While we aren’t really picking favourites in the energy transition race, we’re keen to see startups succeed. Certainly, they have a lot on their side already – they’re fast, agile and they’re at the leading edge of digital. Their culture and aims, too, are attracting many of the brightest minds (often the brightest young minds, if you’ll permit us to say) to their cause.
That said, having worked directly with new energy startups exploring the use of hydrogen and e-methanol and more, we’re aware that startups sometimes have a few gaps in their knowledge base.
We’ve also seen firsthand how they can be at a disadvantage when it comes to funding – and it’s easy for a larger company to present an unrealistic proposal in order to win a grant. There’s a lot of misconception and noise out there, and we want to ensure the startups with more honourable intentions can cut through it.
Not every startup will make it in the energy transition, but with the right advice and approach behind them, many of them will. Here are some of the ways in which our experts are making this happen:
A mission that’s written down early
We know that startups typically have a strong reason for existing at their core, but not every startup is in a good habit of writing the mission down.
In the early days, when it’s mostly the founders, the mission can afford to be a little loose. But as soon as there’s six-to-ten people in your team, you’ll need to make sure that your mission is clear so you keep hiring the right kind of people and your forward momentum carries you in the right direction.
The mission’s focus might be to decarbonise shipping with hyperscaled offgrid green methanol supply projects for example. Or it could be to scale up the novel application of existing technologies in order to make the direct air capture of CO2 from industrial processes or the atmosphere a fully competitive project without major subsidy.
Making money will be a part of it, but “how” you’re going to do it will set you apart and, besides your employment benefits scheme, that’s what will attract the people you need. Much of startup culture can afford to be loose, adaptable and changeable, but not your mission.
A systematic way of greenlighting the next stage
Another aspect of your work that can’t be too adaptable is the questions you ask at each gate in your project execution plan.
You’ll need to be asking about readiness, competitiveness and risk at every key gate – from creating the timeline you’ll have to deliver on your value proposition, to creating the systems of your organisation, and setting performance management in place.
It’s vital to do this if you’re going to be able to execute your mission at scale. Your CO2 direct air capture method might be known, the cost of how the existing technology will be applied in a novel way might be known, but the costs involved as you scale it up might be hard to predict, and so might be the competitiveness – it’s a risk factor, and one you’ll need to account for so that you don’t hit too high a financial burn rate solving for it late in the game.
The moment you’re burning too much money, or making too many mistakes, you’ll be forced to slow down. So you want to make sure as you end each stage you’ve assessed readiness and competitiveness, along with the risks and opportunities.
Integration, and more integration than you might think
When you’re working in a small team, integration is easy because you’re all talking to one another all the time. But as your team grows, your plans to stay integrated need to grow too.
Integration is vital in projects because all the real issues happen between humans. It’s rarely the technology within each work scope or package that goes wrong, it’s the human element, at the interfaces between each team member, or group of team members, or each group of contractors and suppliers, where the integration risks lie.
A frequent question from startup management teams and CEOs to their trusted projects consultants and advisors is often: “How are we doing?” The most frequent response is: “You think you’re more integrated than you really are.”
In the dialogue that follows, writing down the execution plan for the business or the project is the most highly recommended action as the means to drive closer integration and mitigate interface risks; a side benefit is a culturally closer, more aligned team, but still fully reflecting the inherent diversity available from the team. The best integration happens on paper. That’s where we piece everything – the commercial, the engineering, the cultural – together into a coherent story for the whole team to own and buy into.
Systemised integration, and writing things down for a diverse group of people to see, fundamentally gets you tighter as a team – it means there is an environment created across diverse cultures and disciplines where there’s no such thing as dumb questions. This is especially relevant in renewable energy startups where “electrons” and “molecules” technical and commercial cultures collide in the projects under development.
For instance, someone might ask about the wind data – why do you need to have 18 months of wind? And out of this, a conversation might come about in which it’s raised that the next 18 months of wind might be very different to the next six years in this part of the world. You’ll then be able to take steps to mitigate the risk.
The more diverse the experts with eyes on the project, the more robust your plans will be.
A willingness to play ball with others
Our final word of caution to startups would be: don’t ignore your competitors and don’t ignore potential partners.
In our experience, startups like to think they don’t have competitors – they’re often focused on simply being the best around – but this is too broad an ambition. No matter how wonderful what you’re working on is, if you’re not clear about where it stands among the competition, you’ll do yourself a disservice – particularly in the eyes of investors.
As for partners, we know that founders don’t want to give away equity or control, but there’s other kinds of partnerships you can take advantage of. If you’re able to focus on the R&D, and another organisation is able to offer you the sites you need, or the scale of engineering capability that you need, a partnership could well be worth your time.
The energy transition involves a lot of inherent risk that’s worth pressing on past anyway – but that doesn’t mean there are unnecessary risks along the journey too. To ensure you’re getting the depth of advice you need, consider Rockflow’s energy transition services.
