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Entrepreneurs: Build it on the cheap (in Cambridge)We started TerraPass with a $5,000 loan. One of the most important lessons of our experience is that you can reasonably test many business ideas with very little money. So what do you do if you just need food and a roof over your head while you test out a new idea? If you don’t want to go down the FFF route (friends, family, and fools), you might want to check into a good program that is trying to professionalize the angel process. The YCombinator team in Cambridge has a very simple application for their Summer Founders Program (due Feb 13). One application, no business plan, and you get $6K per founder to summer in Cambridge. Their model of investment is quite interesting, and with Paul Graham at the helm, our bet is you will learn a ton at the weekly dinners. Comments
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Question: just how do you "fund" alt energy projects? Are you giving out grants, buying stock, or acting as venture capitalists? Is Terra Pass in a position to make a profit on these projects, should they be successful?
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This is a topic we plan to explore more fully on the blog, because it happens to be fairly interesting and also core to what we do. Right now I'm going to be brief, though, because it's midnight on a Sunday:
We fund clean energy by purchasing Renewable Energy Credits (RECs) or carbon credits on the Chicago Climate Exchange.
So the answer is "none of the above." What we're doing is making a purchase. The clean energy producer bundles up the environmental benefits of their energy into something called a green tag, and we buy that green tag. It's an arm's length transaction, conducted over an open trading platform.
And no, we don't stand to profit from the transaction. It's purely an expense for us.
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To follow up on the above question and answer, the purchase of the Green Tags is an expense now. But aren't you amassing the RECs which can later be sold at potentially a higher price? Has Terrapass sold any of the Green Tags to date?
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Is there any way to be sure the Terrapass money going into buying RECs isn't going right back into the pockets of the BIG OIL industry that has crushed the life out of renewable and alternative energy efforts for decades?
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Hi Bill:
Just to be very clear. The RECs and carbon credits are never resold once bought by TerraPass. That would kind of defeat the whole point.
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Mr. Carlyle's comments mix two different goals.
Let's say an oil company has a project that would save a lot of carbon, but isn't financially viable. If the goal is to offset carbon dioxide in most effective way possible, if it's cheaper to have the oil company sell CO2 credits than to, say, retrofit your car to run on sunlight, we're better off with the oil company taking on the project.
Now, if your goal isn't to reduce atmospheric C02, but to create social change, then trading carbon offsets doesn't help at all.
The two aren't mutually exclusive, but they need not be entangled, either.
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I read on your website that you keep 50% of what you collect for company operations and salary. Did I read this correctly?
Fearl
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No. Not sure where you would have seen this, but certainly not on this web site.
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