Financial Planning for Innovative Projects

I spent over 800 hours creating annual budgets for innovation in charities. These are my 5 top tips (I made every mistake going 😳) ✅ Under promise over deliver. You may be tempted to over-promise to access bigger expenditure budgets. But it seldom works. You will inflate expectations. Not meet them. Everyone is hacked off. With new products to new audiences - hitting the jackpot is unlikely. Don't budget for it ✅ Try not to accept big income targets in year. You'll be sat around a table or on a frosty Teams call There will be a gap. No one will come forward to plug it. Don't be tempted to take a £500k+ hole. You won't manage it (probably) ✅ First cut of the budget. Don’t max out your Income first and strip your Expenditure back. There is a barter back and forth. Give yourself wiggle room, so pump up the E and underdo the I first up. You will have to remove E at some stage and increase I ✅ Make sure you have a scaling plan. If something goes well you need to be able to scale it. So talk to colleagues about where the spend will come from if something really takes off ✅ Before you start budgeting - you should have been influencing your boss on the absolute need for a separate innovation budget for testing and experiments. This is not a nice to have - it is a necessity. 2-3% of overall FR expenditure is a good guide. #fundraising #innovation

No Budget? No Problem. Here’s How Smart Innovators Still Win Right now, across organisations, I hear the same phrase again and again: “Great idea… but there’s no budget.” And just like that, momentum disappears. Here’s what many innovators underestimate: Budgets are fixed long before your idea exists. Which means your idea isn’t judged on its potential… It’s judged on whether it was planned. And if it wasn’t? It’s already 1–0 behind. So, how do you still get spontaneous ideas funded—especially now, when everyone is holding tight to their budgets? You change the game. 1. Stop asking for big money. In uncertain times, large investments trigger resistance. Small experiments don’t. A €10k pilot is easy to approve. A €250k project is easy to reject. 2. Don’t sell success—sell learning. Leaders today are not looking for bold promises. They are looking for controlled risk. So instead of saying, “This will work,” say: “This will give us valuable insight within weeks.” 3. Create visibility around the idea. One idea on a slide can be ignored. A wave of ideas across the organisation cannot. Internal campaigns, shared ownership—these create traction. And traction attracts funding. 4. Look beyond the obvious budget. Smart innovators know that money is rarely “not there.” It’s just not in the place you expected. Innovation funds, cross-functional budgets, small discretionary pots—these are often the real enablers. 5. Make it safe to say yes. Because that’s what this is really about. In times of uncertainty, leaders are against unnecessary risk. Your role is to remove the fear around it. Because here’s the paradox: The more uncertain the environment, the more innovation is needed… …and the harder it becomes to fund it. Unless you adapt. So next time you hear: “There’s no budget,” Don’t stop. Reframe, resize, and reposition your idea. That’s how smart innovators win. Cheers, Gijs #Innovation #CorporateInnovation #Ideas #InnovationStrategy #Intrapreneurship

I was denied by 20 banks trying to build my first treehouse resort. Here’s how to actually finance your first project: Trying to finance a treehouse hotel or unique stay project at a national bank is a fool's errand. Chase, Wells Fargo, Bank of America - total waste of time for unconventional projects. Here's where to focus: 1. Local banks They're more flexible with lending criteria and understand the local market. Find a loan officer who gets excited about what you're building - banking is a relationship business. All you need is one willing to fight for your deal with the underwriters. 2. SBA loans Specifically designed for early-stage founders, including real estate. I didn't use this route initially, but I'm considering it for my next project Baya. 3. USDA financing Agricultural-focused but broader than most realize. The caveat? Expensive upfront fees around 3-5% versus 0.5-1% for local banks. But to get your first project off the ground, you take the financing you can get. 4. Friends and family (equity) This is uncomfortable for most people, but you need people who believe in you, not just your business plan. When you don't have a track record, you're raising on relationship and conviction. 5. C-PACE financing For energy-efficient or sustainable projects, this financing gets tacked onto your property tax bill, offering long-term, low-cost capital. The only downside? Finding a senior lender willing to have C-PACE as part of the stack, since it's technically in a senior position to the bank as part of the tax bill. Otherwise, it's great rates and easier approvals than other financing. 6. Private debt Non-bank debt from sources like debt funds, high net worth individuals, or institutional capital. Often more flexible than traditional banks for unconventional projects. 7. Mezzanine lenders Willing to sit in second position behind the senior bank, helping increase your leverage. Many banks won't go above 50-60% LTC these days - mezz can get you to 75-80% LTC. Can come from debt funds, HNW individuals, or institutional capital. On my first project, I leaned into my network and found a local bank willing to work with us. That combination got us across the finish line. My second project was local bank plus mezzanine debt from a public REIT. Financing your first project isn't about having the perfect pitch deck - it's about relationships, resourcefulness, and piecing together unconventional solutions. What financing routes worked for your first project?

