Choose your co-founders with care. This is my third start-up. The first was a great success for everyone and I had 4 great partners. We were pretty well aligned from the start and that was key to our success and key to the great outcome for our shareholders. The second start-up I got involved with was a situation where I came in after the original founder ran into difficulties. In retrospect, I can say that I did not do my homework on the working style and values of the founders.
As part of my series about the leadership lessons of accomplished business leaders, I had the pleasure of interviewing Peter Leighton.
Peter is the co-founder and Chief Operating Officer of RE Royalties Ltd., a publicly traded company that provides innovative financing solutions for the renewable energy industry. Peter has been involved in the renewable energy industry for over 25 years and has delivered over $750 million worth of wind energy projects from the embryonic stage of development through to the ready to build stage. He was a winner of Canada’s 2020 Clean 50 award for Advancing Sustainability and Clean Capitalism and is a past Director of the Clean Energy Association of British Columbia.
Peter holds a Bachelor of Science Degree from Queen’s University and a Master of Business Administration degree from the University of British Columbia.
Thank you so much for joining us! Can you tell us a story about what brought you to this specific career path?
I would like to answer that question in two parts. Firstly, I was drawn to the renewable energy space in the early 1990’s when I moved to beautiful British Columbia to pursue my MBA and realized that the application of business skills was a key mechanism to reducing and eliminating environmental impacts. This issue is front and center for us all as we attempt to mitigate the impacts of climate change and I am passionate about promoting renewable energy and energy efficiency as being part of the solution.
Secondly, throughout my career, I have been fortunate to have had the ability to work in a variety of corporate environments, ranging from very large multi-nationals to very small start-ups. I love our current small team environment where it truly is “one for all, and all for one”!
Can you tell us a story about the hard times that you faced when you first started your journey?
Starting a new business is hard. There are a lot of people who have great ideas but have difficulty getting their business ideas off the ground. My co-founder and I started with what we felt was a great idea: applying a proven business model called royalty financing to a new business sector, the renewable energy industry. In the early days the difficulty was convincing both investors and clients that we could make our idea into a successful reality. The expression “chicken and egg” was one we discussed a lot as we were looking for both financial investors and clients with exciting renewable energy projects!
Where did you get the drive to continue even though things were so hard?
Bernard Tan, my co-founder and I come from very different backgrounds, he has experience utilizing royalty financing to enable projects that he worked on to get built and I have the experience of trying to find financing to build and develop renewable energy projects. We share a vision of leaving the world a better place for our children and we both have a strong desire to do something to try and solve climate change. More importantly we are both relatively pragmatic, and we knew that we could offer a product that would deliver growth and yield to investors while allowing investors to participate in helping solve climate change, and we also knew that we had a product that would allow our clients to build more renewable energy projects. Knowing that you have a truly win — win solution makes difficulties easier to overcome.
So, how are things going today? How did grit and resilience lead to your eventual success?
We are entering our fifth year in business and I would say that so far we are on track. We have raised over $24 million to date and have invested that money into a portfolio of 84 royalties on solar, wind and small hydro projects operating across Canada, the US and Europe. Combined, these projects generate approximately 800,00 MWh per year of clean energy, enough to power approximately 117,240 homes and we remove the equivalent of 360,000 tonnes of Green House Gases from the atmosphere on an annual basis.
In 2018 we took the company public on the TSX Venture Exchange and we started paying our shareholders a dividend at the same time. We are currently offering our inaugural Green Bonds to the public market with a five-year term yielding 6% per year. We are really excited about this offering; it is available to retail investors and can be held in registered accounts. We believe that this democratizes the ability for retail investors to participate in growing the green economy
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
The funniest mistake I made in the early days occurred about two weeks prior to closing our first royalty financing transaction. We were just in the midst of getting through all of the last minute legal, accounting and approval issues when Mother Nature decided Bernard and his wife’s second child should arrive two weeks early. My mistake was in deciding to bike into work on a 0-degree day winter day — call it true Operator error! I hit some black ice, had a spectacular wipeout and spent the next month immobile. Despite those challenges, we closed the deal!
We learned a few lessons:
- If we could close a transaction with two hands tied behind our back, we could do anything;
- We needed to expand our team to diversify risk;
- Support of your family is mission critical to success; and
- I now have a temperature cutoff, where if it is below two degrees Celsius, my wife locks my bike in the garage and won’t let me have the keys!
What do you think makes your company stand out? Can you share a story?
I think there are two things that really make us stand out. The first is that we are very quick to transact. Our fastest wire to wire transaction was a loan and royalty structure for a solar developer in Texas. We started discussing a letter of intent on December 1 and we had the loan proceeds in our client’s bank account by December 14! Secondly, our entire team has experience developing projects and we understand the pain and roadblocks our clients face. Our royalty financing product is designed to help our clients grow their business and maintain control of their assets. It is also designed to match the production of their energy so when our client does well, we do well, and when they are felling a financial pinch due to a cloudy or calm month, we share their pain.
