Sun Number awarded $1 million by DOE to lower solar acquisition costs

by James Lester, Managing Consultant with Cleantech Finance

Rockies Venture Club presenter Sun Number has announced an award housesof approximately $1 million to expand the geographic coverage of its rooftop solar assessment services through the Department of Energy’s SunShot Incubator program. The award also enables Sun Number to expand the scope of its services by providing additional data that solar contractors will use to grow their businesses and lower customer acquisition costs.

“Being chosen as a SunShot 8 Incubator award recipient to commercialize Sun Number data will significantly accelerate our growth as a company.  The SunShot funding will be used to quickly expand into new cities increasing the number of buildings analyzed to approximately 35 million,” said David Herrmann, co-founder of Sun Number.

Herrmann added, “The funding will also be used to integrate additional data into the analysis of properties, including data on the likelihood of a building owner qualifying for a solar lease or loan, and the statistical likelihood that a building owner will be interested in solar based on a behavioral model that will be developed.  The data that Sun Number provides brings an installer closer to being able to complete the design of a PV system from their computer in a fraction of the time it currently takes.”

According to the company, Sun Number Scores will now include the economic suitability of a property for solar. Integrating the suitability of the roof for solar with the local cost of electricity, incentives, tax benefits, and the local cost of installation, the Sun Number Score will tell a homeowner if the economics of solar make sense for their building. The new Sun Number Score will be dynamic and as the variables mentioned above change, so will the score. Homeowners with a low score today will be able to set a threshold for the future and get notified when their Sun Number Score reaches that threshold.

The SunShot Program, initiated by the DOE in 2007, has incubated the emergence of 58 U.S. startups. The program has leveraged $104 million in federal money to generate more than $1.7 billion in private sector investment, or nearly $18 of private sector buy-in for every dollar of taxpayer support.

The long-term SunShot vision is for the U.S. to get 14 percent of its electricity from solar by 2030 and 27 percent by 2050 and to drive down the cost of solar electricity to $0.06 per kilowatt-hour.

“Over the last three years, the cost of a solar energy system has dropped by more than 70 percent,” DOE Secretary Ernest Moniz said in announcing the awards. The new investments will back more programs that reduce “soft costs like permitting, installation and interconnection” and “improve hardware performance and efficiency.”

Sun Number, previously profiled on the RVC blog here, was co-founded by Herrmann and Ryan Miller after receiving a $400,000 grant last year from the Sunshot Incubator. Sun Number used the funding to develop a tool to make it easier, faster and less expensive for both homeowners and solar companies to analyze the solar potential individual properties. The tool, known as a Sun Number Score, engages consumers by providing a solar analysis of their home or office building with an easy to understand score between 1 and 100, and then putting them in touch with a local solar professional. Solar professionals are able use the tool to reduce the costs of customer acquisition, often called ‘soft costs’.

If you would like to learn more about Sun Number, visit their website or contact David Herrmann at david.herrmann@sunnumber.com

Why does RVC pitch so many companies?

Why do we pitch so many companies?baseball-vc-pitch

I like to tell the story of the first time I filled out a questionnaire about Rockies Venture Club’s activities for the Angel Capital Association.  When I got the the question about how many companies we present each year, the choices were something like 1-3, 4-7, 8-10, 11-15, 16-20, 21-25, 25+ pitches per year.   With over 100 companies pitched in 2012 and 80 in 2013, we are off the charts!

I have a huge respect for the people I’ve met at the ACA, so I began to wonder whether we were doing something wrong.  I started looking at how the different angel groups functioned and why we were different.  Here is a summary of what I found:

1)      RVC is unique in that it serves the whole community and not just investors.   We have pitch events with 100+ people watching four pitches every month and conferences with hundreds of people watching 12 or 24 pitches.  We reach out to the community through partner groups.  If you just have a few dozen angels to depend on for your deal flow, then you won’t see a lot, but if you involve the whole community, then the deal-flow suddenly becomes significant.

2)      RVC is also unique in its focus on education.  By educating both the angel investors and the entrepreneurs, we make a smarter environment full of smart investors and savvy entrepreneurs.  This means that there are more high quality deals available than if no quality educational resources were available.  Without Pitch Academy we’ve noticed that most  (but not all) of the pitches we see are pretty flat.  They’re not only poor pitches, but the thinking behind them is often thin and poorly researched.  RVC workshops help entrepreneurs to build a solid logic to their plans, backed up by good research and hard work.  This alone is not enough to succeed, but it definitely raises the bar and puts higher quality deals in front of investors who now have the tools to really evaluate the deals that they’re looking at.

