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There are a lot of different asset classes where you can build your portfolio. Mike Silvestrini, who started as a chef while backpacking, shifted to being an investor for renewable energy assets. As someone concerned with the earth’s ecology, the quality of our air, and whether it’s fish stocks or forest cover, or climate change, Mike focused his time, efforts, and money on renewable energy assets to help preserve our planet. Mike co-founded Energea, a renewable energy retail investment platform. Before Energea, Mike was co-founder and CEO of one of the U.S’s largest commercial and industrial solar firms. Tune in as he shares the rest of his journey on the show!
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From Traveling Cook To $100M+ In Renewable Energy Projects Around The World With Mike Silvestrini
Joining us now is Mike Silvestrini, Cofounder and Managing Partner of Energea, a renewable energy retail investment platform. He and his team took his first company Greenskies Renewable Energy from inception to a successful exit in 2017. He’s now focused on connecting investors to renewable energy projects and making it easier for ordinary investors to participate in an asset class he views as profitable and impactful.
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Mike, welcome to the show.
Thanks, Chris. I appreciate you having me.
Before we get into your background, I want you to tell people the story of how your kids go to school on a boat?
When COVID-19 made everything strange, we sold our house because it was a great time. It was a seller’s market for sure and then we moved to Breckenridge. It was whiskey season out there. After that, we moved to the Caribbean. We’re now in the British Virgin Islands. We live on this little island called Scrub Island and the kids go to school on another island called Tortola. They take a boat over the little piece of the Caribbean Sea before school every day. It’s been an adventure and they developed a whole different set of skills like surfing and snorkeling instead of maybe soccer and traditional American pastime. It’s been fun seeing them have an opportunity to have this experience.
We could spend a whole episode talking about that because what we’re all about is helping people find their path to financial independence and ultimately, being able to do things that you’ve done with your family. I know we’re aligned on that, but I’d love for you to share a little bit more about your background before we dive into what your company has got going on right now. How did you end up where you are now?
It’s is a path to financial independence and that’s was a main objective of mine. I knew that business was going to unlock a lot of opportunities for me. After finishing grad school, I started my first company. It was a solar energy company called Greenskies. It was back in 2007. Up until that point, I’d been a chef for many years. I had been a backpacker. I was in the Peace Corps. I have no real experience with business, but it turns out that all of those life experiences do prepare someone for a world in business, and as an investor as well.
I’ve relied on those past experiences, the hard work ethic that I learned in the professional kitchen and the global perspective that I learned from backpacking around the world. Every day, I still continue to use those skills to make great decisions about what to invest in, where I see the puck is moving towards, and also to put in the work effort that’s required to be successful.
Shortly after starting my first company, and I’m sure many of your readers have done that, it’s not the easiest thing. If you’re wild enough and bold enough, and you can live off a very small amount of cash for a long period of time, then you can do it. We started getting contracts. I remember in the old days doing a couple of $100,000 solar projects. It was like, “Whoa.” This was a brand new level of economics for me, growing up in the middle-class in Connecticut. My dad was a journalist or a newspaperman, and my mom was a nurse. Seeing how a business functioned and then going out and striking what at the time were huge deals for $200,000 transactions, I was like, “There’s no limit to this.” Those kept snowballing and a couple of years into selling solar energy projects, we got lucky. We signed deals with Walmart and with Target in the same month.
That company, Greenskies which I cofounded and ran for many years, started to become a service provider to those juggernaut companies. We were developing and owning solar assets, and selling the electricity from those projects to customers like Amazon, Walmart, Target, utility companies, municipalities, and other large businesses. It blossomed as an enterprise and it was fun to be part of that. Along the way, I learned what it was to hold a real asset. After selling the company, I went from being asset-rich and cash-light to cash-rich and asset-light. It was fairly uncomfortable, to my surprise. I prefer having the assets.
Fairly quickly after selling Greenskies, I started up another solar energy company to take that capital and convert it back into solar equipment. It’s an asset class that I love and that I’m made for. My career is based on this particular asset class. We did that and I partnered up with a buddy of mine from nursery school. His name is Chris Sattler. We’ve been friends our whole lives and he had sold an energy company at the same time. We both do nonprofit work in Kenya with a group called Big Life, where we started off as anti-poaching, and has evolved into ecological systems management organization. It’s a fantastic nonprofit.
We were talking during our Big Life experience and decided to start a company ourselves to invest our capital into renewable energy assets. We found another hydropower plant down in Brazil that we love. This thing was smashing returns. It was an exciting project. It was in Rio and I thought, “This is so much fun. I wanted to open up this investment opportunity to friends and family.” That is how Energea was born. It’s by taking our personal investment strategies and trying to share that with other people.
