The main document for your project application is the Project Proposal: a concise and credible plan that is straightforward and easily understood by evaluators and reviewers. It should provide enough detail to give evaluators a clear idea of your project’s rationale, structure and management, investment ask, returns and risks as well as climate benefits and any developmental, social and gender impacts. Please follow our guidelines to help you define your project more clearly and convince others, including PFAN, that your project is worth working with.
It is not necessary to address every question or item in the guidelines – elaborate on those relevant to your project and for which you have information available. Any areas requiring further work will be covered during the coaching PFAN offers to selected projects.
Please note the following:
Ownership structure (Who)
What problem is being solved/addressed by your company/project?
Where is your region/place of operation and distribution/sales? How strategic/positive is the location for your project?
Is it an already operating company or a new project? What have been the milestones so far, and what is the future timetable for implementation?
Who and what are your management team, required financing, technology, permits, construction contracts, additional basic infrastructure investments pre-project, supporting regulations, strategic partners (synergies), local authority’s role/support?
Who is on the team that will manage the project development and implementation, their previous background, experience and role in your project? How many men and how many women are among the owners, management, board and staff of your project/business?
Is it a build-operate-transfer project, a privatisation, a green field project, a scale up of existing operations? What is being done, offered, acquired, sold and distributed? What are the goals?
Local/domestic? International? Barriers to entry?
What are the opportunities and threats, the existing physical, logistical and commercial infrastructure in place, the status of regulatory environment?
Who are they (private, public, local, int.)? What are your company/project’s competitive advantages over other market players? This is especially important for investors.
Is there a feasibility study, a development plan? Who are the off-takers, is there a PPA agreement (volumes)?
What technology is used in your project? What are its advantages compared to other similar technologies? PFAN project reviewers are experienced financing practitioners in the clean energy space and have practical experience with most common clean technologies. Only completely new technologies or enhancement of existing technologies will require a more detailed technical presentation. What milestones have you already achieved, what progress have you made on implementation, or what is the estimated implementation start and target timeframe?
How will your company sell its products/services to customers? How they will be distributed, how payments will be received/processed?
What is the legal and regulatory environment applicable to your project? (concession laws, privatisation, mandated energy mix requirements or targets, structure of energy tariffs/independent power production etc, planning and building permission, commercial and business licences, employment licences, emissions/water rights, import and export permits, etc)
What is the level of political support for your project at the state, regional and/or local level? How is this support demonstrated? Are state guarantees be available? Are other incentives available (grants, subsidies, tax breaks, etc)?
From construction to operations, are the required professionals available? Is training required?
Development Phase: this covers the time up until financial close and should outline what needs to be done and detail the plans for achieving financial close;
Construction/Implementation Phase: this covers pre-operations and activities/conditions that need to be in place before the project is operational;
Start of Business/Operations Planning: the operational plan should include details on day to day business operations, scheduling, manpower distributions and supply chain planning;
Expansion/Growth Strategy: to the extent that rapid business growth and expansion are anticipated, information on growth strategy and expansion plans should be provided, and the financial analysis provided later in this Business Plan should reflect these details. What is the planned project lifetime? What will happen at the end of this lifetime?
Exit Strategy: if and where applicable; this is always of interest to evaluators and potential investors.
Shareholder structure (local, int., companies/private individuals).
Investors already involved (local, int., type of lenders, general terms)
Expected additional investment from existing shareholders
Supporting organisations, amount
Source of financing (any local banks?), amounts and terms (tenor, borrowing costs, any guarantees or collateral already committed)
Mention if developers have also put significant “sweat equity”, non-cash contributions into the project – most investors would like to understand developer’s commitment and link to the project.
Discuss main assumptions, especially revenue and estimated capital expenditures and operating expenses (scope of work/bill of quantities/technical specification), time frame used.
Internal rate of return (IRR), return on capital invested/expenditure (ROCE)
Payback period, point of break even
Annual debt service coverage ratio (DSCR) and interest coverage ratio (ICR) using earnings before interest, taxes, depreciation and amortisation (EBITDA)
The Investment Proposal should be for a commercial investment which provides a return on capital to the investor and/or which pays a rate of interest to a lender on a debt, which is repayable on agreed terms. The proposal may include grant or subsidised components, but the investment opportunity should be structured as a commercial proposition. PFAN will not consider proposals that are structured primarily as grant requests.
What is the breakdown of the total amount being asked in the different types of investment envisaged (debt, equity, grants) and currency preference?
What is the target debt-to-equity ratio after the proposed investment?
What rights and benefits would be attached to investors’ obligations and commitments?
What is your detailed plan for the use of proceeds (source and application of funds statement/summary), including CAPEX, OPEX, financing costs, soft costs?
Who are your target type of investors? (e.g. philanthropic investors, impact investors, development funds, institutional investors, private equity, venture capital, strategic investors, industrial investors, carbon investors, development finance institutions and banks, etc)
For equity investors, what would be potential exit strategies, including multiple exit points if possible? (such as industry sale, buy back by developer, IPO, etc)
For debt investors, what would be the pay back strategy, long term amortisation based on stable cash flow generation or refinancing?
What is the nature of the risk, the likelihood of it occurring, the potential impact and possible mitigation measures? Are there risks related to the underperformance of new technologies? In case of new technologies, has intellectual property been protected? What are the prospects for new technology developments that may harm or benefit the business model of your project? What laws and policies are in place that could threaten the success of your project?
What is the estimated financial impact of key risks, as demonstrated in the cash flow projections under different assumptions of growth, sales, successful implementation, milestones?
Under what circumstances would your project become financially unviable? How likely are these circumstances to occur? What are the implications and commercial options if they do occur?
What are the social impact factors including population trends/demographics, employment, land ownership, customer behaviour (related to your product/services), education, pollution abatement, health, economic participation, water quality and availability, poverty reduction etc?
How many people will increase their resilience to the impacts of climate change due to your project? What jobs will be created, skills transferred, technologies transferred, economic benefits from increased productive use of clean energy solutions, etc?
What are the positive and negative impacts (including mitigation measures), include outcome of environmental impact assessment (EIA), if available? If possible, provide annual GHG reduction potential for the project in tonnes of CO2e avoided or annual energy savings in GWh, as well as methodology used and assumptions for your calculation.
What are the energy efficiency gains offered by the new technology/process/project?
How could access to your product improve the livelihoods of women and girls or change observed gender inequalities? Please provide a GIA (Gender Impact Assessment) if available.
Finally, in your conclusion, highlight the main strengths and benefits of your project/business and summarise why an investor should consider investing.
Farm-Hand benefited from being part of the PFAN cohort through: first, networking with other clean energy startups and the investment community, second, rigorous quality checks on key company documentation and, most importantly, third the energy and emphasis placed on creating a sustainable, scalable and impactful business.’’