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
The renewable energy industry is tough because electricity is a commodity, but it doesn’t trade like a global commodity. Electricity trades on a very regional basis with approximately 12 regional markets in Canada and approximately 150 regional markets in the US. For this reason, I always recommend to colleagues that they branch out across several markets in order to diversify and maximize their opportunity to succeed while minimizing the risk that they get frustrated by local regional politics or local regulatory decision making.
I also recommend that colleagues make work-life balance a priority. This is an easy thing to say but it takes an incredible amount of personal discipline to make it happen. One has to have both the self-awareness to understand what is truly important for you, and the confidence and the support to make work-life balance a priority with your work colleagues. At RE Royalties we take a flexible approach in order to ensure that all of our team achieves this balance. For some it is the flexibility to ensure that they can meet childcare or parent care needs, for others it is time off to reach new educational milestones and for others it is time to pursue exercise or hobbies. We firmly believe that we get superior performance and results as a team if everyone has the support to feed their inner soul.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
I have been very fortunate to have had a number of strong mentors throughout my career. Some of these relationships were direct supervisors and some were very senior leaders who still took time to share their wisdom and guidance. There are too many stories to tell but the one guiding principle I always turn to was my Dad. “Measure twice and cut once … but don’t hesitate … once you start cutting, have confidence in your measurement”. I cannot tell you the number of times I have applied that maxim to business decisions.
Despite all of the mentors, the one person who I am most grateful to has been my wife. Over our 20 plus years of marriage she has been the rock that has allowed me to take calculated career risks; knowing that she has my back. We have very different academic training and careers, but she is still the one person who I can turn to for guidance when I am stumped on a business problem that I can’t solve!
How have you used your success to bring goodness to the world?
I would like to think that I will be leaving the world a better place then I found it but that is a difficult measure to assess at this point in my life. From a business perspective, I am passionate about renewable energy and the benefit it can bring our world by helping us transition away from burning fossil fuels. I really feel that today, with what we have done at RE Royalties, we are making an impact. Our portfolio of investments have helped reduce global Green House Gas emissions by over 360,000 tonnes per year. This is the equivalent of powering approximately 117,000 homes, or removing approximately 69,000 cars from the road, or planting approximately 5 million trees.
What are your “5 things I wish someone told me before I started leading my company” and why. Please share a story or example for each.
- Choose your co-founders with care. This is my third start-up. The first was a great success for everyone and I had 4 great partners. We were pretty well aligned from the start and that was key to our success and key to the great outcome for our shareholders. The second start-up I got involved with was a situation where I came in after the original founder ran into difficulties. In retrospect, I can say that I did not do my homework on the working style and values of the founders. With RE Royalties, my co-founders and I have been completely aligned right from the start; not just with respect to our goals for the business, but more importantly with respect to our values. Starting a business involves dealing with a lot of uncertainty and a few curveballs, you absolutely need to be aligned with your partners!
- Which comes first, the chicken or the egg? RE Royalties is innovative in that we are the first group to apply a proven business model, royalty financing, to the renewable energy sector. We had lots of clients with projects that we knew could use our product but we needed to raise the money to help our clients. Herein the classic question of which comes first, the chicken or the egg. Investors liked our idea, but wanted to see that we had the keys to the projects before they would invest, and project owners wanted to see that we had the cash in the bank before they would give us the keys to their project. Our solution was to start small and prove the business model, and then go back for more investors. We are now at 84 royalties under contract after starting with 1, so I guess that approach works.
- It is amazing how little tax you pay when you don’t draw a paycheck. If you don’t like to pay tax, not paying yourself is an amazing way to reduce your tax exposure. Although we started at zero, we eventually increased our salaries to minimum wage. This gave rise to one really funny story. We were interviewing our first employee, Bryce, and we told him that he could have the CEO/COO pay package. He was pretty excited until we told him that was minimum wage. To his credit, he jumped at the chance!
- Investors at an early stage are investing in you as much as they are investing in your idea or your company. We were fortunate to have a group of wealthy entrepreneurs who invested in us during the early days. They liked the business idea but more importantly they invested in us. They had to believe that we could deliver results, that we would look after their investment, and that we had similar core values. I feel indebted to those who have supported us but more importantly, I don’t want to disappoint them!
- There are a lot of barriers to getting a start-up off the ground. You expect some of them, some of them are completely unexpected. For example, my partner Bernard came up with the first name of the Company, Renewable Energy Royalties, but when he went to the BC Company Registrar to select a name, they told him that Renewable Energy Royalties was not descriptive enough. He then tried RE Royalties, and they were fine with that. Now at every investor meeting we have to explain what the RE stands for!
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 😊
My single biggest passion is active transportation. Personal physical and mental health both benefit hugely from the is approach and the environmental benefits to our shared community are also massive. We need to address urban planning and design, and infrastructure but the single biggest impediment is people’s attitudes. Getting outside and getting moving is mission critical to our health and for every challenge and obstacle there is a solution, if you look hard enough!
How can our readers follow you on social media?
This was very inspiring. Thank you so much for joining us!