That wasn’t enough for us so we started to figure out ways to open the investment opportunity up to even more individuals. We found out Regulation A, which is an SEC qualification that we utilize at Energea to take these renewable energy portfolios and share them broadly with any US investor, accredited or not accredited. That’s been the journey. Starting off, I was a curious kid with a love affair for travel and inexperienced, and becoming an entrepreneur and evolved into an investor over the years.
You’re making my job easy because there are so many things we could talk about here. Where were you a chef in? What city were you in?
I was all over the place because I used that as my main cashflow while I was backpacking. I was a chef in Australia at this bar in downtown Melbourne, a great food city. I was a chef for Daniel Boulud in Manhattan. I was a lower-ranking chef there.
I think I’ve been to Bar Boulud and I’m trying to think if we’ve been to one of his other restaurants.
I was a chef at Bistro Moderne, which is one of his smaller shops. His flagship is DANIEL in Manhattan. I also worked at a number of different restaurants from high-end to low-end, from sushi to Italian to fusion, all different stuff. It always paid the bills and it put me in a great social setting because restaurants are a fun place to work. I thrived off of the intensity of the work effort that’s required in the back of the kitchen, the tremendous hours, camaraderie, teammate and team-building. The way I manage businesses now, most of that derives from lessons learned in the back of a kitchen.
You can’t always get two polar opposites other than a line chef to an investor, and putting these deals together. I love to cook and I love food. Let’s talk a little bit about the business side of solar because I’ve had solar panels on our house. I’ve had hybrids. We have a plugin hybrid now. I’ve looked at different solar investments. Anybody that’s reading knows about solar energy, but you are talking about putting these projects together for big companies. Can you talk a little bit about that? How does that work versus going and buying some solar panels, putting them on our roof and plugging them into the grid, for instance?
Renewable Energy: We don’t have a snowball’s chance in hell of preventing the negative aspects of our own behaviors unless we figure out how to align capitalism with the solutions to these problems.
Instead of our customers owning the solar panels, which it sounds like you do and that’s cool, we would own the solar panels. I would sell the electricity at a fixed and agreed-upon rate to my customer for a long period of time like 15 or 20 years. Walmart, for example, has come to us and says, “We want to go solar.” We’d say, “We can help you do that. Let’s try to figure out how much you’re paying for electricity in different markets, and then in markets where the sun is bright, the electricity is valuable, and there are incentives coming from the state in those days, where the economics made sense, we’ll buy the solar plant that will sit on top of your roof and you’ll agree to buy the power produced from that plant for that extended period of time.” I make a return on my investment by harvesting that monthly cashflow to pay their now solar electric bill to my company, instead of paying the incumbent utility company for their power.
Who made the initial capital investment. Was it Walmart?
They didn’t touch their wallet. All they did was buy electricity and the electricity was materially cheaper than their alternative choices of conventional electricity. That’s how solar works.
It’s a win-win for them and they also can raise their hand and say, “Look how environmentally responsible we are?”
Walmart knows how to save money. They’re the best at it. They were a fabulous customer, to be honest with you. The world still does think of that organization and they were the first movers. They allowed companies like Greenskies to scale and figure out new ways of systematically approaching this industry. In those times, picture a rooftop the size of a Walmart. They would only have a tiny little solar project on there because maybe there was a grant. You can only put up that much solar to get the grants, but they made no sense.
All of a sudden, fast forward a couple of years, this was 2014 and 2015. We were blanketing those roofs with solar panels because we were able to get the costs lower because Walmart gave us to scale. I think it was a big part of the maturation of this industry that people are talking about so much nowadays. A lot of that comes from the early adopters like the big American corporates who took a chance on guys like me to deliver them abundant, clean and cheap electricity.
I love that you determined on your title page that you’re an enviro-capitalist. It’s great when you can find something where you can do both. I spent so much time outdoors. We live in a beautiful area for that. I remember John Mackey who founded Whole Foods, talking about this idea of being a conscious capitalist. One of the stories was about Stonyfield Yogurt. I don’t know if you’re familiar with it but it’s everywhere now. The Founder was talking about how his friends were like, “You’re selling to Walmart. You’re sold out. You’re sharing it with the devil.” He looked at his friend and said, “Walmart sells more yogurt than anyone else in the country. We are achieving our mission faster because of them.” He was like, “You can make this work.” I hear you say the same thing about the same company. It’s pretty amazing and they save money. It made sense economically for them and it’s a win-win.
