By Janice St. Onge, president of the Flexible Capital Fund
An engineer by training and environmentalist by choice, Chad Farrell founded Encore Redevelopment in 2007 to “scratch an entrepreneurial itch.” In those early years, the business focused on cleaning up contaminated waste sites for commercial real estate development. “That was what being an environmental engineer meant in the nineties,” said Farrell. “The focus of the environmental movement at that time was largely on pollution.”
It wasn’t until President Obama took office in 2009 that the conversation took a hard turn towards renewable energy. Entering office in a recession just after the banking crash of 2008, Obama introduced the American Recovery and Reinvestment Act, which included $90 billion for energy efficiency and renewable energy. Around the same time, the Vermont legislature enacted legislation to create a program to jump start investment into clean energy in Vermont—and Farrell saw an opportunity.
“The proverbial lightbulb went off over my head,” said Farrell. “To generate any meaningful amount of electricity from solar, you need a decent amount of land. Wouldn’t some of these larger landfills and brownfield sites be really appropriate for brightfields with community scale solar projects?”
Reading the Tea Leaves, Reinventing the Company
Reacting to both legislative initiatives and market signals, Farrell began to explore solar energy, taking a deep dive into solar siting, design, permitting, finance, and construction. With his entrepreneurial spirit, three interns, and an idea, Encore re-emerged as a company dedicated to reclaiming undervalued real estate for clean energy generation and energy storage. The idea was to use marginalized land to greatly expand the state’s solar energy generation.
The concept caught traction, but “those were challenging days,” said Farrell, acknowledging that he and his fledgling team had a lot to learn. In 2015, he brought on Blake Sturcke, an investment banker with clean energy experience, as CFO. With Farrell’s vision and Sturcke’s expertise, the company rebranded as Encore Renewable Energy, having found their niche in “concept to completion” project development for renewable energy assets and installing community scale solar projects around Vermont at sites including a remediated brownfield in Hartland, capped landfills in South Burlington and Brattleboro, and an abandoned gravel pit in Stowe.
By 2016, Encore was poised to expand. “We were in growth mode,” said Farrell. “We had a story, we had a track record, and we had some name recognition in a nascent market, but we were also bandwidth constrained, resource constrained, and capital constrained.” So Encore turned to Janice St. Onge, president of the Flexible Capital Fund (the “Flex Fund”), and secured a $500,000 royalty loan—$400,000 from the Flex Fund with participation of an additional $100,000 from the Vermont Community Foundation. The structure of the investment as a royalty (or revenue based) loan gave Encore flexibility in repayment, as monthly payments are based on a percentage of revenue instead of a fixed monthly principal and interest payment. For a company like Encore whose revenues are often “lumpy” and inconsistent, the structure was a great fit, and allowed Encore to bring in much needed expertise and grow its team.
With additional resources in place, Encore began to look to diversify both geographically as well as technologically. St. Onge helped to facilitate a second round of funding in 2019, securing a joint $1 million royalty investment by the Flex Fund, Bright Community Financing Fund (affiliated with Coastal Enterprises Inc. of Maine), the New Hampshire Community Loan Fund and another independent investor. In addition to bringing in $500,000 from out-of-state investors, the Flex Fund helped Encore tap into regional connections which has opened up new business for them around northern New England. “There’s a good chance we will do a greater number of megawatts in Maine in the next year to 18 months than we’ve done in our entire history to date,” said Farrell.
Focusing on People, Planet and Profit
As the company grew, so too did a global understanding of climate change and the critical role of clean energy in reducing greenhouse gas emissions, further solidifying the company’s mission. “The more we learn about climate change, the more convinced I become that this is the challenge of our lifetimes,” said Farrell, “but it’s also the common enemy that can bring us all together. As a lifelong environmentalist, I wanted the company to be focused on making the world a better place.”
Shaped and supported early on by Vermont’s socially-responsible business leaders including Jerry Greenfield, Will Raap, and Jeffrey Hollender, Farrell’s values as an environmentalist are part of the company’s DNA. In 2016, the company became a Certified B Corp, which Farrell says is a key part of the company’s culture. “In some ways, becoming a B Corp codified the values we’d always held,” he said, “in other ways it has been transformative.”
“As a B Corp, our focus is on the triple bottom line—people, planet and profit. As we’ve grown, we’ve been able to show profitability and we score well on the environmental side because of what we do. The social side is where we’ve had the most headroom to improve, and I’m really proud of the strides we have made.”
Today, Encore has 19 employees, just under half of whom are women, and includes individuals who identify as BIPOC and non-binary. “Intentional diversification of our team has had a profound impact,” said Farrell. “We’ve always said two brains are better than one, but it’s not only that. You also need two (or more) brains that bring different life experiences and perspectives to the table to encourage thoughtful, open-minded discussions, which in turn leads to greater creativity and productivity.”
Acknowledging that the company is still learning, Farrell adds that Encore has a justice, diversity and inclusion task force that keeps the work central to everything they do. For example, a couple years ago the company rewrote a job description with input from a diversity specialist at B Lab, the non-profit organization that manages and oversees B Corp companies. “I’ve never seen more red ink,” said Farrell. “The revised job description was so much better and served to attract a much more diverse applicant pool.”
Despite a challenging year during Covid-19, Farrell is optimistic about the power of business as a force for good in the world, and is hopeful about the future. “The zeal, interest, and passion of the next generations gives me hope for the future. The young people I meet in this field are motivated, actively learning, and engaged on all of these issues—it’s just awesome. I’m blown away by the talent and passion of young people and their commitment to doing this work.”
About the Flexible Capital Fund
The Flexible Capital Fund, L3C is a Community Development Financial Institution (CDFI) and impact investment fund that provides flexible risk capital in the form of subordinated debt, revenue based financing (also known as royalty financing) and alternative equity structures, to growth-stage companies in Vermont and the region’s food systems, forest products, and clean technology sectors.
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