3)      You could challenge our plan to pitch roughly one in ten applicants.   “Why not just pick a few really good companies and go with them?”   There are a few problems with this challenge.  The first is that in many cases you don’t know which companies are good until you pitch them and get into due diligence.  If you just goody-pick the companies with great executive summaries all you get is companies that are good at executive summary writing.

4)      What about the 75% of RVC pitch companies who don’t get funded?  I’m often surprised about what does and what doesn’t get funded.  What I have seen is that something like two thirds of the companies that don’t get funded didn’t make it because they weren’t ready to pitch yet.  They still had homework to do in order to back up their plan and to refine their message and build a sharp strategy.  Some times these companies give up and other times they go back to the drawing board and come back six or twelve months later with a new CEO on board and the funding falls immediately into place.  Giving these companies the opportunity to pitch provides them with the perspective that they need to grow and get funded – or better yet, it teaches them how to bootstrap so that they never have to be beholden to angel or VC investors!

5)      Seeing lots of companies is the best way to build your 10,000 Malcolm Gladwell hours as an investor.  Some angel groups pitch only one company per month.  It would take one of those angels ten years to see as many deals as an RVC investor sees in a year.  Which investor do you think is going to have the ability to spot the winners from the losers?  Pattern recognition plays a big part in investing and the only way to build that is to see lots of deals.

6)      Enterpreneurs benefit by seeing lots of pitches too.  If entrepreneurs can see lots of great pitches, they get an idea for how high the bar has been set in our community.  They see what investors like and don’t like and they get to see which companies get funded and go on to do great things.  In many angel groups, the first pitch the entrepreneur sees is their own.  This is a bad way to learn how not just to pitch your company, but to build a winning strategy and team.

After thinking about it, my conclusion is that, like so many things, the best solution is to reach a balance.   It’s great to pitch a lot of companies for perspective, exposure and deal flow, but you also have to be prepared to limit the companies pitching to the ability of your entrepreneurial community to produce quality deal flow.    Right now we’re seeing 80 quality deals a year, but if things slow down, 60 might be the  right number, or if they heat up, then maybe 120!

To see a dozen great pitches – and I mean it – twelve highly investable companies – attend the 25th Rockies Venture Club Colorado Capital Conference.  #2013CCC   This even will have twelve great companies PLUS presentations from four Colorado companies that have gone big-time and had huge exits this year.  Hear from their founders and CEOs to learn how they did it and what to watch out for as either an investor or entrepreneur.

November 6-7 in Denver and Golden.  The 25th Colorado Capital Conference

Register for Investing In Tech Companies event

 

The Debate: When Should a Company Start Planning its Exit

success-next-exitI’ve been talking to a lot of people about exit strategies this year, including VCs, Investment Bankers, two and three time exit participants, entrepreneurs and investors.  I’ve heard a lot of great exit stories and yet there doesn’t seem to be a consensus about when a company should begin planning for its exit.

One school of thought is that you should just start a company and grow it as fast as possible and you’ll know when it’s time to exit.  This has been described kind of like lightning striking and then it’s time.

The problem with this school of thought it that it is all wrong.

Companies should be thinking about their exit plan before they even form the company.

Why?

Here are a few reasons:

1)      It’s an agreed upon principle that a company should really know its customer.  If you’re selling widgets  through your company, you need to know the widget buyers, but if you’re eventually going to be selling the company, pursuing an IPO or other exit, you need to know your customer – and it’s not the guy who buys your widgets – it’s the company that acquires you.   You need to know why your company would be a strategic advantage for them – would you provide a geographic benefit?  A new set of clients? Intellectual Property? Or would they buy you just to get rid of a meddlesome competitor?  You need to know who will acquire you and why they want to acquire you.  Once you know that, then you build the company to provide the most value to the people who will buy it.

2)      Exits aren’t executed in a day.  By the time that you realize it’s time to exit, it’s probably too late to put a plan together and get it done.  Smart companies plan for their exits and understand acquisitions in their field and structure their company so that multiple companies will be likely to be bidding for it when the time comes.  If you spend your time building a company that has only one potential acquirer do you think you’ll get top dollar?  A great exit is built on relationships.  These can take months and years to cultivate, especially among multiple acquirers.  Why not begin those relationships at the start and shorten the time to exit?

