Ask any rural business owner what the hardest part about starting and growing a company is and I can almost guarantee you will get the same answer nine times out of ten – finding access to capital.
Our business, Northern Reliability, is no exception. Finding investors for a small, growing company in rural Vermont can be very difficult without the masses of investors that larger metropolitan areas have. Couple that with the difficult rates and returns that most investors want from small companies, and you can see a perfect storm situation when one looks for capital to expand. This is why the investment we received from the Flexible Capital Fund (Flex Fund) has been so critical to our growth and success.
Based in Vermont, the Flex Fund invests in the state’s growing food system, forestry and clean technology sectors that are on the forefront of their industries. Their mindset in focusing on health food systems, preservation of our working landscape and helping establish a clean environment in the energy sector really sets them apart from so many firms focused solely on the investment’s return. The Flex Fund offers ‘flexible’ financing in the form of royalty (or revenue-share) financing, a loan instrument repaid based on percent of revenue over a fixed time period, rather than a fixed monthly payment. It is an alternative to equity, and doesn’t require an entrepreneur to give up ownership, control of the company or decision making.
Northern Reliability designs, builds and operates Energy Storage Systems that equip off-grid applications with renewable energy while reducing fossil fuel dependence, as well as grid tied solutions for electrical grid support applications all over the world. Formed in 2007 by former Barre based, Northern Power Systems employees, Northern Reliability built a solid track record in engineering and product innovation to help customers become more energy independent. However, our company like so many others quickly hit growing pains as we began to expand. The investment from Flex Fund was perfectly timed and allowed us to ramp up sales and marketing efforts, hire new and maintain current employees, and support product development. Additionally, as a real partner in our growth, the Flex Fund’s advisory capacity has been a valuable part of their overall investment in our company. The President of Flex Fund, Janice St. Onge has provided invaluable business guidance and has become part of our advisory group.
Companies in rural areas like Vermont tend to be smaller and work on a less-than global scale, offering a return on investment that does not often meet venture capital requirements. The challenge is sometimes these rural companies need some type of equity like capital to fuel expansion, grow sales, enter new markets and create new products. The Flex Fund filled this gap for Northern Reliability and has worked with us to support the business as we continue to grow. I encourage other growing businesses in food, forestry and clean tech sectors to learn more about their financing options.
Today, Northern Reliability operates out of Waterbury, Vermont and employs 20 Vermonters who design and build systems that have operated on all seven continents. Its engineers have over 40 years of experience in a field that is touted to be the answer for the world’s energy crisis. This is exactly the type of economic growth that Vermont needs. The Flex Fund’s investment in Northern Reliability came at the right time with the right structure. We would unlikely be here today and we certainly would not have seen the growth and success we have enjoyed over the last several years if it weren’t for their investment. If Vermont’s rural economy is going to thrive in an increasingly global and competitive world, it is unique and creative organizations and innovative investment structures like those used by the Flex Fund that will help drive their success.
Jay Bellows
President & CEO
Northern Reliability Inc.
