Graham Day
CFO
The Conference Discovery | 2016
When you walk off the street into the Hyatt Regency in Merida, Mexico, a wave of gloriously cool air washes over your face. The marbled reception area is an immediate respite from the dusty humidity of the outside world. You cannot help yourself from simply stopping, taking a deep breath and gazing to the high ceilings of the atrium.
The Hyatt annually hosts the Latin American Impact Investing Conference in February. It was 2016, and I was an Investment Manager representing LGT Venture Philanthropy, a Zurich-based impact investing organization funded by the Princely Family of Liechtenstein. The event brings together investment funds, entrepreneurs and impact institutions from all over the world. It’s an annual confluence for north and south, investor and entrepreneur, novice and expert, Latinophile and Latino-naive —all people with whom I had shared stories and mezcal in the years prior.
But I didn’t know the person approaching me. Esther Altorfer, a young Franco-Swiss woman was intent on showing me bright photos of smiling campesinos and glistening black biodigesters on her laptop’s screen. Then, Alex Eaton joined us —New Englander, and pro snowboarder-turned-engineer-turned-entrepreneur, who accidentally wound up in Mexico 8 years prior and had no plans to leave. Huddled on a bench outside the conference room, they delivered a powerful elevator pitch for Sistema.bio. We followed it up with a longer session at a proper table, then a lunch. By then, I was easily convinced to leave the conference entirely the next morning and go for a field visit instead. I was hooked and wanted to see if even a fraction of what I was hearing could possibly be true. Indeed, it was all true —with massive potential to scale.
The Colombia Experiment | 2017
It was almost a year later when I got a call from Alex. I was back in Bogota, looking for a new opportunity. Starting a Sistema.bio subsidiary wasn’t on my radar. Until it was. I had a new focus in my life. I would start the company from scratch in early 2017, hire technical and administrative managers, and set off to find our pilot sites for our incursion into the Colombian countryside.
After being mostly behind a desk for the previous three years, this was an incredible opportunity to discover the real Colombia. I drove hundreds of kilometers to potential clients on the high-altitude savannah that surrounds Bogota. I talked to scores of farmers who did little to hide their fascination, skepticism and bewilderment at the situation. After all, they were being pitched on a technology that quite literally turns manure into natural gas, by an out-of-place Canadian gringo with limited farm vocabulary. But by month’s end, we had five pilot projects ready to go.
It hadn’t occurred to me what my mother would say when I proudly sent her a photo of me, mud streaked, digging the first RV-sized trench. “This is what you did your Masters for?” she said. It was less of a question and more of a well-intentioned provocation, the way that only mothers do. “Yes”, I said defensively, “I have a feeling I’m going to need to learn all the details of this business I I’m going to help grow it”. It seemed like the right thing to say.
It shouldn’t come as a surprise that it would prove extremely helpful to understand the basics of the technical and commercial operations. I arrived in Mexico a little over a year later (2018), with my wife and baby, to begin as CFO to raise (in earnest) 5M+ for the Series A. Alex and the team had expectations that my skills at fundraising and investor relations would be far better than my abilities as a farmhand.
Breathtaking times in Mexico | 2018
I had a remarkably soft landing in Mexico City, compared to most foreigners. There is a certain familiarity among Latin American capital cities —they are all large, bustling, and wildly unequal. Although the language is the same, a surprising number of words are not. Thankfully, my colleagues helped me with my local vocabulary, and slowly but surely my Colombian accent softened to give way to a Mexican twang and cadence. At home, my toddler was learning how to ride his balance bike under the tree-shaded streets of the historic Condesa district. We took family trips to see the annual migrations of fireflies and butterflies. Mexico is a treasure trove of activities, nature, food and people.
Meanwhile, Sistema.bio was growing and growing quickly. A grant from the Shell Foundation had turbo charged our entry into East Africa. Our Kenyan commercial team was sweeping the countryside, generating both sales and expectations for our digesters. It wasn’t long before the demand outpaced sales in Latin America and we quickly fell behind out delivery schedule, thereby testing the patience of our hard-earned customers. Our spending accelerated as we rushed to manufacture more product and hire more technicians. Our cash took a beating, since our customers were paying over 12-month payment plans and would take a while to come in. Investors would need to step in quickly, or we’d be out of cash within months. Thankfully, there was a strong pipeline of introductions to convert. All were trying to weigh up our potential and risks. But we felt confident.
