Turning Waste Into Value: Inside the mind of Bas Van Berkel, President of StormFisher, one of the world’s richest biogas companies

In Part Four of Fireside Chats with Fiery Entrepreneurs™, our ongoing, six-part series of business planning-related interviews, we talk to Bas Van Berkel, Co-founder and President of StormFisher Biogas, a renewable energy company in Toronto that builds, owns and operates biogas plants across North America. Working with the food processing and agricultural industries, StormFisher processes organic by-products and turns them into natural gas and electricity.

Bas co-founded StormFisher Biogas along with Christopher Guillon and Ryan Little, whom he met while pursuing his MBA at the Richard Ivey School of Business. Bas and his team recently negotiated a strategic partnership agreement with Denham Capital Management, a Boston-based private equity firm, to develop a $350 million portfolio of biogas projects. The relationship with Denham makes StormFisher one of the most well-funded biogas companies in the world. For more on StormFisher, click here.

Faheem Moosa: Bas, thanks very much for your time – great to have you here. In your opinion, what are the best ways an entrepreneur can research and understand his or her market?

Bas Van Berkel: Network and make sure you talk with people who are doing business in your market. Most people are willing to have a chat if you’re polite and will provide you with a ton of information which you can’t always take on face value, but which are the real data points that will truly tell you a lot about the market. To back up our business plan, we got a lot of information online – tons of information online. We did weeks and weeks and weeks of research online. There’s so much available, it’s amazing.

FM: When there are several growth opportunities ahead of you, what criteria do you use to analyze those opportunities and place your bets?

BVB: Depends a little bit on what stage you are in the business. In the beginning it’s about ‘quick wins’ to help create credibility in the market. These might not be your financial ‘big bang’ but you’ve got to first create credibility. But later on, when you’re an established player, you need to forgo the small opportunities and look for the big ones. At that time, it’s about allocation of resources. You have a limited amount of people, limited amount of time in the day and so you have to focus on the big opportunities. In the beginning, when we started, we looked at small biogas plants. Along the way we discarded a whole bunch of small opportunities, but that’s just because we were moving on to a new stage in the company. You should not be afraid of throwing something away that you’ve already spent a lot of time and money on – it’s a sunk cost. I noticed with myself that in the past, I really wanted to hold on to the smaller opportunities because we already spent a lot of time and effort on them and wanted to pursue them. But the logical choice, in the end, is not to. We have a rule at the company that every few months the management team deconstructs the entire business strategy and everything we have been doing is open to question. It can be surprisingly hard to objectively challenge conclusions you hold so dear but it’s the best way to make sure you’re not being complacent.

All what I’ve spoken about till now relates to looking at opportunities in a general sense. Looking at this through the lens of StormFisher, we build projects – that’s our business. So, if we look at growth opportunities in terms of new projects, we look at a combination of size, profitability, Internal Rate of Return (IRR) and simplicity of execution. Just to expand the ‘execution’ part, for example, in our business arguably the biggest opportunities are in California, but it’s so hard to execute that we have not yet made the choice to go to California.

FM: Do you think it important for young companies to have a well-defined competitive position, target market and value proposition? Why?

BVB: Absolutely. For one thing, it’s what the investment community demands. We’ve been very, very focused on these three things that you mentioned. We play in three segments – we take organic by-products and we sell both electricity and fertilizer. Those are our three revenue streams, and within those industries we have very specific target markets. Electricity – sold under long-term contracts to creditworthy parties, a very targeted position. Fertilizer – we sell it as an input to the fertilizer industry.  We do not do sales distribution, so again it’s a very targeted position.

So yes, I think it’s very important. If anything, this is where you make the difference with investors. And regardless of that, this is how you win as a company, I believe. I can describe our competitive position, value proposition and target market in 60 seconds. What you should be careful about is not to write big reports on them. Have a few slides that help describe them, after which you can explain it to the entire room – that’s the key. If it needs a change, then it needs a change – so change it quickly.

FM: What is your philosophy with regard to raising awareness about your company? How do you recommend entrepreneurs approach and plan this task?

BVB: One of the strengths of our company is raising awareness. This has been very helpful to us because you become credible in the marketplace very quickly if the awareness is positive. By raising awareness, people start to call you instead of you having to call them. For the first year and a half, we had to push hard to get our name out there. Now people come to us for biogas-related opportunities. So, raising awareness is extremely important.

To raise awareness, in our company’s case, we recognized that there were lots of angles about our business that are interesting to the public and the business community. We built a public relations campaign on that interest that has been in pretty high gear for about two years now. One of our co-founders takes leadership in this area and makes sure we are always out there with public speaking, earned media, press releases and so on.

FM: What are the key success factors for running and growing a Renewable Energy company?

BVB: Making sure that you know your stuff better than anybody else. Don’t bullshit people. This is as much about values as business. We are recognized as a group of young guys who really want to do this because sure, they want to make money but they also want to do something good for the environment. We’re tough negotiators, but we don’t lie. We’re open people – maybe a little bit too open once in a while. But that’s how we are and that’s how we want to do business. So, that’s a big factor for success.

Working constructively with your stakeholders is another key success factor. We are in a business where we just cannot fool around. This is a serious manufacturing business and you’ve got to follow the rules – there are lots of regulations. Do not believe that just because you are a strong player or own a certain niche that you can bully people. Negotiate tough and professionally, but do it in a constructive way with everybody. There will be some stakeholders today that do not seem powerful in the whole equation, but tomorrow they might be. If you are a bully, you’re going to lose out in the future.

Finally, it boils down to the team. We focus a lot on building our team here and have some high quality people in our company. I know that publicly it might sometimes come across that it’s just the three of us (Christopher Guillon, Ryan Little and myself). But, to give you a flavour of the rest of our management team, the leader of our VP of Development (Brandon Moffatt) used to be the leader of the biogas business unit of a major firm where he built farm-based biogas plants all over North America. Our VP of Construction (Mark Stanski) has over 25 years of construction experience, building $10-25 million projects throughout the world. Our Legal Counsel (Ann Hughes) used to be the EVP and Corporate Secretary of Canadian Hydro Developers, the biggest renewable energy developer in the country. And our Operations Manager (Ashwani Kumar) ran a biogas plant for 12 years. So we added some really, really experienced people to the team. And the younger people we hired were selected based on intelligence and attitude, because in the end, everybody has to learn about biogas since it’s fairly new in North America.

FM: What do you feel is an entrepreneur’s biggest challenge when it comes to implementing a strategic plan / business plan? How can entrepreneurs be successful at implementation?

BVB: Depends a little bit on whether you need a lot of investment. If you need a lot of money from the outside, it’s always important to balance the promises you make to an investor in an early stage versus what the reality is of the execution. Because, the one thing you know from the start is that your initial business plan is not going to work out as planned – that’s the only thing you know. So you need to balance or manage the expectations of investors versus what’s happening in the real world. And that’s a challenge. I would say you should focus on getting results, or qualified successes. Investors will then be forgiving and say ‘Okay, this is a qualified success. It’s not exactly what we expected, but it doesn’t matter, it’s a success nonetheless’.

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For an analysis of this interview, click here.

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