𝗦𝗧𝗢𝗥𝗬𝗧𝗜𝗠𝗘: 𝗛𝗼𝘄 𝗮 $𝟮 𝗺𝗶𝗹𝗹𝗶𝗼𝗻 𝗽𝗿𝗼𝗷𝗲𝗰𝘁 𝗯𝗲𝗰𝗮𝗺𝗲 𝘁𝗵𝗲 𝗯𝗶𝗴 𝗯𝗿𝗲𝗮𝗸 𝗳𝗼𝗿 𝘁𝗵𝗶𝘀 𝗰𝗼𝗻𝘁𝗿𝗮𝗰𝘁𝗼𝗿—𝗮𝗻𝗱 𝗵𝗼𝘄 𝘁𝗵𝗲𝘆 𝗺𝗮𝗱𝗲 𝗶𝘁 𝘄𝗼𝗿𝗸 We all know this contractor story. After chasing a client for years—sending dozens of bids, running endless numbers, and getting rejected every time—they finally got the call. The competition had faltered, and suddenly, the $2 million project was theirs. Of course, they said... yes. This was the moment they’d been waiting for—a huge opportunity, even at the upper range of what they typically handled. Their backlog was solid, their accounts receivable healthy, and their operations running smoothly. But this new project came with a challenge: it required significant upfront cash to get it moving. After running the numbers, they realized they’d need 20-25% of the contract value just to reach the point where the project would begin cash flowing on its own. 𝗧𝗵𝗲𝗶𝗿 𝗹𝗶𝗻𝗲 𝗼𝗳 𝗰𝗿𝗲𝗱𝗶𝘁? Maxed out from ongoing growth. 𝗖𝗮𝘀𝗵 𝗿𝗲𝘀𝗲𝗿𝘃𝗲𝘀? Enough for daily operations, but not for this. They knew relying on existing customers to pay faster wasn’t an option—if even one payment was late, it could throw their entire business into chaos. Pulling cash from other projects wasn’t feasible either; it would risk delays or worse, disrupting everything they’d worked so hard to build. So, they reached out for help. We stepped in to map out their project cash flows and confirmed their estimates—they’d need 20% of the contract value. But by working with a few vendors, they found ways to reduce that to 15%. We structured a project loan that kept this new job completely separate from their core operations. The loan funds, paired with the project’s payment schedule, ensured they could meet their obligations without disrupting their existing business. 𝗧𝗵𝗲 𝗹𝗼𝗮𝗻 𝗮𝗹𝗹𝗼𝘄𝗲𝗱 𝘁𝗵𝗲𝗺 𝘁𝗼 𝗸𝗲𝗲𝗽 𝘁𝗵𝗲𝗶𝗿 𝗰𝘂𝗿𝗿𝗲𝗻𝘁 𝗰𝘂𝘀𝘁𝗼𝗺𝗲𝗿𝘀 𝗵𝗮𝗽𝗽𝘆 𝗮𝗻𝗱 𝗺𝗲𝗲𝘁 𝘁𝗵𝗲𝗶𝗿 𝗻𝗲𝘄 𝗰𝗹𝗶𝗲𝗻𝘁’𝘀 𝗲𝘅𝗽𝗲𝗰𝘁𝗮𝘁𝗶𝗼𝗻𝘀 𝘄𝗶𝘁𝗵𝗼𝘂𝘁 𝗺𝗶𝘀𝘀𝗶𝗻𝗴 𝗮 𝗯𝗲𝗮𝘁. Even better, the efficiencies they built into the schedule helped offset the cost of the loan itself. The project not only succeeded but strengthened their reputation with both the new client and their existing ones. This is what happens when smart analysis and careful planning come together. By taking the time to map out their cash flow, think through the risks, and secure the right funding, they turned a risky situation into a major win for their business.