3)      Understanding exits is the key to understanding company value.  Many valuation methodologies for early stage companies are based on the exit value.  The Venture Capital Method begins with potential exit scenarios and then discounts the value of those exits to present value.  If the company can’t develop a strong case for a big exit, they will either fail to raise venture capital, or they may raise capital at valuations far lower than their potential.  Early stage companies should research who is acquiring whom in their market and for how much.  This research will make them much more attractive to investors who know that without an exit, they will never get their money back.

4)      I recently worked with a company that set up several subsidiary companies with different ownership structures and potential conflicts of interest among them.  This could make sense in terms of building an international distribution business, but it makes no sense to potential acquirers.  Ultimately this strategy would lead to much lower acquisition price in the end.  If you think about the exit when you’re setting up your company, your decisions will be easier since you can just ask yourself “what will add the most value to an acquirer?”

5)      Finally, there’s Steven Covey’s second Habit of Highly Successful People “Begin with the end in mind.”   Do you think he meant this for everything except something as important as the destiny for your company?   No, you need to found your company with the idea that there will be an exit and a clear idea of who will acquire it.  Without this clarity, the company will be spinning its wheels on initiatives that may not ultimately be adding value to the acquirer.  Some people say that you can’t know for sure who will acquire you when you’re just starting out.  Sure – that’s true.  But the fact is that you can’t know ANYTHING for sure, so if you can only plan for things you know for sure, the only sure thing is that you shouldn’t be planning on being an entrepreneur.   I’ve heard the same arguments from people that entrepreneurs shouldn’t even bother with a business plan – just do it, they say.  This is a pendulum-swing response to those who are stuck with analysis-paralysis which is also a company killer.  Neither extreme is good.  These people are sometimes lucky, but more often not, they’re forming part of the 90% of businesses that fail.  All investors and entrepreneurs should know that their plans are not likely to be executed as stated, but this doesn’t mean that there shouldn’t be a plan.  Without a plan, there is no alignment among team members, no goal, no smart thinking about options and alternatives, and all you’ve got going for you is luck.  Good luck with that.

 

To learn more about exits and learn from some of the biggest exits in Colorado, attend the Colorado Capital Conference November 6-7 and hear about seven big exits and how they happened.  You’ll also get to see twelve great startup pitches, all of which have a clear exit strategy articulated!  Join us and follow the debate!

Register now at www.coloradocapitalconference.org

Register for Investing In Tech Companies event

Four Tips to Know if You Have Practiced Your Pitch Enough

Practicing your pitch is one of the most important parts of presenting to a group of investors.  While some people can do a pitch with relatively little practice, no one can just wing it.  So how do you know when you’re ready to pitch and you’ve practiced enough?   Here are a few quick tips:

1)       Practice at least ten times before you pitch in front of someone else.  You should get to the point where you’re not having to think about what you’re saying – you have key phrases that you use every time.

2)      Time your pitches.  If you have more than ten seconds of variation between the pitches,  that means you’re making up new stuff each time.  Practice enough times that you can hit the same amount of time within ten seconds each time you present.

3)      Memorize your slide order.  If you have fifteen slides, you should be able to recite the titles of each of the slides in order.  This way when you’re on your “problem” slide, you’ll know that the next slide is your “solution” slide and you can transition smoothly and powerfully from one thought to the next.  Have someone quiz you for the complete order and starting at random slides so that you always know what is coming next.

4)      Be smooth even if you have distractions.  Use the TechStars method and have people throw wadded up balls of paper at you while you’re pitching.  Have someone unplug the projector and then practice dealing with that smoothly and without dropping a beat in your presentation.  Things often go wrong in a pitch, so be ready to roll with the punches.

If you do these things, your pitches will be more professional and confident and you will be better prepared to communicate your ideas most effectively to investors.

Colorado Needs More Exits

At the Esprit Entrepreneur Conference in Boulder this week a question was asked about how we can make Colorado more than a flyover state and attract more out of state investment.

Given that Boulder and Denver are in the top three cities for startups on a per-capital basis, it’s clear that we don’t have a problem with developing an entrepreneurial community  and the great high quality deal flow that comes from that.  I’m continually impressed with the ability of the Front Range ecosystem to turn out high quality companies.

But, if we want to attract more out of state investors, we need to have more Colorado exits that we can celebrate and make public.  This year has been a great year for Colorado exits with the IPOs from Noodles & Company and Rally Software.  Both companies have more than doubled since their IPOs and are doing great.  We’ve also had a number of great $100 million plus acquisitions including LineRate and NexGen Storage.