I’m obsessed with this concept where capitalism is the most powerful engine to mobilize the ingenuity of mankind. It’s profoundly effective stuff when used correctly. How do we take that engine and strap it to these new desired outcomes? For me being an environmentalist, I’m deeply concerned about the ecology of the Earth, the quality of our air, and the things that we’ve done to our planet, whether it’s fish stocks, forest cover or climate change. These are real concerns that we need to be aware of.
I don’t think that we have a snowball’s chance in hell of preventing the negative aspects of our own behaviors unless we figure out how to align capitalism with the solutions to these problems. In a lot of ways, those are the types of products that we build at Energea and Greenskies. I’m working on a new one now. I’m trying to figure out ways to use the real estate infrastructure with these REITs, and use some of the toolings that we have for real estate to protect precious ecological land. It is possible that as the land of tremendous ecological value like an African Safari type of land gets rarer, its value would increase. We have to figure out how to monetize that value so that we can use the capitalistic drivers to protect it.
There are some mechanisms in the United States that work for that. They incentivize land conservation and those sorts of things. They get a bad name. I know the IRS targets a lot of these things, but I have a good friend that puts these together. He’s a hunter and he loves to hunt. He loves to provide environments where people can enjoy it. He also likes to preserve the environments for these wild animals so that he and his family can hunt on them. He has a nonprofit that is associated with kids doing this. To your point, if we can bring these things together and make it happen, it makes everything a lot easier.
Here’s the thing. I know climate change has gotten polarized, but I wish if we took a step back and said, “Can we all agree that the world would be a better place if we didn’t pollute as much?” We don’t have to say, “We’re talking about this tax this month. You’re bad and you don’t want fossil fuels.” Probably, 90% plus of people can agree that we want less pollution. It’s like, “Come on.” We talked about Greenskies and your current projects. If you look on your website, it’s so cool some of the places around the world where you’re doing these projects. Share a little bit with us about some of your current projects, where they are, and what you’re excited about now for these.
I put my investor hat on here and I think about how to build an ideal portfolio of renewable energy assets. As I explained, I already liked the asset class because you’re collecting this long-term contracted revenue or this pretty fat dividend yield. It’s cashflowing and it’s a real asset. It’s uncorrelated to stocks and bonds. It’s inflation-proof because most of the contracts have escalators in them that escalate with the consumer price index. I liked some of the characteristics of the asset class, but to think about it as an investment product, we have to take the next step and think about how to diversify within this asset class.
For me, being somebody who loves traveling and has been in many countries, the natural diversification strategy was to look at other markets. The United States is the best place in the world to do business, but you’re going to get a lower return on investment because competition is very sophisticated. There are lots of players in the market. There are lots of capital in the market and there are lots of cheap capital in the market. That’s great but with 6%, 7% and 8% returns, it’s going to be hard for people to retire on a 6%, 7% or 8%. You have to have millions of dollars stowed away, working for you and flowing dividends for you to pay your mortgage every day after you retire.
That’s what we got Bitcoin for.
Mix it up. Maybe that’s your thing. I think nobody should be as heavily weighed in renewable energy as I am. I wouldn’t recommend that to anybody. I’m 90% renewable energy over here because I love the asset class and I know it. I control my own destiny because I’m an asset manager in this profession. When I look at this, I see opportunities like in Brazil. When you said the word Brazil, people run in the opposite direction. The news about Brazil is never good news. They have a crazy whack job president. They like to smash their environment. There’s no good news. The currency is weak. You pretty much name a problem and Brazil has got it.
Underneath all that is a huge return opportunity because I think Warren Buffett said, “When everybody’s running in one direction, you run in the opposite.” We’ve taken that approach in the family of assets that we manage at Energea. We’ve done well for our investors and ourselves in Brazil by taking that chance and risk. This is a massive country. I go there all the time and now I’ve gotten familiar with the place. I understand the culture and I understand that it’s an exciting economy waiting to explode. We’ve seen so many great companies in the private sector starting to wake up in Brazil.
For Brazilians, I’m happy for them to finally have more free-market opportunities than they’ve had under more socialist political regimes in the past. While it’s starting to heat up, we’re going there and taking positions in their energy sector, which has been primarily hydro-based and now they’re having more droughts than ever. All around the world, climate weirding is a pretty common thing.
Most of those currencies are also denominated in dollars. As the currency weakens and as the droughts increase, it’s creating this gold rush for anything but hydro in Brazil, and solar is the cheapest option. We’re doing hardcore infrastructure deals with A-rated customers like telecommunications companies, the biggest pharmacies and retail customers in the 20% unlevered IRR range. You don’t see real assets in that type of range very frequently on that scale. We’re doing hundreds of millions of dollars of business down there and we expect that market to continue to grow.
