Garbage In, Energy Out: A Q&A with the Founders of ReGenerate

The four guys behind ReGenerate, a student-led renewable energy start-up, come across as all business. They're young, clean cut, equipped with impressive resumes from big schools, and have the business plan competition winnings ($200,000 and counting) to back it up.

At the end of the day, however, the mask slips and they reveal that they're still college students. The solar-powered beer dispenser is the first giveaway. The former Coke vending machine now dispenses home brews and the choice of local craft brews (Short's and Arbor Brewing Co. are regular favorites) for ReGenerate's four co-founders: Paul Davis, Bobby Levine, Hunt Briggs, and Nolan Orfield.

"It used to be just cans until we modified it to dispense bottles because we're mature grad students," Nolan says. "I sell them for a nickel apiece and provide the bucket of nickels."

Otherwise, these four University of Michigan students (two of them are pursuing MBAs and the other two, PhDs) deal with the normal pressures of college life for grad students in their late 20s /early 30s. They wrestle with studies, relationships (all four are either married or in committed relationships), student debt obligations, where to establish their roots (they're all from out of state), business plan competitions, and getting a start-up off the ground.

ReGenerate is developing a commercial anaerobic digester that naturally breaks down organic material (think food scraps), turning it into soil nutrients and methane gas. The gas is then turned into electricity. ReGenerate's system allows businesses like restaurants and farms to divert some of the 32 million tons of organic waste generated the U.S. each year away from landfills.

The idea has proven so successful that ReGenerate has taken cash prizes in about three quarters of the business plan competitions it's entered.

"I tend to measure success in the number of big checks we have," Nolan says. "We have five big checks and a trophy or two." Now the four grad students are working to find a few jobs and some more hours in the day to go with their start-up.

Most U-M graduates don't end up going into the garbage business. How did you guys end up running a start-up focused on waste streams and landfills?

Hunt: I'm going into the clean energy business.

But a lot of people say that regarding wind or solar energy. This isn't the sexy way to go into the clean energy business.

Paul: It's the lowest hanging fruit in terms of sustainability. People pay to ship off material with a lot of value and dump it in a landfill. This has a lot of potential to create clean energy from a wasted resource. In my mind it's even better than solar.

Hunt: If you look at all the food that's wasted in the U.S. alone, it's an untapped market. There's a lot of opportunity for development in this area, while there is a lot of competition in other forms of renewable energy.

ReGenerate's target market seems to have infinite growth possibilities. Where do you see the market going?

Paul: You have seen other waste streams contract. We just had a conversation with the EPA where they said food waste was the largest waste stream hitting landfills today.

Bobby: About 2.5 percent of that waste is being diverted into a compost pile. That leaves about 97.5 percent that isn't being used. That's a huge share we're looking at.

Paul: Right now we're looking at food scraps but there are other organic material opportunities out there.

Organizers of business plan competitions always point out that these events provide more important value than just seed capital, such as connections made and business plan work. Has that been your experience?

Hunt: Absolutely. The competitions are one of our greatest opportunities to advance the business quickly because we get rapid feedback. If we're wrong about an assumption, they are very honest with you. They do not pull punches.

What have the cash prizes meant for your company? How important are they?

Paul: We wouldn't be able to get where we are today without the cash prizes. It has allowed us to build our prototype unit, test it and work on this business as we get out of school. Another thing is credibility. We go out and look at an investor and say we have won X, Y, and Z business plan competitions. That makes us a better investment target.

Are business plan competitions an effective fundraising route for start-ups, or are the traditional funding sources so dry entrepreneurs should soak up cash wherever they can get it?

Bobby: There isn't a better way to get free money doing all the things you would need to do to build a business anyway.

Paul: The deadlines are also motivating. That's why we have a business plan and a financial model and a functioning prototype.

Dug Song, a well-known local entrepreneur, said that there is too much emphasis on perfecting business plans and not enough on actually building the business, such as finding customers. What's your opinion on that statement?

Hunt: It depends on how much you need money. The funding that can come from business plan competitions is really valuable and allows you to support the underlying things of your business plan.

But customers are the long-term answer.

Paul: Before we won a business plan competition it was really hard to get in the door to talk at people at Whole Foods or Wal-Mart. The people we needed to talk to succeed as a business. Once we won, we called people and they answered the phone.

Bobby: On the other side of that, each one of these competitions has different requirements, such as so many pages and only so much text per page. We'll spend a few days changing that to appease some silly guideline and thinking, 'Shouldn't I be on the phone with Wal-Mart?'

Universities, including U-M, have been pushing for more of their graduates to go into sustainability-focused careers. When it comes to your classmates going into sustainability careers, do they believe the hype?

Bobby: There has been a big push for bio-fuels in chemical engineering, but chemical engineering has traditionally been for oil companies. There are many more green jobs today, but I still see a ton of kids going off to traditional oil jobs.

Paul: There are a lot of students that come into the school that want to work in sustainability. Those jobs might be there when they get out, but that passion is still there. There are more and more people taking traditional career paths and integrating sustainability.

Lots of local start-up incubators have emerged over the last decade. Would you guys be able to pursue ReGenerate if you didn't have TechArb and its resources?

Hunt: It would be a lot more difficult.

Nolan: There was a ranking about Ann Arbor being one of the Top 10 towns to start a business. We're living proof of that.

Michigan, Metro Detroit, Ann Arbor, and U-M talk a lot about talent retention with an emphasis toward college graduates. You all fit into that category. How effective are these efforts?

Nolan: I will be moving here. My wife and I came here so I could go to grad school with no intention of staying. We both fell in love with the town. It has a lot to offer.

Paul: To counter that, Michigan could be doing a lot better than it's doing right now.

Nolan: It's hard not to see that Detroit, despite all of its problems, isn't rife with opportunities. People have really started to come around and get excited about Detroit in the three years I have been here.

Hunt: I am also looking to stay in the area, and I had no intention of staying long term after I graduated. One of the most exciting things for me is all of the revitalization efforts going on outside Ann Arbor. I have a lot of classmates who are eager to move to Detroit.

What should local officials be doing to keep more local college graduates here?

Hunt: Student-loan forgiveness. As someone who is graduating with quite a bit of debt, that is a critical part of my equation for what's happening next and my ability to be an entrepreneur. I would be nice to see some loan forgiveness programs for entrepreneurs.

Considering all of the debt that comes with all of your degrees, how can you think of not having a steady paycheck until you pay that down?

Bobby: Working with two teams of MBAs from the Ross School, debt is the limiting factor in their ability to commit to an entrepreneurial venture. Their hearts may be in it, but it's very hard for them to risk that. It's a shame to give to those kids an education in entrepreneurship but no ability to pursue it.

Indentured servitude for the 21st Century, basically.

Bobby: Right. Addressing that would help keep talent here and let kids do what their trained to do.

Paul: The loan forgiveness would be helpful. It doesn't have to be for an extended period of time. Even a year would be a super helpful runway for them to get off the ground. I fell in love with Ann Arbor, too, but it's all about whether there are opportunities to stay, and those are limited compared to the places people are going.

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Jon Zemke is a News Editor for Concentrate and Metromode and he is the Managing Editor of SEMichiganStartup.com. He conducted and condensed this interview. His last feature was Ann Arbor: Targeted For Acquisition.

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All photos by Doug Coombe

Photos:

Counterclockwise for top left - Nolan Orfield, Hunt Briggs, Bobby Levine and Paul Davis

ReGenerate at the interview with Jon Zemke

Hunt Briggs

Paul Davis

Bobby Levine

Nolan Orfield

ReGenerate trying to go "over the top"