Colorado needs to get the word out more about these great exits.  We’re well known for startups, but investors know that without exits, there is no way to get their money back.  In short, exits are what investors care about.  When investors see that our community is sophisticated and is thinking about how to best position ourselves for exit, even if it is an acquisition by an out-of-state firm,  that there is a greater chance of attracting those coastal dollars to Colorado.

Rockies Venture Club is celebrating Colorado Exits with its 25th Colorado Capital Conference November 6th and 7th, 2013.  www.coloradocapitalconference.org  We will be hosting twelve great startups whose pitches will ALL include a description of their exit strategy so that investors know how they will get their investment back.  The theme of the conference is Steven Covey’s Second Habit of Highly Successful People – “Begin with the End in Mind.”

We will also have speakers from the top companies who have had exits this year who will tell us how they positioned themselves, how they decided on IPO vs. acquisition, and when they actively started the exit process.  The fact that the founders are still with the companies shows that an “exit” is really a liquidity event where money is returned to investors, not an actual exit where the founders leave a company.  This year’s CCC is a must-attend event for investors and entrepreneurs alike.

Do YOU Have What It Takes To Exit? Find out at the Colorado Capital Conference

You think you can sell your company? Learn from those who have done it at 2013 CCC next week!

 

The entrepreneur’s dream: starting from scratch, building something significant, and creating value for everyonesuccess-next-exit on your side. Maybe that means holding on to a business you could retire on or pass down to your family. If you’re in the VC world, taking on investors means you are expected to cash out, hopefully for far more than was invested. Acquisitions and IPOs are great, but why doesn’t it happen more often? A successful exit can be a rising tide that lifts the boats around it – why do so few entrepreneurs actually make it? Beyond a little luck, what does it take to get there?

I don’t know all the answers to these questions. If I did, I might be taking a yacht to the island I just bought to relax for the rest of my life. More likely, I would be looking for the next masochistic opportunity to work really hard at something for no cash for years, in order to do it all over again. I haven’t exited a company (yet) so I can’t tell you the secrets from experience. Thankfully, a few serial entrepreneurs who have been through it all will share their minds on the subject at the Colorado Capital Conference November 6th and 7th.  This year’s theme is “begin with the end in mind” – Habit #2 of Stephen Covey’s 7 Habits of Highly Effective People.

Here are this year’s speakers, who together have built billions of dollars in value in Colorado:

Ryan Martens, Founder and Chief Technology Officer of Rally Software. The Boulder Colorado-based company, which specializes in agile project management software, priced its 6 million shares at $14, raising $84 million at a valuation of $315 million which has more than doubled since it’s IPO earlier this year.

John Spiers, CEO and Founder of NexGen Storage. John Spiers story of entrepreneurial lightning striking twice, first with his sale of LeftHand Networks to HP and this year’s sale of Nexgen to Fusion-IO for $119 million.
Kevin Reddy, CEO of Noodles & Co.   Noodles started with $73,000 in personal funds from founder Aaron Kennedy and raised $200,000 from friends and family.  The company grew to $300 million in sales and had an IPO that more than doubled in its first day and has continued to grow since then to a market cap of over $1.3 billion.
– Steve Georgis, CEO of LineRate.   Louisville based LineRate received early venture backing from Boulder Ventures and wroked in stealth mode with its Software Defined Networking product that increases speed and efficiency in data centers and just ten months after their product announcement achieved success with an acquisition by F5 Networks in one of the largest acquisitions in the Boulder area in the past several years.

Jared Polis, Congressman and a two-time successful entrepreneurial exit success story! His first exit with BlueMountainArts.com for $780 million and then ProFlowers for $480 million.

– Morgan Rogers McMillan, Executive Director of Entrepreneurs Foundation of Colorado (EFCO). EFCO brings together local venture capitalists and start-ups to set aside 1 percent of their profits to charity.

Register here for the 2013 Colorado Capital Conference. The opening Gala in Denver is the evening of Wednesday November 6th, and the full day conference in Golden is Thursday the 7th. Hope to see you there!

RVC Announces the Companies Selected for the 2013 Colorado Capital Conference

The Rockies Venture Club has announced the companies that will pitch at the Colorado Capital Conference. On Thursday, November 7th, the following 12 will give investor presentations:

 

 

These companies are now working with their volunteer individual ‘pitch mentors’ from the Rockies Venture Club. RVC will also provide volunteer ‘deal mentors’ experienced in startup financing to help entrepreneurs navigate investor term sheets and the post-pitch process.

