The Birth of RE Royalties
People have occasionally asked me “why and how did you come up with the idea for the company?” Well, the inspiration and idea was the result of a personal journey and a confluence of several events happening in my life a few years ago.
In the fall of 2013, I became a parent for the first time. When other parents told me that “your life will never ever be the same again!” I had thought that just meant less quality sleep, less free time as a couple, constant diaper changes, and never ending cleaning. They were definitely right. What I did not expect was how my perspective on life and the future would change.
When you are staring into your baby’s wide open eyes in the middle of the night while enduring sleep deprivation, everything changes. You begin to think about every possibility in your child’s life. Who they will grow up to be, who their friends will be, where they will live, their values as a person, and the risks and challenges they will face. These thoughts percolate in a blurry swirl in your head and you wonder how the world will look not just tomorrow, but when they grow up and have their own kids. Will they have the same opportunities, stability and wealth that we as a generation were blessed with? And that was when the future impact of climate change really hit me.
With a bit of knowledge of climatology from my university days still with me, I had always known about the risks, the impacts, and the changes the natural world was going through, but I had never viewed it through the lens of a parent. The immense magnitude of the problem made me feel tremendously powerless and how the future would affect my kids. As much as I wanted to help the cause to mitigate the impact, what could a geeky bean counter really do when there were so many smarter, richer and powerful people trying to solve the problem? But I am also reminded by a quote from my grandfather before he passed:
“The hardest step on any journey is the first one. If you don’t take that step, you will always wonder what could have been.”
So that began my journey in finding a way where I can contribute back to the world.
In 2015, I did some advisory work for an upstart local clean technology company to help with their financing. The company had a promising technology that looked to harness the kinetic energy from tides and canals to generate clean electricity. Not only did they have the technology to generate clean renewable electricity from an unlimited resource, they had an established development partner, the government was waiting to provide them with permits to install at various sites, and a long-term revenue contract to buy the electricity at a very high price! The only stumbling block was raising capital. I thought, wow, this should be easy peasy compared to my experiences in the mining industry; where resources were finite, governments were not always supportive, permits took forever, and revenues constantly fluctuated with commodity price. I started looking at various options: venture capital – too expensive; private equity – too much control given up; public markets – too many hoops to jump through; debt – too restrictive; government funding – too many strings attached. While there were suitors and options, none of them seemed perfect.
One very late night (or technically very early morning), while soothing a fussy toddler back to sleep, the idea came to me….what if this clean tech company monetized a royalty from one of their permitted sites? This was how mining companies got their projects financed and built, and they didn’t have to give up control, wasn’t dilutive to their shareholders, much cheaper than an equity financing, less restrictive than debt, and is relatively simple compared to a public offering. If it worked for mining companies with less favorable conditions, why shouldn’t it work for renewable energy companies?
The very next day, I began looking for a royalty financing company in the renewable energy sector that could help this company. Nothing. I Googled it. Nothing (and Google knows everything!) I even spoke with a renewable energy banker in New York, who told me no such type of company exists. How was this possible? Literally every industry: music, pharmaceuticals, mining, oil and gas, technology, agriculture, consumer products, restaurants, industrial services had a royalty financing company. But somehow, there is this gap that exists in the renewable energy sector. So, I did what any entrepreneur would do. I called someone that actually knew the industry and that led me to Peter….and that was how RE Royalties was born.
As any expecting parent would tell you, one of the hardest part before you become a parent is picking the right name. The name is what defines you and what others will remember you by. So being the creative person that I am, I checked all the names that had yet to be taken and decided to name the company Renewable Energy Royalties! That’s is what we do and so easy to remember! Except….the business registrar came back and rejected it. The reason? It was not unique and descriptive enough. And hence, RE Royalties was chosen instead…because it is more unique and descriptive. ¯\_(ツ)_/¯
- Bernard Tan, CEO and Co-founder of RE Royalties