I have sat through enough first meetings between project developers and investors to notice a slightly uncomfortable pattern.
The developer will often leave thinking the meeting went rather well. The investor asked questions, seemed engaged, requested the model and perhaps even said something encouraging about the opportunity. Then comes the familiar line: “This is interesting. Keep us updated as the project develops.”
A few weeks pass. Nothing happens.
The developer follows up, sends another version of the model, perhaps adds a few slides to the deck and eventually concludes that the investor wasn’t serious, isn’t deploying capital, doesn’t understand the market or has suddenly decided that Africa is too risky.
Any of those things can be true. Investors waste developers’ time too.
But quite often the simpler explanation is that the project was not nearly as developed as the developer thought it was.
This distinction matters because the first serious conversation with an infrastructure investor is not really a pitch competition. You are not trying to persuade someone that renewable energy is a large market or that African businesses spend too much money on power. Most investors looking at the sector already believe some version of that.
They are trying to work out whether this particular opportunity is real enough to justify spending more time on it.
Understand what the investor is actually trying to establish
An investor may ask you twenty questions about the customer, tariff, EPC, land, permits, technology, financing structure and financial model. It can feel as though you are being pulled in twenty different directions.
Usually you aren’t.
Most of those questions are attempts to understand a handful of things: whether the project can actually be built, whether someone will pay for what it produces, whether that counterparty can keep paying, whether the economics compensate for the risks and, increasingly importantly, whether the team sitting across the table can get all of this from PowerPoint to commercial operation.
That last question is easy to underestimate.
Infrastructure development is full of perfectly attractive projects that never become assets.
The technology works. The demand exists. The economics can look excellent. Yet somewhere between the first site visit and financial close, something refuses to cooperate. The customer will not accept the required contract term. The roof cannot carry the proposed system. The EPC number moves. The lender wants security the sponsor cannot provide. The tariff works in dollars but the customer earns in local currency. A permit everyone assumed would take six weeks takes six months.
An investor who has done enough projects knows this, so they are evaluating the project and the developer at the same time.
Don’t lead with the IRR
One of the easiest ways to make an early-stage project sound more developed than it is is to lead with the financial model.
“The project generates a 22% IRR.”
That is useful information, but it doesn’t tell me very much until I understand what went into the 22%.
Where did the load data come from? Has the customer confirmed it? Is the EPC price based on a detailed scope or a budget quotation? What happens if construction is delayed by six months? How is the tariff indexed? Who carries the currency risk? What assumptions have been made about degradation, replacement capex and availability? Is the land secured? Has anyone actually looked at the customer’s ability to honour a fifteen-year contract?
You can produce an extremely precise answer from extremely uncertain assumptions.
That isn’t a criticism of financial models. We need them. It is simply important to remember what a model does: it converts a set of assumptions into numbers. It doesn’t make the assumptions true.
The more experienced the investor, the more likely they are to spend the first meeting interrogating the inputs rather than admiring the output.
Learn the difference between interest and commitment
This is probably one of the most useful distinctions in project development.
A customer telling you they are interested in solar is not an offtake agreement. A landowner telling you a site is available is not site control. An EPC contractor sending a preliminary quotation is not a fixed construction price. A bank saying it would be interested in financing the project is not a term sheet.
And an investor asking you to send the project is definitely not financing.
Early-stage projects are full of statements that sound like facts because nobody has yet forced them to become commitments.
A large part of development is doing exactly that.
You take “the customer wants this” and turn it into a signed agreement. You take “there should be enough land” and establish control over a suitable site. You take a preliminary technical concept and turn it into something an EPC contractor is prepared to price and stand behind. You take an attractive financial model and gradually replace its assumptions with evidence.
This is why two apparently identical 10 MW projects can be worth completely different amounts.
One is 10 MW in Excel.
The other has been developed.
Tell me what’s wrong with the project
I become slightly suspicious when someone presents an infrastructure project with no obvious problem.
There is almost always a problem.
Maybe the customer has weak credit. Perhaps the tariff needs indexation that hasn’t been agreed yet. The roof requires reinforcement. The grid study isn’t finished. The feedstock assumptions are based on information nobody has independently verified. The EPC price is still preliminary. A permit is outstanding.
None of these automatically makes a project bad. In many cases they are simply development work.
What worries investors more is discovering a material issue halfway through diligence that the developer clearly knew about but decided not to mention.
