Antoine Paquin at MaRS Mornings: Challenges of raising funding in cleantech

Antoine Paquin, founder and CEO of cleantech company Solantro, says the “difference between a visionary and a delusional person is that the visionary delivers on the vision.” It’s a personal motto that has driven him throughout his career as a serial entrepreneur.

Antoine gave a talk today at MaRS Mornings, a monthly speaker series celebrating creative founders, on the unique challenges he’s faced raising funding in the current cleantech fundraising environment. With more than 20 years of experience as an entrepreneur, venture capitalist and angel investor, Antoine has navigated the fundraising process to successfully raise capital and secure three notable technology exits. His latest venture, Solantro, is poised to do for renewable energy what Intel did for computers.

“We’re an industrial society yet we’re not innovating anymore,” he told the audience. “We’ve lost the industrial edge [because of how we invest.]”

Here are just some of the challenges Antoine touched on during the event. If you missed Antoine’s talk, you can follow the conversation on Twitter using the hashtag #MaRSMornings.

Why is fundraising so difficult for entrepreneurs?

Structure of the venture capitalist industry

• Traditional VCs want to return all capital in a pool within 10 years. That means a five-year investment horizon. VCs just don’t want long-term investments—something most cleantech companies require.
• Real focus of the VC industry is on fees and the next fund. They want fast results in proven large markets and to make quick money off fees, making them reluctant to invest in emerging markets.

Venture capitalists follow the crowd

• VCs typically make moves to invest only when they sense others are making moves. It’s a sheep mentality and if your company is doing something new, VCs are reluctant to lead the charge.
• No one says no to ideas; they just don’t show up to the closing table. While most VCs are interested in new theses, they often don’t provide feedback or show up to invest. Again, it’s a sheep mentality—they follow the crowd.

No track record of funding true disruptive innovation

• VCs are great at exploring opportunities in large growing markets, not new industries. If you’re aiming to disrupt traditional industries as cleantech companies often do, be prepared for a long haul and to look elsewhere for funding.

Understanding your potential investors

• Traditional VCs are good at placing bets in big established markets. New emerging markets require a different type of investor.
• Think outside the box and target other funding sources: high-net-worth individuals, family and friends, industry executives as well as corporate and government funding. Be warned: It can be an uncomfortable process. Losing Grandma’s money is never an easy thing.
• Control the burn and execute. Be ready to fail early, fail often and experiment.

MaRS Mornings will return in September with a new series of inspiring talks from experienced entrepreneurs, visionary business leaders and innovators.