Lessons from pitching StratoSolar

The StratoSolar concept is usually greeted with a high degree of skepticism.  The obvious way to answer this skepticism is to build it and demonstrate that the system works reliably and delivers low cost electricity.  This creates a catch 22 situation: It is necessary to raise money to demonstrate viability.  However, without a demonstration of viability it is impossible to raise money.  

Independent investors like venture capital or private equity are unable and unwilling to quantify the risks of something that appears so different.  Despite the view that venture capital invests in risky things, the reality is that they are mostly herd followers, and won't touch anything that has un-quantified risk.

The financing problem is further compounded by the fact that there are no general energy companies that have R&D budgets to fund energy as a general category. The energy field is isolated factions, each only concerned with their own business and wary of competition.  Oil and gas, coal, nuclear, wind, solar and  bio-fuel are separate islands.  They raise capital individually and spend it exclusively on their sector. Oil and gas have the most money to invest, but they see exploration as their R&D and other sectors as competitors.

In theory, government should see a big energy picture, but in practice democratic governments treat energy as multiple separate political constituencies and funds flow separately to each sector.  The only government funded sector that treats energy somewhat broadly is research, so peer reviewed science projects get some relatively small R&D funding.  This funding flows through pretty rigid highly regulated channels within academia and the national labs. The current US system provides no funding channel for possible new power system level entrants. 

Compounding this difficult funding landscape is the polarization of public opinion.  People are drawn into camps. Environmentalists see current wind, solar and bio-fuels as the solution and any new contender as a devious plot to undermine their support and delay or stop dealing with the climate problem.  Those who think wind and solar are impractical and favor nuclear only want nuclear.  Those who don't accept climate change or don't want the government involved favor burning fossil fuels.  This polarization of society is reflected in possible investors, most of whom fall into one of these polarized camps. This makes it hard for anything new to get consideration.

In pursuing investment we have gradually evolved an approach that uses engineering ingenuity to reduce the cost of the first step that proves viability. This is in the hope that a smaller investment enlarges the potential initial investor pool.  This is based on the expectation that seeing is believing and that crossing the divide to a minimal functioning system will give confidence to larger high risk investors attracted by potential for very large profit. 

Our other approach is to try and provide data and insight, mostly via the web site and blog, that can help reduce the general impression of science fiction by explaining the concept in more detail and with more context.  This unfortunately only works for those willing to make a significant effort, and is a pretty hard sell.

Overall raising money for this venture has proven to be  a far more complex problem than the actual technical design.
By Edmund Kelly