Renewable Energy: The United States is the best place in the world to do business, but you’re going to get a lower return on investment because competition is very sophisticated.
We have a project in Zimbabwe, South Africa, and the US. Like all things, balance is essential. We mix it up and try to do portfolio architecture. The way I look at it is we’re serving our customers who are investors a solar cocktail. The ice and the drink are the US stuff. It’s not a lot of flavors, but you can’t have a cocktail without it. We punctuate that stuff with the spicier concoctions of Brazil or Africa, where we can find attractive yield and hedge our bets a little bit.
You didn’t spend all your time in the kitchen. You were behind the bar a little bit. Just like a whole portfolio, you got your cocktail and main course. I love that you overweighted. You got to invest in what you believe in. It’s the same thing in real estate. To clarify, you’re still doing solar farms in most of these. Is that correct?
Yeah. It’s mostly solar. We have a bunch of solar and battery projects. I’m down in the Caribbean here chasing a fantastic wind project in Jamaica that I hope I get to bring to my customers. We have a couple of hydro projects but solar is the main event in renewables.
You mentioned something where you said you were utilizing Regulation A. A lot of our stuff, we go through Reg D, we have 506(b), 506(c). The investors that are reading understand those sorts of things. A lot of readers may not be as familiar with Regulation A as you and I are. Can you share a little bit more about that and the impact it’s made on your business as well?
Regulation A and Regulation D are both technically exemptions. Instead of going through a full IPO process, we can go through a shorter process that allows us to sell securities in a company. We create every solar project as a separate company just like real estate, a single purpose entity. We will aggregate a group of solar projects with common characteristics into a holding company. You have a holding company that’s based in Delaware. Even if the projects are in Brazil, the holding company is in Delaware.
We have this holding company in Delaware that owns these solar projects. How do we share that with more investors? We could use Regulation D and it is very useful if you know your investor group. If you’re working with people that you know, and you are also dealing with mostly accredited investors, and you don’t need to broadly market the security, then Regulation D is going to work for you. We’ve done Regulation D projects before with friends and family. It’s what the purpose of Reg D is.
We wanted to go beyond that and we opened up the can of worms for Regulation A, which is one step short of an IPO. You’re auditing your financial statements. You’re going through a review process with the SEC. There are questions and answers going back and forth. You lawyered up. It’s a more sophisticated process than filing a Reg D, which is more or less putting the paperwork in. Reg A does require an SEC process and you create an offering circular.
When you’re successful on the other side of authorization from the SEC to sell Reg A securities, I can now take that Delaware holding company. It can issue shares of itself and sell those shares through our online platform to both accredited and non-accredited investors, which is huge. Over 90% of our country is not accredited investors. They can’t participate in this stuff unless we do Reg A or go through the full public process.
We did Reg A because not only can we include much broader participation, which is what I think is needed to combat climate change, we’re also going to need to have broader participation in this asset class like what you’ve seen with Bitcoin, Coinbase and the success stories over there. The train dollar comes this way. Similarly and as importantly, we can market the securities broadly. We can hand out flyers at the local grocery store if we want. There are no limitations. Whereas with Reg D, you have to have a relationship with somebody before you make the offering. We found that Regulation A is the flexibility that we needed to market our securities and to sell them more broadly to both accredited and non-accredited investors. It’s been a great product for our online platform.
I’ve seen how much you’ve grown. It’s tremendous. Part of the reason we started Next-Level Income was to provide people with the information and these opportunities that used to be reserved for “the rich.” There are better ways to do it. I think it’s fantastic. Mike, if people want to learn more and if they want to see more about your offerings, we’ve got your website Energea.com. What’s the best way for them to check that out?
If we’ve done a good job, we’ve put up a lot of information on the assets for you to review. It’s a great user experience. Thanks very much but if not, please let us know. We’re always looking to get feedback from customers, potential customers, or people who hate the product to tell us that and tell us why. On the website, you can also communicate directly with our investment advisors and folks who can help you understand the asset class and how the platform works. We’re educators. We’re not broker-dealers. We don’t recommend investment strategies for people. That’s up to you. All we do is show our wares. In this case, they are a portfolio of renewable energy assets that kick off dividends on a monthly basis. So far, we’ve done very little marketing of the product. People who have come and gotten involved have loved it.
