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Forbes Article: The Art of Building on The Best

Read the German version HERE.

Read the Spanish version HERE.

 

Henrijs Jansons [Henrijs Jansons] and Janis Timma [Jānis Timma] each have succeeded in their own business area. Now they have joined forces to implement a completely new project better than all the previous ones - energy project developer VENTUS ENERGY.

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Katrina Iljinska [Katrīna Iljinska]

 

In the early 1990s, Henrijs Jansons, a resident of Riga, was only four years old when, after Latvia regained its independence, he sat next to his father in the butcher shop and pressed buttons on the pink children's calculator. He dreamed of working in his father's shop, but he didn't know what position. Later, his father told him that the shop needed an economist. "What is an economist and how much would he earn?" Henrijs asked. When he heard the answer - about 300 lats (at that time, it was a huge amount of money), Henrijs realized that he wanted to become an economist in the future and work in the shop. After asking his father what he must do to become an economist, Henrijs began to count everything so that mathematics would become his strength, and even enrolled in Riga Valdis Zalitis Primary School. However, when the boy grew up, his father's shop had been closed already. The young man was still thinking about his own business in high school, but he didn't really know who to learn from, and he also had no experience. Therefore he concluded that he should work for the Big Four - one of the largest audit companies.

Word spread quickly in the city. At that time large Scandinavian banks were rapidly developing in Latvia, new investors were coming in, and every prospective student knew that they had to study in "the Swedes" - Riga School of Economics to later work in companies like KPMG or PwC. Henrijs wasn’t an exception. Step by step, together with his classmates, Henrijs Jansons found himself working at the information technology company Scandic Fusion, which developed data warehouses and business intelligence tools for large companies in the Baltics and Scandinavia. It was an opportunity to examine various companies and customers from the inside, see cash flows, best management mechanisms, and other important aspects of the business. And it was a great experience. Later, one of Henrijs' clients - Eleving - invited him to join their team. "That's how the dream about my father's shop led me to the fintech more than ten years ago," says Henrijs.

After some time, Henrijs joined the company that developed one of the first P2P platforms in Latvia, DoFinance (after the change of the owners, the legal name was changed to Nectaro). "The company issued consumer loans, and after some time it started to seem not really ethical. Values changed, and the desire to work with products and services that are meaningful and that could be recommended to friends intensified. Let's be honest, you wouldn't recommend a friend to take a consumer loan," Henrijs recalls.

He was invited to Creditreform - a debt collection and credit information bureau, and Henrijs gained a completely new, unprecedented experience. "The rhythm was different - quarterly plans, stability, profit. Everything was organized, and predictable. All the best corporate practices were implemented - you could grow within the company, there was great mutual respect in general, from the point of view of human resources policy, it was a very good workplace, and the company's results also proved every year that care and investment in employees bear fruit," says Henrijs. Later he was invited to join the Debitum Investments team, and after more than two intensive years of work, he managed to elevate the company from a stagnant platform and transform it into a rapidly growing IBS with a good reputation and a high level of customer trust.

In parallel with Debitum Investments, Henrijs studied in the executive MBA program at the above-mentioned Riga School of Economics. "On the first day of my studies, the university management showed statistics that after completing studies, most graduates change their jobs and focus on new challenges in business. Ironically, my last day of work at Debitum was exactly the day before graduation. The studies were very good, we talked a lot about startups, but the main idea I learned was to investigate the market, study the industry, and take the best from the competitors," says Henrijs. And he looked around and decided to take on new challenges with Ventus Energy.

Ventus Energy is not an old company. Its co-founder is Janis Timma, who is better known in Latvia as the Chairman of the Board of the Latvian Cogeneration Power Plant Association and an active participant in the heat production market.

He graduated from Adazi Secondary School and the French Lycée, began studying finance at the University of Latvia, and later, law at Turība University in Latvia. Timma has gained experience in PwC but then found himself working in BDO, where he was responsible for the energy sector. He has been interested in energy since he was a pupil - he wrote a scientific research paper in physics. "I sat at the Institute of Solid State Physics next to scientists and wrote everything down. The work was about solar panels, and I also gained basic knowledge about energy processes there," Timma recalls. He was interested in how the power plant could be built. Law studies gave him knowledge about industry regulations. Shortly after graduating from elementary school, somewhere between university offices and his workplace at that time, driven by interest, Janis filled out all the necessary documentation and sent an application to the Ministry of Economics to try his luck. And, as required by law, exactly 30 days later, he was surprised to receive the document by mail titled Permit for the Implementation of New Electricity Generation Facility, which laid the foundation for further developments of the first project.

