors.

Patrick's presentation demonstrated that there are significant benefits in obtaining funds from private investors, which may not first meet the eye:

  • Time frame: Typically, a private investor will look to invest within just 6-8 weeks, however applying to an institutional investor can take 4-6 months.
  • Extra-monetary involvement: The level of involvement offered by any investor will inevitably vary; some investors will require regular updates and have a genuine interest in the nature of the business, while others will be solely interested in their capital return. An experienced investor can add a wealth of non-monetary value to a project using their contacts and knowledge of the industry.
  • Pros and cons of fundraising in stages: Fundraising in stages can be a timeconsuming and high risk strategy, as it requires multiple stages of "good news" to entice investors. That said, the challenge of having lots of minor shareholdings is often offset by the fact that it is less likely your company will need to renegotiate its shareholders' agreement, or be subject to issues of undue influence, as one agreement will usually fit all, with no one shareholder in a dominant position.
  • Expected return on investment: A venture capitalist will typically expect to receive a 10 times capital return on his investment within 5 years. Patrick pointed out that this expectation can be risky for a small start-up company, as it may unrealistically embellish its business plan in order to "get to the table". As high net worth individuals are often less determined to secure this level of return, they can be a more appropriate method of investment for start-up companies. While echoing much of Jonathan's advice, Patrick would encourage companies in search of finance to consider the following:
  • Keep your message simple: This is fundamental. Keep your presentations to a maximum of 30 minutes and do not talk about the intricacies of your technology. It is critical to outline your route to market.
  • Find an independent broker or stock broker: This is essential. A broker will open doors by introducing you to a host of investors to whom you may not otherwise have had access.
  • Register as an EIS company: The Enterprise Investment Scheme (EIS) is a government initiative that allows certain tax reliefs for investors who subscribe for qualifying shares in qualifying industries. Registering as an EIS company will make your company much more attractive to future investors, as they will benefit from 30% income tax reliefs from 6 April 2011, subject to state approval.
  • Consider who you are hurting: If you are new to the market, who will you displace if your company takes off? It is important to consider and pre-empt the likely response of any existing competitors.
  • Limit how much control you give away: If you choose to fundraise in stages, do not give away more than 20-30% of your company at each round of investment.
  • Ensure that the investor you are targeting has the money to invest: Do not waste your valuable fundraising budget "barking up the wrong tree".

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.