Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
There have long been incentives associated with taking on green projects and organizations available to assist with information.
Whether it’s installing solar panels or finding ways to get reusable cups into concert venues, Minnesota has also become a hotbed for sustainability-based companies helping move the state and nation toward net zero goals.
“Minnesota is a fabulous place for sustainability and programs, incentives and organizations, says Ben Wallace, co-founder of Minify Energy and a member at Clean Energy Economy Minnesota, a nonprofit working toward a cleaner energy ecosystem.
The utilities themselves often have programs. Organizations like the Center for Energy and Environment are eager to assist, he says.
And a unique set of sustainability-based companies has grown from this commitment, not just statewide but nationally and, in many cases, locally. Here, a few of those companies talk about their motivations, their causes and the challenges they’re overcoming to get there.
As a citizen, Michael Martin gets really frustrated hearing stories about companies like Exxon, which he says rake in billions in profits without being forced to clean up any of the environmental messes they make making their cash.
As a music producer, he sees up close the amount of waste that takes place in stadiums and arenas across the country. As an environmental innovator, he decided to do something about it.
Martin started r.Cup to work with cities and venues to educate attendees about the perils of throwaway and even recycled cups and manufactured reusable ones that can be returned, washed and used multiple times.
There are challenges involved. Lack of infrastructure. People believing recycling is the best answer.
Locally, he’s come across state laws preventing the use of reusable serveware. More globally, the cups cost the user more. The venues don’t have washing facilities. So, r.Cup installs washing facilities in economic development zones in each city with which it partners, cleans and returns them.
“You have to have the bins to collect them, the dumpsters where you need to have the liners, you’ve got training, education, social media,” he says, adding that when r.Cup gets more volume, those costs will come down some. “The mission is to build the infrastructure, platform and movement for the reuse economy.”
To prove the point, r.Cup donates 10 percent of its profits to nonprofits aimed at reducing single-use plastic waste.
And the company is making progress. It’s operating in about 200 locations across five cities, including Denver, Seattle, Los Angeles, San Francisco and Washington, D.C. It’s dipping a toe in the hometown Twin Cities market, as well, using its product at an every-other-week concert in Excelsior.
“People can come see us in action out there,” he says. “It works great.”
Martin says r.Cup is focused on operational ease and on growing the company’s environmental impact while building credibility by doing it the right way. For example, he says it takes three ounces of water to wash one of his cups versus 66 ounces of water to make a single-use plastic cup.
“It’s much more for aluminum and bioplastic,” he adds. “So, you start to think about that and, at every measure, CO2 emissions, reuse wins on all of those.”
Taken further, Martin says it isn’t just single-use plastics that need to be marginalized. It’s single use in general.
“Whether it’s bamboo or aluminum or plastic or bioplastic or paper, it’s all single use,” he says. “It’s taking tons of resources to create those items and to dispose of them. Even if you recycle them all, those things are contributing to emissions, toxins, water usage. That’s why I started this company.”
Ben Wallace worked in technology and marketing for a number of Minnesota-based companies over the years when he arrived at 75F. It was there he recognized the opportunities for enhancing the environmental solidity of old buildings through the use of technology.
Then he met Jeremy Davis, who has worked in sustainability consulting around the country for 20 years. Together, in 2019, they started Minify Energy, an energy efficiency and smart technology implementation firm that helps people and their buildings operate more cleanly.
“He saw the frustration of putting proposals in front of these companies, which are predominantly nonprofits that he worked with, and them not taking action on the recommendations for conservation and leveraging the incentives and making an impact,” Wallace says. “We created Minify Energy to help activate.”
The company does full building assessments for commercial, nonprofit, government and multi-family facilities, coming back with recommendations, assessments, potential designs and systems that could be implemented. But that’s not where the work ends.
Minify also follows that through by helping implement projects, as well. Sometimes that means Minify and its, to-date, small team will do some of the work itself. Or it might mean that the company helps coordinate between its clients and partners in the sustainable area of choice.
“We’re really positioning as an energy efficiency and renewable energy contractor,” he says. “We really focus on the implementation.”
A lot of existing buildings are inefficient, Wallace says, adding that most of the jobs so far have been retrofits.
“There’s a lot of aged buildings,” he says. “The average commercial building is over 50 years old. You know, pre-internet, pre-IoT, pre-smart buildings, pre-LED lighting.”
Minify works with the utility partners in the buildings to get and analyze several years worth of records, which can be challenging and time consuming. Starting the company right before COVID hit was a sizeable “bump in the road,” as well, though it did provide some added expertise in indoor air quality and pathogen abatement work.
Much of the work so far has been in low-hanging fruit areas, such as smart, automated HVAC controls and lighting retrofits. In the last year, bolstered by the Inflation Reduction Act, the company has expanded into electrification, electric vehicle charging, geothermal systems and solar.
“We help identify and leverage grants, rebates and tax incentives, which is a complex landscape to navigate,” he says. “We try to make it easier for building owners, property managers to have an understanding of their current systems, what the opportunities are, what the financials are for payback and other commercial real estate benefits.”
With those programs, the increased cost associated with electric and gas and the ability to pass along some savings to potential tenants who would be locating in a cleaner building and it’s getting easier to make the case.
“All these incentives that stack together make a really strong financial case,” he says.
Billy Parsons and Justin Wagner worked together for an electrical contractor for several years. After a while they went their separate ways, Wagner for a different job and Parsons to start BlueSky Electric & Solar.
“We always kept in touch,” Wagner says. “We’re pretty good friends and our values align. Eventually it got to the point where he’s like, ‘Why don’t you just come over to BlueSky?’”