He had no money for the station, so Janis decided to look for an investor or sell the project, and it was a big surprise when Juris Savickis (one of the prominent businessmen in Latvia) accepted the meeting regarding project revision. In the further coordination process of the project, the Līvāni municipality (municipality in Latvia), where this energy facility was intended to be located, created obstacles, and the deal did not take place. However, the experience gained helped him realize that this particular industry is appealing. The knowledge helped Janis to consult BDO clients and to build the biomass boiler house in Riga, Ganibu dambis in 2018. At that time, it was one of four independent heat producers in the capital, excluding Rīgas Siltums and Latvenergo. The boiler house, by the way, is profitable. Later, during another power plant acquisition deal, Timma experienced something unprecedented: within 26 hours, 1.5 million euros were collected from 900 investors on a crowdfunding platform - as opposed to a year and a half spent in discussions with local market participants about raising a similar amount. This was a turning point and Janis developed a new project-financing company, Crowdestor, specializing in third-party SME lending.

Henrijs and Janis came together and developed a new project that, in their opinion, would be better than the previous ones. "We followed the principle we have learned - take the best from others and add your own uniqueness," says Henrijs. Corporate governance and knowledge of the financial sector have been taken from his previous experience, from Timma’s - knowledge of the energy sector.

"We have established a group of companies that acquire and develop new energy companies in the Baltics (the first deal was concluded in early December), and we have provided our lenders with a convenient and transparent website where documentation is compiled and loan accounting is carried out," says Henrijs Jansons. Basically, Ventus Energy is an energy project developer with ambitions to operate in international markets. We haven’t sought far for inspiration for the project and used the idea of our Estonian neighbors. It all started when two entrepreneurs with knowledge and experience in various fields came together and established the company Nelja Energia to develop facilities in the energy sector. After 12 years Eesti Energia bought the company for 493 million euros, allowing the owners to earn 290 million. "If Estonians can do it, why can't we?" Timma asks rhetorically.

Ventus Energy currently has six projects in various stages: one has already been built, one is in the design phase, and the others are in other development phases. The entrepreneurs have agreed that they will first acquire already operating plants to have profit and use it for interest payments to lenders, ensuring predictable and organic development of the group. How fast Ventus Energy will develop depends on the projects on the market and the availability of the capital, as well as, of course, the red tape of energy project implementation. It is no secret that the energy sector is regulated and strictly monitored both during the project development stage and during the operation period. Ventus Energy's smallest project currently requires funding of two million euros, the largest - 30 million. All six projects so far are located in Latvia, but the company's energy sector activities also extend to Estonia, Lithuania, and in the future - to Spain.

You may ask - where is the uniqueness?

Ventus Energy has chosen the electricity balancing market as the primary goal, which is a very specific niche. As is known, in February 2025 the Baltic States will disconnect from the BRELL electricity supply network, which connects Latvia, Lithuania, and Estonia with Belarus and Russia, therefore balancing will be particularly important.

The balancing market in the Baltics is managed by Augstsprieguma Tīkls in Latvia, Litgrid in Lithuania, and Elering in Estonia—the so-called large electrical wires or infrastructure operators. They solve the problem when there is a gap between electricity demand and supply, that is, when demand exceeds supply (or vice versa), for example, when HPP or some other production facility breaks down. Or, which is especially relevant today, when weather conditions change rapidly, causing renewable energy producers—solar and wind parks—to be unable to meet their production plans. In short, the more fragmented and unstable the market, and the more difficult it is to balance electricity production with consumption, the greater the challenges of network balancing. Until Russia invaded Ukraine, electricity was sourced from Russia in such cases, but with the disconnection from BRELL, other solutions must be sought. Therefore, high-voltage network operators conclude contracts with companies that can urgently produce electricity if needed. In such cases, fluctuations in electricity prices are huge, as energy is required as soon as possible. "There is pressure from Europe’s side regarding the closure of gas and coal plants, which is, of course, right from a sustainability and emissions reduction perspective. However, the more facilities that can produce electricity instantly (in 12 minutes) from its activation are closed, the more unstable the market can become at certain moments," Timma explains.

Ventus Energy's web-based loan attraction tool is not available to everyone. It is a closed environment where a certain circle of lenders is offered the opportunity to participate in the financing of energy projects. The person must first register and pass verification, and only then information about energy objects is provided, as well as information about project ratings, potential profit indicators, etc. Ventus Energy does not lend to third-party projects, but it allocates lenders' money only in subsidiaries 100% owned by the group.

During the first week, when Ventus Energy started raising capital, almost 300 lenders already gathered around energy projects with a minimum funding amount of at least 1000 euros, and the absolute majority of these lenders were Germans. Now the total capital of Ventus Energy lenders for the acquisition and development of energy facilities is 5.5 million euros. This confirms that energy is not only the backbone of every economy but also a very attractive sector for lenders.

"Our lenders and other partners are clearly aware that this is not a consumer loan. The first lenders, for example, have concluded loan agreements for three years. Everyone should take into account that energy facilities are complex, their acquisition and development, not to mention construction, is a time-consuming process," says Henrijs Jansons and adds: "We must be sure that we can operate with these funds during some time".

Taking into account the approach of taking and combining the best from everyone, Ventus Energy was established in less than a year, of course, if we do not count the years of experience accumulated to implement such an ambitious project at this very moment. And this is the right time in the energy sector. The global need for clean and safe energy is growing rapidly, so this industry is becoming a critical pillar of the development and security of any economy.

 

 

Ventus Energy in Forbes December 2024 issue.