A term sheet with three weeks on it, a deck that promised “81 per cent efficiency”, and a twenty-year contracted asset being priced as a start-up. The structure that let the founders keep control, and the lease that nearly stopped the bank.
An illustration. The project, its figures and its people are invented, to show the method in use: a wrong turn, a dilemma the method did not settle, and what it cost.
The founder wants an introduction to a venture fund and help with the deck. The fund has offered USD 3.4 million for 55 per cent of the holding company, with a term sheet that expires in three weeks; the deck promises “a system efficiency of 81 per cent”.
The founder is describing an infrastructure asset as a start-up.
Twenty years of contracted cash flow against a known cost is a debt instrument waiting for a lender. The fund is pricing it as a venture, with venture discounts for execution risk, and asking for the equity those discounts imply.
A financing structure under which the founders keep control, a lender can lend, and the integrity exposure is managed before money moves.
Agreed after some resistance.
The term sheet’s three weeks were setting the pace of decisions that deserved three months.
He likes the fund. It is fast, its partners are charming, and it does not ask about typhoons. The operator names the resistance rather than arguing with it: “the fund is selling you speed, and the price is control.”
| Venture raise | Debt-led structure | |
|---|---|---|
| Founders’ share after the raise | 45 per cent | Retained, with a minority equity partner in the project company |
| Cost of capital | High | Lower; secured; amortising |
| Fit to a twenty-year contracted asset | Poor | Strong |
| Speed | Weeks | Months; heavy diligence |
The comparison the operator put in front of the founder. He let the term sheet lapse in week three, with a clear conscience and a polite letter.
1. A bridge from the partners for development. 2. A peso loan from a domestic bank for about seventy per cent of the phase-one cost, sized at 1.30 times cover on the P50 case. 3. Refinancing into term project debt once the plant has a year of operation behind it.
At 3 MW the supply agreement falls inside the 2025 exemption and goes straight to the regulator. Adding 9 MW later “under the same contract” would take the cooperative over the ten-megawatt line, so phase two is redrawn around the competitive process or the right-of-first-refusal route.
The “81 per cent” turns out to be the performance ratio, not an efficiency. The capacity factor in the founder’s own model is what a lender will ask for, and the Global Solar Atlas value for the site supports it.
A performance ratio says how much of the energy the sunlight on the modules could have produced the plant actually delivered. A capacity factor says how much of the year the plant was, in effect, running at full rating. A lender sizes debt on the second; the deck quoted the first.
The founder had already signed a lease, on the site the project would eventually use: for ninety-nine years, at a premium, because a friend had told him the longest lease was the safest.
The bank’s counsel did not want ninety-nine years. It wanted the right to take the lease as security, to step in, and to assign it on enforcement, none of which the signed lease allowed. Renegotiating with the landowner took two months and a fee, and the landowner, now aware that the lease mattered, priced the change accordingly.
The lesson: size the lease to the need, and put the lender’s requirements into the draft before anyone signs it.
Site diligence turned up better-placed land nearby, about three per cent more yield, and integrity diligence produced the finding every provincial project should expect to look for: the family that owned it included the spouse of a member of the cooperative’s board, which would be asked to approve the supply agreement.
Two lawful courses were open. Switch to the better land, disclosing the relationship to the cooperative and the lender, with the board member recused and the land priced on an independent valuation, which the lender said it would accept. Or stay on the land already leased, with the lower yield.
The founders stayed. The method made the choice explicit, documented both options and showed the lender why either would do. It could not tell the founders which risk they would rather live with.
| Course | Yield | Condition |
|---|---|---|
| Switch | +3% | Disclosure to the cooperative and the lender; the board member recused; an independent valuation |
| Stay | as leased | On the land already leased, with the lower yield |
These figures are invented to show the shape of an outcome, not to describe one.
This brief follows the worked case at the end of chapter 12, “Capital and structure”, of Nobody Else Is Coming: An Operator’s Playbook for Crisis, Compliance and Capital (first edition, October 2026), pp. 53–54. The chapter sets out the method the case applies: venture or asset; the three numbers behind a technical claim; the project vehicle, the lease and the risk table; debt sizing and a financing menu for a small project; integrity as a condition of the capital.
Open chapter 12 at the case ›doi:10.5281/zenodo.23462160This brief as a PDFStatus. An illustration: the project, its figures and its people are invented, and no client’s information appears in it. Not legal, financial or investment advice. The law is stated as at October 2026 for the Philippines, as in the playbook. Licence CC BY-NC 4.0, as for the playbook; commercial use needs a licence from the author. Author Christopher I. V. Farmer, LL.M. (University of Worcester), independent researcher, Geneva · https://civfarmer.github.io/