 

This year marks the 25th annual Colorado Capital Conference and will be hosted in Denver and Golden on November 6th and 7th, 2013. It is one of the biggest events for early stage companies and investors in Colorado, and features a great speaker lineup this year. Register here if you haven’t already!

Get Ready for the 25th annual Colorado Capital Conference!

On November 6th and 7th, the Rockies Venture Club will host the 25th annual Colorado Capital Conference in Denver and Golden, CO. 12 companies will be selected to pitch to investors, and the 2-day event will focus on recent Untitledsuccessful exits from other Colorado businesses.

2013 CCC speakers include Jim Lejeal, CFO of Rally Software that went public this April, and John Spiers, CEO of NexGen Storage, who sold to Fusion-io just a couple weeks later. Congressman (and Techstars founder) Jared Polis will also keynote the conference. A rare breed in politics, the Boulder native earned substantial entrepreneurial success, including multiple exits and an E&Y Entrepreneur of the Year Award, before running for office.

Applications to pitch are competitive, and open until October 15th. Conference attendees and investors can find early-bird discount registration until October 10th. The Colorado Capital Conference is one of the most important events of the year in Colorado both for investors, and companies looking to raise $100k to $2 million. In 2012, companies that pitched through Rockies Venture Club received over $22 million in financing, and this year’s CCC is sure to kick off the last big funding push of the year!

 

Denver Startup Week is over, what’s next?

By Michael Price,

Executive Director of Coalition for a Connected West

michaelprice@connectedwest.org

Innovation takes action. That’s a core takeaway from Denver Startup Week and the APEX Conference the prior week.  Both events were jam packed with amazing entrepreneurs who told inspiring stories of perseverance and anecdotes of how they made their ideas a reality.  Now people are wondering if the energy and excitement generated by DSW will have a lasting impact.  That may be the wrong question to ask.

DSW shouldn’t be looked at in isolation. The event is the culmination of years of hard work and is predicated on the fact that a startup culture already existed in Colorado.  Before DSW there were small meetups in coffee shops, at bars and larger ones like New Tech.  DSW’s existence and subsequent success is actually a sign that Colorado’s startup community is growing stronger.  If the community is going to continue to mature, it’s going to take constant action.

“Do it yourself first,” is a principle espoused by the book Rework by Jason Fried and David Heinemeier Hanson (creator of Ruby on Rails).  Colorado’s most successful startup entrepreneurs are people who embrace this perspective, and it’s a trait that has weaved itself into the local DNA.  Entrepreneurs see gaps in the market, create solutions and provide services that consumers are compelled to buy.  They don’t always need a lot of money or government support, they just do it.

Colorado’s spirit of innovation has grown despite threats to its existence. Using outdated models for managing markets, regulators can stifle innovation or, even worse, stop it in its tracks.  While there’s an interest in protecting consumers from bad actors, regulators can sometimes overreach and prevent great ideas from reaching their full potential.

That’s why it’s important that entrepreneurs be the leaders of the startup community, a philosophy of Brad Feld’s “Boulder Thesis.”

Entrepreneurs are the best vessels to carry the message that innovation can’t be contained and the winners and losers should be chosen by the market.  Those with the ability to take ideas from conception to consumer should be rewarded and allowed to compete.

At the Coalition for a Connected West, we strive to generate a dialogue between entrepreneurs and policymakers so that innovation in Colorado can continue to thrive.  We have a great advisory board of thought leaders, who also happen to be entrepreneurs, and are compelled to get involved.  They are the ones who can have the most impact because they live it every day.

If the startup community in Colorado is going to continue growing, it’ll take a commitment from entrepreneurs to be both leaders of their businesses and of their communities.  Have awareness about the policies that affect your community.  Learn more and work with organizations like CCW, Rockies Venture Club and Colorado Technology Association to make a difference.  Take our future in our own hands.

 

Book Review Contest

Venture Capital For Dummies

Review Contest!

 

Review this book on Amazon.com and get automatically entered into a drawing for a Full Year of Keystone Membership to the Rockies Venture Club.

 

Keystone members have access to everything that Rockies Venture Club does in a year for free!  Classes, conferences, pitch sessions, workshops, socials – all free!

 

Instructions:

  1. Go to the Venture Capital for Dummies page on Amazon
  2. Buy the book or get the Kindle version and read some
  3. Or read the copy you got at an RVC event
  4. Now tell the world what you think!
  5. Done!  You are automatically entered to win a year access to free RVC events!