‼️ Everyone Wants SAF. No One Wants to Pay for It ‼️ So — How Do You Finance a £500M+ Clean Fuels Project⁉️ Let’s be blunt: SAF plants are not being built because of financing. High-CAPEX projects like SAF, e-fuels, methanol or hydrogen rarely die in the lab — They die in Pre-FEED, FEED or just before FID when the money actually needs to move. So let’s simplify the landscape. If you’re building a plant, here’s what your financing journey really looks like: 1. Pre-FEED / Pre-Development Stage Goal: Prove you’re credible enough to justify deeper due diligence. ✅ Typical funding sources: • Founder equity / angel capital — painful but essential skin in the game • Innovation grants (e.g. UK AFF, EU Innovation Fund, DOE in the US) • Strategic partnerships with tech licensors or feedstock suppliers (often in-kind support rather than cash) What works best? ➡️ Grants + early offtake LOIs — your only real credibility anchor at this stage. ⸻ 2. FEED / Advanced Development Stage Goal: Turn assumptions into engineering-grade numbers. ✅ Typical funding sources: • Blended public-private grant structures (e.g. matched funding) • Corporate venture capital (CVC) — but only if you’re aligned with their supply chain needs • Convertible debt from strategic partners (airlines, fuel suppliers) What works best? ➡️ Grants + CVC + strategic equity, but only if you can prove future revenue. ⸻ 3. FID / Construction Stage – The Real Cliff Edge Goal: Secure bankable contracts so lenders stop seeing you as “experimental.” ✅ Funding instruments that actually close deals: • Project finance (with senior debt + mezzanine) — only unlocked after offtake contracts & feedstock secured • Revenue Certainty Mechanisms (e.g. UK GSP, US 45Z, EU FEETS allowances) • Export Credit Agencies (ECAs) — massively underrated, especially for equipment-heavy builds • Loan guarantees from governments (e.g. US DOE LPO model) What works best? ➡️ Long-term offtake + GSP/45Z or similar policy-backed price floor. TL;DR — Here’s the Brutal Truth Technology without bankability is just a science project. Policy gives confidence. Offtakes give leverage. Guarantees unlock capital. If you’re stuck between FEED and FID and don’t know which lever to pull first — you’re not alone. That’s exactly the gap we help close at StratX: bridging strategy, partners and financing pathways so real plants actually get built. Let’s talk!

Too often, our discussions of climate and development finance focus on the supply side: - how many trillions are needed, - how to mobilize private capital, and - (sometimes) how to reform financial institutions. In doing so, we neglect the most critical foundation of all: planning. Energy systems, industrial sectors, cities, and transport cannot be financed in the abstract. They must be planned, through frameworks that assess technological options and pathways, sequence investments, and ensure affordability and resilience. Most major sectors are inherently regional: clean fuel corridors, mineral-based industrial hubs, cross-border grids, and transport systems that require coordination across markets. Innovation in new technologies—circular economy, optimized energy systems, innovations in industry or transport, storage (BESS), distributed resources (DERs)—must also be deliberately built into these pathways. Planning and pathways are what make such investments investable. Yet that is not how our financing approaches are usually structured. A bottom-up approach brings clarity on investment priorities anchored in a country’s development strategy and a region's opportunities for, and imperatives of, connectedness. From there, we need a technical and institutional framework that translates those priorities into costed, sequenced investment programs, supported by the right policies and institutions. The next step is an integrated financing framework that clarifies: • What can and should be financed through affordable sovereign borrowing (the IMF should then ensure access to adequate affordable borrowing, not impose arbitrary debt ceilings); • What should be led by the private sector; • Where would concessional or catalytic capital be most effective; • Which innovative tools (e.g. thematic or cities guarantee funds, liquidity mechanisms, etc.) could address structural barriers or project-specific risks. This approach also requires us to get much more precise about risk. Current practices compress diverse risks into blunt assessments. Sovereign ratings become a ceiling for public banks, cities, and projects. Instead, we should disaggregate risks (currency, liquidity, policy, offtake, etc.) and address each through fit-for-purpose structural reforms and tools. In short, financing the transition, and sustainable development more broadly, requires bottom-up planning and strategy-driven financing. When governments and regions are supported to do such planning, define what needs to be financed, and build the institutional and financial frameworks to support it, capital can flow where it’s needed. This also shows the limits of existing approaches to aligning finance (taxonomies, disclosures, due diligence) and the need instead for structural supports for planning, financing, and delivery. (image is of our 2022 Roadmap for Zero-Carbon Electrification in Africa https://lnkd.in/eFHmigmU).