“2-BULLET TUESDAY” Newsletter — 2 GW of Coal to Close, Battery Unicorn, Revenue Royalty Notes, &
Summer Fridays Good for Business
I hope you enjoy our most recent 4-minute read on energy finance, startups, lifehacks, and efforts to entertain.
Wise Words from Warren Buffett:
- “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
- Takeaway: Think long term, not quick wins.
Have a great week.
Chris Wedding, PhD
Managing Director, IronOak Energy Capital
Founder, Invest for Impact Academy
CLEAN ENERGY FINANCE
New Lithium Tech Becomes a Unicorn:
Former Tesla Employee #7 Drives Company to $1 Billion Valuation
- Off of most people’s radars, Sila Nanotechnologies uses silicon instead of graphite to boost battery density by 20%. They’ve raised about $300M to date with their April 2019 Series E of $170M led by Daimler, along with investors such as Sutter Hill Ventures, Matrix Partners, Bessemer Venture Partners, and Next47 (Source: Pitchbook). For more, here’s a great headline about the team and tech from Inc. — “This Company’s Magic Powder Makes Your Phone Run Longer.” Or check out an interview with the founder from the good folks at Powerhouse. Now finally, close your eyes and picture a battery transforming into a rainbow-colored unicorn. [Apparently, I’m exposed to too many fantasy stories with my seven-year-old daughter.]
Major Plant Shutdowns by End of Year:
Equal to 1/23rd of Illinois Peak Power Capacity
- The Illinois Pollution Control Board (IPCB) recently issued two decisions that will force Vistra, an NRG subsidiary, to close 2 GW of coal power plants within about six months. The ruling was based on factors relating to air pollution, water pollution, and climate change. Along similar lines, Bloomberg projects that coal’s portion of the global power mix will fall from 37% today to 12% in 2050. As a boy from Kentucky, I know what coal means to small towns. But maybe it’s time to ramp up training and change policy to support solar jobs there instead.
PRODUCTIVITY & BUSINESS
ALTERNATIVE FINANCE STRUCTURES
Revenue Royalty Notes:
Can’t Pick Between Equity and Debt? Try a Mix
- If you’re an investor that likes the predictability of debt (check), but loves the upside potential of equity investments (yep), then Revenue Royalty Notes might be worth exploring. Why might investors like Royalty Notes? (1) Higher current income expected relative to most debt products, (2) More equity-like IRR potential, (3) about 1–8% of revenue (not profit) paid to you monthly or quarterly, (4) Less uncertainty and more seniority than equity investments, and more. Entrepreneurs, with profitable businesses, also like them for these reasons: (1) Alignment of incentives — “If I do better, then you do, too (at the same time),” (2) No pressure to meet fixed debt payment schedules — “It’s easier for me to predict my success in terms of years, not months,” (3) Capped upside for investors — “If I succeed, then I am thrilled to pay you more than senior debt would earn, but I’m happy to keep more of the upside,” and more. To dig deeper, check out my blog: Royalty Notes: A Debt + Equity Fusion?
Summer Fridays (Off) — More than Cold Beer:
Can Downtime Improve Work time?
- If you’re an employee, the answer is clearly, “Hell, yes!” If you’re an entrepreneur, you (we) are probably tempted to just keep pushing ahead with no breaks because our timeline is “yesterday.” If you’re an investor or business owner, you may be skeptical — “How do my teams get more done if they work less in the summer?” This Forbes article explains some of the benefits: Increased morale, Stronger trust, Higher retention, More loyalty, Greater productivity. Sound like an experiment worth trying?