We’re having a lot of fun over here at Energea, and we’re excited to see where this goes. A lot of people complain about climate change and their right to do so, but complaining only takes us so far. We want to create a product that allows people to put their money where their mouth is. If that’s a concern of yours, maybe you might want to include some renewable energy as a portion of your portfolio when you look at your allocations. We’ve made that easier than ever for people to participate more directly with the assets and include renewable energy in their investment strategy.
Do good and make money. It doesn’t get better than that. Speaking of doing good, tell me more about Big Life before we wrap up here. What do you guys have going on with that?
Big Life is a cool organization. It was started by a group of OGs. One of them is a true master of the African bush. His father was the last game warden under the British empire. His name is Richard Bonham, and he’s such a fascinating guy. These guys are all bush pilots and they know all the Maasai because it was a Maasai territory, Southern Kenya and Northern Tanzania. The Amboseli ecosystem, which is a spring. In the dry season, all the wildlife makes its way to the Amboseli Springs. When it rains, they disperse. There is this massive territory around Kilimanjaro, Tsavo National Park and the Chyulu Hills. These are this Amboseli ecosystem. There were 400 poached elephants a year in this ecosystem. It was nasty. A lot of these were Al-Shabaab groups that are coming down from Somalia and killing the world’s last wildlife.
These guys said, “Enough’s enough.” They started Big Life and I got involved a couple of years into it. We started figuring out how to train warrior-age Maasai in becoming rangers. We are training them more professionally and arming them correctly with the tools that they need to make arrests and stop poaching. We took poaching from 400 a year to zero-year. People don’t poach in our area of operation, which is over 2 million acres. There’s a lot that goes into it and it turns out that stopping poaching was not as hard as we anticipated it to be. You just have to show force. Unfortunately, what is most likely to happen is poachers will go elsewhere. We’re continuing to expand and trade knowledge with other defenders of ecology, but the problems continue to grow. Now it’s becoming more of a real estate issue.
Maasai tribal land has started to get subdivided and they want to develop real estate. We have to figure out ways to make sure that real estate remains undisturbed so that the last remaining elephants, lions, cheetahs and leopards of the world have a place to live. We think that that’s extremely valuable. We have a service nonprofit entity whose job is to be stewards of the ecosystem that links four national parks, so when animals traverse from one place to another, they can walk freely and in safety.
Renewable Energy: Not everything goes perfect all the time, especially when there’s money involved. Sometimes you learn it the hard way.
From talking about being a chef to your solar projects, this may be the most interesting thing here as we talk about this. If you could go back and give your 25-year-old self a piece of advice, what would it be?
I was a little bit too trusting. My 25-year-old self when you’re young and you assume that everything’s always great and everything’s going to continue to always be great. As you get older, you hit rough patches and deals, especially in business. Not everything goes perfectly all the time, especially when there’s money involved. Sometimes you learn the hard way who your friends are and who they’re not. It doesn’t mean you have to be a curmudgeon but you might want to be a little bit more patient than I was at 25 with the relationships that you build. Make sure that you structure things fairly, transparently and everybody understands what the deal is. That’s what I would tell my 25-year-old self
That’s great advice, Mike. I appreciate you sharing your story. If you want to check out Energea, go to Energea.com. You can check out the projects and products that Mike and his company are working on and see how you can put your money where your mouth is, do good for the environment, and make money at the same time. Mike, thanks so much for being on the show.
It’s an awesome show, Chris. I appreciate it. Good luck to you.
Thank you, buddy.
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I hope you found this episode valuable and I have one more thing to gift you. We have a page for my coaching clients where you can get a free copy of my book, as well as much more from previous guests on the show. Check out NextlevelIncome.com/coaching to get a free copy of my book, audiobook, and much more. I’ll send you a copy of my book and cover all the shipping costs as a thank you. Also, please like, share, and take 90 seconds to give us a rating on Apple Podcasts.
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About Mike Silvertrini
Mike Silvestrini is a co-founder and managing partner at Energea, a renewable energy retail investment platform. Since launching the
company’s first solar energy offering in August, 2020, Energea has raised more than $65 million to invest in its Africa, Brazil and the U.S. portfolios. To date, retail investors have realized a 12.27% IRR.
Prior to Energea, Mike was co-founder and CEO of one of the largest commercial and industrial solar firms in the U.S. He managed multiple renewable energy funds worth more than $500 million in
aggregate and oversaw the development of more than 400 renewable energy projects.
He and his partners sold Greenskies Renewable Energy in 2017. He served as a Peace Corps volunteer in Mali, West Africa and serves as
a board member of the Big Life Foundation, a wildlife conservation nonprofit based in Kenya.
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Tagged: financial independence, solar assets, Green Skies, energy portfolio, backpacking, solar panels, Group 3
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