LNG startup companies and the investors game

No cash – no business. That’s stone old wisdom. Any LNG venture – even a smallish fuelling outfit – needs a certain amount of cash to get rolling. Most people don’t have the necessary cash on their bank account so that gets you into the investor’s game.

I had a couple of business ventures in my life but compared to what I am doing right now they were all mercifully small and I was always able to carry anything myself. LNG changed that too. Even the smallest possible project requires millions which is beyond my means.

That has gotten me a ticket to the investor’s hall of broken bones. Because once you are in that game its aspirations, its dreams, its visions but it’s also lots of work, its countless revisions of Business Plans, its lots of numbers and Due Diligence until you feel that even the inside of your undies has been examined with the magnifying glass.

Let’s apply another algorithm …

And you take it with a smile because you want those funds in order to finally get going. And so it goes until you are either lucky (that means round two of the same game) or all your dreams and aspirations are shattered. And all the time and effort has been wasted. That’s a deep pit you fall into at that moment.

I have been there and it crushed me to fragments. The funny thing is, it does not have to be that way. Because raising funds and pitching your project is a door, that swings both ways.

Two years ago I was told by an investment tycoon that there is more money than good projects out there and that if my project is any good, money will come. The first part of his statement is true, there indeed is a lot of money looking for worthwhile investments but even if your project is great, you might never lay your sweaty palms on it.

It’s because the loops through which you will have to jump are sometimes outright crazy.

But as long as an investor is a solid and seriously interested investor, you gladly do the jumps and twists. Because one can understand the investors’ fears with all the hyped assumptions and so many frivolous projects at large. They want to be sure you are not one of the jokers. I would want that.

So they have to poke holes in your business case in order to see if it stands up to pressure as pressure there will be once the project goes real.

However besides those serious investors, there are also all sorts of frivolous creatures trying to relieve you of whatever funds you have with no intention whatsoever to invest or bring an investor. Those brokers need to be flushed out and the only way to do this is by erecting some loops the potential investor will have to jump through.

You find that a bit overdone? Trust me; the serious folks will not even have a semblance of a problem with some kind of procedure if the procedure is fair and honest. It’s fair to ask for an NCNDA to be signed before any information is being handed over. It’s fair to propose some stiff timelines by which certain things must be done and it’s absolutely fair to ask questions and justifications like where the funds come from for example and if the investor uses his own funds or goes on a money raising spree himself.

Because those are the worst sort of brokers. A real broker has real access to an investment community and is not afraid to say who they are as usually there is a position of confidence and trust between the real money people and himself. Those relationships have usually been built over long times and have been earned the hard way. Those are very solid people and they will turn the inside of your stomach out before they risk their vanilla contacts with your potentially stupid project. Nothing wrong here.

If the broker himself goes searching for an investor right at the moment when he sees your project the first time, then you are in trouble because those searches never produce anything worthwhile. Those (I don’t even want to call them brokers) hawkers just want your project in the portfolio for their own shopping spree. They need your project to look solid in front of others as otherwise, the investment community would not even look at them.

They raise all kinds of hopes with you and give you headaches to no end for less than a real chance for the funds to ever come forward. Because those hawkers have other projects up their sleeves which they all carry in their tray. They don’t care if it’s your project or any other that gets financed as they just want to squeeze themselves in between for long-term gains. They can be very charming and will pose as your best friend but worry not. When the moment of truth comes, they will take your guts out and smash you through the grinder with not even the slightest remorse. They are hawkers – it’s in their nature.

Just look at the odds. The hawker has a minuscule chance of ever getting close to the cash but for him, this is OK as he spends very little effort getting it going and he has other deals he always carries along. The likelihood for you to ever get funded through such a person is extremely low – virtually impossible.

But he raises all kinds of hope in you which makes you waste time; cash and effort on something that is doomed from the get go. You better dump this cheater before he costs you real money – and your project. Because you will need all your energy and your wits to get ahead in the real game. If it looks easy or someone wants to make it look easy, then it’s not real. Real investors are no pushovers. They are a pain and they have every right to be. So if it does not feel like the grinder, it’s not real.

But, you say, he never asked me for money. True, but he asked you for something way more important. He asked you for your lifeblood and the future of what is dear to your heart. And he holds you back from making hard decisions at their appropriate time.

Check your investors and especially check your brokers. There are real good ones out there and they deserve your best efforts but there are also scores of hawkers. When you see one, take a hike. If you are not sure what camp he belongs to, you are probably talking to a hawker.

I am in the process of funding my 3rd startup and this is exactly what I see. The biggest mistake I made in the past was that I just took on board who was willing to jump. Today I am ruthless and demanding with my partners and my investors. Either they really do what they are supposed to do or they are out. I am willing to kick anyone to the exit – even an investor if he proves to waste my time and energy. That sounds arrogant but it is, in fact, a lifesaving mechanism. Waste too much time on joker investors and/or partners, and you are toast. Remember, time and funds are limited so there is always a sense of urgency. If an investor does not get it, let him go. I make mistakes, but I will never again allow those mistakes to dominate my thinking or become big and important when I have recognized them for what they really are. Hope an investor might still turn around or a partner might somehow change is always a ticket to hell. There is no hope – only facts.

Let him go.