🔒After ‘phenomenal’ return on 2017 solar sale, CT’s Silvestrini aims even higher

The co-founder of Connecticut’s largest homegrown solar firm, flush with millions of dollars in proceeds from selling the business a few years ago, has even larger aspirations for his next venture.

Michael Silvestrini has been quiet since he and his partners sold Middletown-based Greenskies Renewable Energy in 2017, a business they built up over nine years into one of the highest volume commercial and industrial solar installers in the country.

Nothing was publicly disclosed about the financial terms of the sale to California renewable energy investor Clean Focus Yield (which has since resold the business to infrastructure fund JLC), but a recent U.S. Securities & Exchange Commission filing shows the 2017 deal had an enterprise value of $165 million, which means former CEO Silvestrini, even as a 25% owner, made a major return on the $35,000 family loan he used to start the company back in 2008.

“You really can’t call it anything other than a phenomenal performance,” Silvestrini told the Hartford Business Journal in a recent interview. “It’s the type of money that’s offered my family and I the opportunity to work a hell of a lot less.”

While he wouldn’t reveal exactly how much he netted personally, he said it amounted to an approximately 400-times multiple compared to invested capital.

Silvestrini, 40, could retire now, but he’s not done with renewable energy by a long shot.

His new venture is called Energea, launched with childhood friend and fellow Connecticut energy entrepreneur Christopher Sattler.

The Old Saybrook-based startup, which has about a dozen employees so far spread across several countries, aims to employ the same type of business model that made Greenskies successful, but on a global scale — bundling energy contracts for solar, hydro, battery storage and other clean energy projects in Brazil, the Carribean and Rwanda, as well as the U.S. and elsewhere, and with a unique twist.

Energea is billing itself as the first U.S.-based crowdfunded renewable energy platform.

The company recently got the greenlight from the SEC to begin advertising and selling equity shares in its project portfolios to investors, who can purchase them through Energea’s website. The company says it has also made arrangements with IRA retirement account custodians who can allocate part of their investment mix to Energea, which is targeting (but cannot promise) market-beating returns.

The company is currently selling shares in two project portfolios, for commercial and community solar projects in Brazil. A U.S. portfolio is coming soon, according to Silvestrini, who spoke to HBJ from the U.S. Virgin Islands where he was scouting solar projects, and more could follow.

The 2012 Jobs Act, which took effect in 2016, allows each of Energea’s portfolio companies to raise as much as $50 million per year through equity crowdfunding. The company has crowdfunded about $1 million so far in its quest to raise up to $10 million to $15 million within a year, which the company can supplement with debt and partners’ capital, Silvestrini said.

If the company meets those targets, it would be a significant feat, as clean energy remains a small part of the overall crowdfunding space, said Sherwood Neiss, principal of Crowdfund Capital Advisors LLC, a Miami-based advisory firm focused on equity crowdfunding.

Since the Jobs Act kicked in, nearly 1,700 companies have raised a combined $438 million in investments. Of that amount, a mere 45 companies were in the clean-tech space, raising $14.4 million, Neiss said.

However, there are signs that clean-tech crowdfunding is on the rise, as developers seek to overcome barriers to accessing capital from banks and other traditional sources.

“Data show the [clean-tech] market is rapidly evolving, with 2020 poised to be the biggest year despite the pandemic,” Neiss said.

A mini-IPO

Equity crowdfunding allows anyone to buy a stake in a company, not just the wealthy accredited investors who typically invest in private businesses.

The technical name for the crowdfunding under the Jobs Act is Regulation A or “Reg A,” and the equity raises are often compared to a miniature version of an initial public offering conducted by a public company.

However, Reg A offers companies raising money lower costs and less regulatory red tape, compared to an IPO, and also tends to give founders the ability to keep a greater degree of control over corporate decisions.

Silvestrini’s partner, Sattler, co-founded Norwalk-based retail energy supplier North American Power, which California energy generator Calpine acquired for $105 million around the same time Greenskies was sold.

“We had been on very parallel journeys,” Silvestrini said of himself and Sattler, who now lives full time in Brazil, a key market for Energea.

The longtime friends aren’t relying solely on internet strangers’ money. They are also investing their own capital — $7 million in total so far, Silvestrini said.

They’ve also booked a few early wins, including an acquisition and subsequent exit from a solar and storage project in Rwanda, which Silvestrini said yielded an approximately 14% return.

The co-founders have traveled together frequently and are both board members of a Kenya-based wildlife conservation and anti-poaching nonprofit called the Big Life Foundation.

There are a few fellow Greenskies alums along for the ride at Energea too, including Chief Technology Officer Gray Reinhard, who built Greenskies’ project management software.

Old Saybrook is Energea’s corporate home, and it may expand in Connecticut in the future, but its operation for now is farflung, with the management team spread across several states and countries, including an office for accountants and others in Rio de Janeiro.

“We’re hunting premium assets and living on Zoom,” Silvestrini explained.

Little projects add up

Since selling Greenskies, Silvestrini said he’s been traveling the world, often with his wife and two children.

In meetings with solar companies in South America, Latin America, Europe, Africa and Asia, he gleaned that many are having trouble accessing capital to finance mid-sized projects.

A single solar farm that’s a few megawatts in size may promise a healthy investment return, but it won’t draw the interest of institutional capital, which is more focused on large grid-scale installations.

“Private equity doesn’t want to cut little checks,” Silvestrini said. “I may have $30 million worth of awesome deals, but they are not awesome enough for a private equity group to put a team on it.”

It was a problem he dealt with early on at Greenskies, and solved it by bundling together enough long-term solar energy contracts with high-value clients like Walmart, Sam’s Club, Target and Amazon.

“The reason Greenskies was able to secure institutional capital is I had a wheelbarrow full of contracts,” he said. ”Without that, you’re left with these small bespoke projects.”

While Energea perceives a way to profit from the financing death valley faced by renewable energy projects, Silvestrini said the firm also values the chance to offer regular people a way to help spread renewables around the world as part of an effort to address climate change.

Silvestrini made a mint on his first company, but he contends that it wouldn’t be possible to create similar explosive growth for a U.S.-focused solar startup today. Things have changed a lot in the industry over the past dozen years. Equipment prices have fallen steeply, the players are more sophisticated, and incentives are generally headed downward.

“The space is very advanced and complex now,” he said. “Just the capital you need in legal fees to understand how this stuff works would blast through my $35,000 in about two days.”

However, there are other countries to target.

The Brazil boom

There are renewable energy markets all over the world, but Brazil is by far the biggest initial focus for Energea.

Despite its copious amounts of sunshine, the country’s solar energy boom is just starting, following cuts in government funding that had lowered power bills for ratepayers, Reuters reported. President Jair Bolsonaro has since extended subsidies that make for a quick payback of just four years on a solar investment, drawing lots of Chinese solar suppliers, according to Reuters.

“It’s undoubtedly a gold rush,” Silvestrini said of Brazil’s fledgling solar market. “It has the best economics mixed with the best policy to limit risk in a market with loads of solar irradiance.”

Energea has already announced contracts with some marquee companies in Brazil, including Vivo Telecommunications and a grocery retailer with 40 locations.