Opinion
Gershenson: Climate VCs often give under-informed board advice with unearned certainty
“The challenge that I have with that group of investors is that oftentimes the advice that they give to founders, or the guidance that they give to founders while they're on their boards, is often not as informed as it should be, but is given as very definitive…”
Assertion Not checkable as stated
Gershenson: Automated underwriting in 2019-2022 fintech lending was not real
“And a lot of that was built on the promise that technology had come to a place where you could underwrite basically automatically, which In retrospect, like, wasn't really true then.”
Insight
VCs advise against debt due to their own equity allocation incentives
“The problem is that, like, there's a lot of misalignment of incentives in a lot of those conversations, and, you know, a VC who sees the opportunity for greater allocation in a business that they're interested in, obviously is going to want to take that alloca…”
Insight
Financial instruments do not kill startups; founders and boards do
“The notion that a financial instrument kills a company is false.
Founders kill companies, and boards kill companies.
The people who hold responsibility are the decision makers in the company.”
Assertion Supported
Gershenson: Venture capital is not the dominant capital source for US climate
“If you look at the data for how much money flows into climate in the US, like, VC is not the dominant.”
Assertion Not checkable as stated
Gershenson: Enduring Planet's default rate is well under 1% across 80 deals
“Our default rate across, you know, nearly 80 transactions is dramatically below the average default rate for contract lending, and at this point it's like way less than one percent.”
Opinion
Gershenson: Climate founders' persistence keeps Enduring Planet default rates low
“Part of what allows us to have the default rate that we do is that people just don't give up. And so when stuff goes wrong, we modify alone, and they make it work.”
Assertion Supported
Many GGRF grants negotiated out standard federal termination for convenience clauses
“So a lot of the GGRF grants, they negotiated out the termination for convenience clause, which is why the thing is still in court, right?”
Insight
Gershenson: Early funds cannot invest in software until scaling AUM
“In the early days, you know, you basically just have management fees to cover people, and the idea of, like, investing in software to make the process better is, you're not going to do that until you have much larger AUM, right?”
Assertion Not checkable as stated
Gershenson: Raising under $20M in US climate debt remains difficult
“You know, you could go to a bank and raise fifty-plus million dollars, but getting anything less than 20 was, like, really, really hard. I mean, it's still really hard, but it was really hard back in twenty-twenty-one.”
Insight
Gershenson: Using equity to fund short-cycle reimbursable work is inefficient
“They would use equity to pay for work that was Getting reimbursed on a very short cycle, which is a terrible use of equity dollars, so, like, a really expensive way to finance this kind of work. And so credit makes, like, much more sense, right? It's much more…”
Insight
Gershenson: Venture debt is underwritten solely against future venture rounds
“Venture debt is underwritten against your next venture raise.
It's not underwritten against anything else.”
Assertion Not checkable as stated
Venture debt banks can cost half as much as private debt funds
“I mean, the cost of debt from a venture debt bank, Versus a venture debt private fund is sometimes half, and often the warrant coverage is lower.”
Disclosure
Gershenson: Enduring Planet ignores signed term sheets until capital is deposited
“We don't take fundraising risk. Like, we just don't. So if a company is like, well, we're working on our seed round, we have interest, I'm like, yeah, great. Even if you have a signed term sheet, we don't care. Like, until the money is in the door, we don't co…”
Assertion Not checkable as stated
Founders failing to socialize debt deals with boards killed six approved loans
“We've also had circumstances where founders don't properly socialize the deal with their board, and so probably, like, half a dozen of deals in the last, I don't know, Year to year and a half. Failed. Even though we approved the deal, we signed a term sheet wi…”
Assertion Supported
Gershenson: Federal grant cancellation clauses require reimbursement for completed work
“But the trick is that that clause At least as it's generally been written, requires the government to reimburse the grantee or the vendor, et cetera, for any work done to date until the cancellation that is within budget.”
Disclosure
Enduring Planet expanded to commercial lending anticipating the Trump administration
“And then we also, kind of, in anticipation of the Trump administration, we expanded to lending its commercial contracts as well”
