Being retained by a Family Trust to insure that the projects that the family invested into were spent and deployed wisely was a insurmountable task given that over $40 MM were deployed into approximately a dozen projects over a 5 year period. The portfolio was primarily focused in Green Energy with some diversification into power storage and solar cell manufacturing.  The Family Trust set aside an additional $30 MM as a continuation investment to help their portfolios growth.

My first task was to review the operations of these 12 separate operational entities, in which I immediately recognized that since the Trust was the primary investor, many of the administrative functions such as payroll, HR, benefits, legal, etc., could be easily consolidated. Ironically, in reviewing the operations management team, I found many of the hires had no real experience in their given roles. It seemed that a many of the portfolio companies hires in adequate management that had no hope in growing the company and had was a substantial burden on the balance sheets. In similar roles, in competitive organizations within the same industry, many of the executives were being paid in excess of 200-600% above the salary of a well qualified candidate.  Secondly, some of the portfolio was obsolete, in which their technology, if even fully commercialized, could not match the cost of production levels of Chinese manufacturing. This was most applicable to a new solar cell array that even if it was mass-produced was still 20% more expensive with a 5-15% less power output. Lastly, to my surprise, no Green credits, grants, subsidies or governmental assistance programs were ever utilized.

Over the next 3 months, I purged and sold off any “never to be profitable” invested entities, and pooled them by their Green categories into 3 investment funds, in which the Family Trust was the primary investor. Next, I brought in 4 senior grant writers’ who then applied to over 120 grants, tax and other forms of state and federal assistance. Lastly, I structured an investment strategy that would syndicate out the investment with the Family Fund still maintaining controlling interest, but not the total risk of the overall investment. Most importantly, I assembled an “A Team” of top-level management with a solid track record of success. If the Trust was to put more money into the remaining core projects, at least their would be a competent management team to operate and grow the company. With the Family Funds international connections, it seemed prudent to recruit an EB-5 investment pool.  For those not familiar with the program, the US Citizenship and Immigration Services (USCIS) administers the Immigrant Investor Program, also known as “EB-5,” created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a pilot immigration program first enacted in 1992 and regularly reauthorized since, certain EB-5 visas also are set aside for investors in Regional Centers designated by USCIS based on proposals for promoting economic growth. To insure compliance with the SEC and other regulatory agencies, I recommended two top tier investment banking and an accounting firm to structure the final offering and investor processing.

The end result was 5 out of the 12 Green companies survived my initial evaluation, whereas the remaining was either sold or dissolved. The five remaining companies were placed into 3 Green Funds which 1 was a stand alone in methane harvesting, green building materials and environmental terraforming. Given the preferred stock and options package retained by the Trust compounded by grants issued to the project prior to opening the investment, they were able to retain a 63% controlled interest, while gaining a net $159 MM in additional capitalization. All 3 funds are currently in operation, along with the founding projects that seeded the funds focus.