Much of the process for raising #VC as a #climate entrepreneur is the same as raising #debt. Outreach, intro meetings, legal negotiations, etc. But there are some fundamental differences and they're worth unpacking. A quick 🧵

(1) first, you need to realize that while VCs think mostly about upside/exit opportunity, lenders are 100% focused on risk. Like 🦈 with frickin’ laser beams on their frickin’ heads. The pricing, terms, structure, collateral, etc…all to manage risk.

(2) lenders largely don’t care about your origin story, your TAM, etc. They’re typically not betting on a founder. They evaluate (a) the economics of your business, (b) the exp. trajectory during the term of the loan, and (c) the risk so they can eliminate, mitigate, or allocate

(3) you often need to have commercial traction to raise debt, although there are exceptions (like the LACI debt fund and soon @enduring_planet ;)) . The exact amount is very dependent on the lender, but generally you need (a) revenue and (b) pipeline.

(3.a) like with VCs, you need to have your 🦆in a row BEFORE you talk to a lender. But there’s a big difference in the degree of investment/rigor you need to apply to 3 specific things:
- your books
- your financial model
- and your pipeline.

(3.b) Don’t have a bookkeeper? Get one. If you’re not an expert, hire someone to help you build a REAL financial model. There’s talent all over the 🌎 that can do this for little $ and the dividends are huge. We have a few consultants/firms we really like, DM us

(3.c) For pipeline, you need to present a LOT of detail and structure that builds confidence in an expanding revenue base. This can’t just be 2 columns in a spreadsheet. You need to show likelihood to close, estimated value, stage, time elapsed, average close time, etc.

(4) Invest the ⏱️ to evaluate risks to your business and build a base of documentation to assuage lenders. Would someone be worried about your customers paying you? Show off your contracts, AR aging, collections rates, etc. Get ahead of the diligence asks. They’ll come anyway.

(5) Last but not least, be prepared for (most) lenders to take time to do a deal. Given how deep the diligence is for most debt, you can expect deals to take 3-6 months on average, if not longer. Some debt is faster (like @enduring_planet), but most is not.

I know I'm missing a few things. @ThirdSphereHQ team, @iamAlexMitchell, please chime in.