There is a much better way to handle it:
“The biggest unresolved issue today is the customer’s credit profile. We have three years of financials, but we don’t yet have enough comfort for the proposed tenor. We’re looking at a parent guarantee and a shorter initial contract structure, and we expect to know whether either works within the next month.”
I would rather hear that than another five minutes about the size of the African renewable-energy market.
You have identified the problem, you understand why it matters and you have a plan for resolving it. That is what development looks like.
Make your project easy to diligence
This one sounds administrative until you have been on the other side of it.
Suppose the annual consumption in the financial model is different from the number in the proposal. The EPC quotation assumes a different capacity from the technical design. The tariff in the presentation is 8.2 cents but the model says 8.7. Someone asks where the customer’s load profile came from and nobody on the call is quite sure.
None of these things individually kills a project.
But each inconsistency creates another question, and every question creates work for somebody.
That matters because investors are not looking at your project in isolation. There may be another ten opportunities competing for the same investment team’s time. If one project has a clean data room, consistent numbers, clearly labelled documents and a developer who can explain where every important assumption came from, while another requires three emails to establish which financial model is current, the difference becomes surprisingly important.
A good data room will never turn a bad project into a good one.
A bad data room can certainly make a good project look worse than it is.
Don’t ask whether they’re interested
By the end of a good first meeting, I don’t think the most useful question is:
“So, are you interested?”
It is too easy to say yes. Nobody wants to spend thirty minutes discussing your project and then end the call with “No, not particularly.”
I’d rather know what prevents the investor from doing something.
Ask what would need to be true for the project to progress internally. If the economics remain where they are, what are the two or three issues they would need resolved before taking it to investment committee?
Now the answer becomes useful.
They may tell you that the customer’s credit isn’t strong enough. Perhaps they need site control, a firmer EPC proposal or evidence of a particular permit. They may tell you the project is below their minimum ticket size.
Occasionally you discover something even more useful: this investor was never a realistic source of capital for the project in the first place.
That is not a failed meeting. You have just saved yourself three months of follow-ups.
Treat fundraising as another source of project data
After enough investor conversations, patterns begin to emerge.
One investor questioning your customer credit assessment may simply have a different risk appetite. If six credible investors independently arrive at the same concern, I would stop treating it as an investor problem.
The same applies when everyone struggles to understand the commercial structure, asks why the EPC price looks low or keeps challenging the same assumption in the model.
Write these questions down.
Not because investors are always right. They aren’t. But repeated confusion is information.
Sometimes the project needs work. Sometimes the explanation needs work. You need to know which.
This is one reason fundraising and project development shouldn’t be treated as completely separate activities. The market is constantly telling you where it thinks the weak points are.
Use that information.
Project development is the product
It took me a while to appreciate this properly.
We often talk as though a developer starts with an energy project and then goes looking for someone to finance it. But at the earliest stage, what you really have is an opportunity surrounded by uncertainty.
Development is the process of removing enough of that uncertainty for somebody to put serious capital behind it.
You validate the demand, secure the site, establish the technical solution, negotiate the commercial structure, investigate the customer, obtain the permits, firm up the construction cost, allocate the risks and work out whether the economics still make sense after reality has had its turn with the spreadsheet.
By the end, if you have done the job properly, you have produced something quite different from what you started with.
You have produced an investable project.
There is no great shortage of solar panels, inverters, batteries or EPC contractors. There isn’t necessarily a shortage of capital looking for good infrastructure opportunities either.
The scarce thing is the messy bit in between: projects that have been developed far enough, and well enough, for that capital to actually be deployed.
That is the thing you are selling to the investor.
And if the response after the meeting is “keep us updated as it develops,” sometimes the best thing to do is exactly that.
Go develop it.
P.S. I have been unfair to Excel in this article. Excel has never claimed that the land was secured, the customer was creditworthy or the EPC price was firm. We put those assumptions in the cells ourselves. The spreadsheet was just following orders.
P.P.S. None of this means investors are always right. I have seen investors pass on good projects, misunderstand markets and spend months diligencing opportunities they were never really capable of financing. That deserves its own article. Bankability is a two-sided problem.
P.P.P.S. The inverse problem is knowing when to stop. Developers are very good at finding one more structure, investor, tariff or study that might save a project. Sometimes that is persistence. Sometimes the project is dead and nobody wants to say it. I think that deserves the next article.