When he did, the company took off. Parsons, CEO, had started it as a traditional electric company with the hope of someday getting into solar installations. When Wagner came on board as president, it freed up Parsons to start pursuing that kind of work.
“We’re a full-blown electrical contractor,” Wagner says. “We do commercial, industrial, residential service and construction, remodels, the whole thing. One of our niches — our strongest niche — is the solar and EV charging.”
Last year, solar projects accounted for about a quarter of BlueSky’s revenues. This year that will exceed 50 percent. “It’s like it’s taking over,” he says. BlueSky is pursuing a contract with a chain of gas stations to install car chargers at each location. If that happens, that sector would become a quarter of the company’s revenues, as well.
Total revenue for the year is on pace to more than triple from low seven figures to mid seven figures.
“It’s becoming a major, major part of our business,” he says, adding that the company, which hires only union employees, will likely be looking to add more employees in the near future, as its original electrical work hasn’t decreased significantly either.
Some of the work comes organically — work on a residence in a neighborhood and a couple of neighbors get curious and start asking questions. A lot of it also comes from friends and peers in the industry who are approached about doing solar projects but who have not yet taken them on.
The market for such projects is incredibly competitive, Wagner says, adding that it’s challenging competing against larger companies with big marketing budgets.
“Thankfully, we have a lot of friends in the industry,” he says.
While Wagner coming on board freed Parsons’ time, their renewed partnership also came at a fortunate time to be pursuing solar projects.
Part of the demand continues to stem from ongoing city, state and federal financial incentives for installing green projects. For example, the city of Minneapolis has a Green Cost Share Program under which businesses can apply for up to $75,000 in funds to reduce building energy use or up to $50,000 to put solar on the roof.
“We’ve helped a couple customers — they haven’t gotten the full $50,000 yet, but close to it,” Wagner says, adding that some customers who opt for net metering with Xcel Energy generate more electricity through solar than they need and end up getting money back by selling power back to the utility. “That’s where the big payoff is.”
Additionally, equipment costs have dropped as much as 80 percent. And it reduces dependency on local utility companies.
“It makes complete sense in our minds,” he says. “Whatever your motive is, if it’s financial, it makes sense. If it’s reducing your carbon footprint and helping the environment, that definitely makes sense too. … If you are a homeowner or a business owner, you’re not at the mercy of the utility company all the time. Anything you can control in a business, you should.”
In the early 2000s, Shane Grutsch was working for Restaurant Technologies Inc., a Twin Cities-based broker of restaurant cooking oils, running the company’s supply chain. He liked the trading aspect of the job and he recognized the growing opportunity as biodiesel was taking off.
So, he left to start St. Paul Commodities a few years later, effectively setting himself up in 2007 as a middleman. His company now trades about 1.4 billion pounds of fats and oils each year, effectively becoming the largest independent aggregator of fats and oils in the U.S. About 20 percent of the volume originates internationally, primarily from Southeast Asia and South America.
The company owns about 1,000 rail cars and has three facilities, one each in Kansas, Missouri and Tennessee, and about 25 third-party locations where product gets transferred.
It’s primarily a transferer of product, but does also provide some logistics, quality improvement processing and aggregation.
“We’re a middleman between the origin of these products and their destination, which is a fuel producer,” Grutsch says.
“We ship by truck, by rail, by barge and by vessel,” he says. “We sell to a renewable fuel producer and they’ll make renewable diesel or biodiesel as a replacement for petroleum diesel.”
It can be challenging working in an industry supported by government incentives that are regularly either modified or up for renewal at the whim of a vote, but state and federal incentives also help provide a market for the production and use of these fuels.
“If you produce fuel from virgin soybean oil, you’re eligible for a certain amount of credit, but if you use cooking oil instead, you get a larger credit he says. “Along with that has come some additional regulation in terms of verifying that used cooking oil is, in fact, used cooking oil.”
The company bought a software company to help solve the compliance situation, allowing it to trace the products it sells. “Government regulations, incentive programs have been tough to navigate,” he says.
Good timing, as the company is on the verge of big growth. Right now, the market is about 2 billion gallons a year for biodiesel. The growing market of renewable is expected to increase to between 5 billion and 6 billion gallons over the next four years. The company currently has about 80 employees, but that could grow quickly.
Over the years, St. Paul Commodities has built a customer base of around 300 partners across the fuel and feed industries to which he trades depending on the market and status of any government programs. As the renewables take off, his customer base starts to change to companies like Phillips 66, Chevron, Marathon and Exxon.
“In the biodiesel world, a big plant might be 50 million gallons,” he says. “In the renewable diesel world, a big plant is a billion gallons. They don’t want to deal with 700 suppliers. They want to deal with people that can bring them some scale and some volume.”
As the name suggests, Owatonna-based Kamp Automation looks for customers with a process they’d like to automate. It could be a small, inconvenient, tiny part that people can’t assemble. It could be a high-volume product so needed that the customer can’t find enough labor to produce it in the necessary quantities. “We’ll work anywhere from medical device companies to the seed industry for corn and soybeans,” says Kent Patterson, co-founder, president and CEO. “We just jump all over wherever there is custom automation.” The company started in his garage. Patterson and his partners built a machine. The company started to grow to the point where now it has 48 employees — and had a bunch of people and stuff in different locations. “We went from a garage to a shop to a shop and just kept moving to new places and signing leases,” he says. “We got to a point where it’s like, OK, this is getting big enough and sustainable — we felt that we wanted to look for our own space.’”