The first hints of trouble came when several over-confident investment managers —thus far assuring us smooth sailings through their processes— were halted by their respective investment committees. The reasons varied from the technical (Mexico was outside their allowed territory), to lack of risk appetite. It was a classic case of nobody wanting to be first. We tried not to panic and decided to focus on existing relationships. As a result, a current investor stepped up along with a local VC by late summer to get us through the rest of 2018, along with some loans.
With a first close under our belt and Kenya posting 1,000 sales in less than 12 months, we created enough momentum to bring in a new slate of interested investors. It’s amazing what a little FOMO, or fear of missing out, can do. By the spring of 2019 we had firm commitments, but legal paperwork kept dragging on. Our cash was running dangerously low again and we held our breath as we began postponing supplier payments and pausing executive salaries. I had lost my appetite and wasn’t sleeping. We were less than a week away from missing payroll when I saw the notification on my phone that the first funds of this second close had hit our account. I took a deep breath I think the first full one in weeks— and smiled. When all was said and done, the round ended up being 25% oversubscribed and was widely reported as the largest raise ever in small scale biogas.
Meanwhile, Sistema.bio was winning international recognition for our field work. In quick succession, we were awarded the Ashden Award for the best affordable clean cooking solution, recognition as a Schwab Entrepreneur at the World Economic Forum and a finalist at the United Nations Development Program’s Sustainable Development Goals Geneva Summit. I was lucky enough to be alongside Alex to receive the Ashden Award on stage in London.
A tireless but hidden team | 2019
Developing the back-office of a quickly growing business is incredibly important to facilitate scale. But it is mostly overlooked and undervalued. It lacks, after all, the adrenaline of sales, the storyline of operations and the intrigue of R&D. Let’s be honest, the only reason you hear about what’s happening in accounting, administration or HR is if something is going wrong.
My skillset was firmly on the fundraising side, so growing the administrative backbone of the company was new territory for me. Thankfully, I had a great team that helped me adapt to new needs, course corrected when we made mistakes, and worked deep into evenings and weekends when necessary. Together, we coordinated audits, implemented new accounting software, set up payment request systems, ran customer credit portfolio analysis, published weekly KPIs, coordinated budgets, developed pricing strategies and more. All of this was in addition to our core work of monthly accounting, supplier payments, payroll and all the other standard back-office work. If you can believe it, we did this only with a staff of five at our Headquarters, and another five or so at the three subsidiaries. I only have admiration for this hardworking and gritty team, in particular Jordi Manzo, our Finance Manager and my right hand, and Daniel Gachuz, our financial analyst with infinite capacities to learn under pressure.
The COVID-19 slowdown and rebound | 2020
We were badly overdue for new hires to the finance team when COVID-19 hit and we froze all recruitment. Our field demonstrations stopped, global shipments ran into delays as the supply chain weakened, and staff were unable to move for long periods. We responded by cutting unnecessary spending (without laying off staff), revamping our field activities, leaning into digital activities, and tweaking every process we could think of. We became more efficient and rebounded with the strongest Q4 on record, nearly reaching 2019 revenues.
As we begin 2021, a decade of learnings, recruitment, and persistence is paying off in a big way. Our new factory in India is producing at less than 70% of what it cost in Mexico just a couple of years ago. We have purchase orders for 10,000 units in hand for 2021 already, the same amount that the company sold over a nine-year period (2010-2019). Better yet, we are poised to earn carbon credit and other results-based revenue from each digester installed, a financial acknowledgement of the environmental and social impact we create on a daily basis. We have fresh talent joining the company at all levels, and with it decades of best practices to contribute to our growing enterprise.
Tolls and Changes | 2020/21
Mexico City was (and still is) one of the hardest hit cities by COVID-19. The Mexican Sistema.bio family lost a number of relatives to the disease. Schools have been closed for almost a year, putting incredible pressures on parents at home. My wife and I were not immune. Faced with unending lockdowns and an ever more dire public health situation, we began to consider a move back to Canada. I struggled to navigate my feelings of desire to protect my family and of guilt for abandoning my colleagues. We made the decision in late May 2020, and in two weeks we were on an airplane to Vancouver. It was a decision only made possible by the bizarre and unfair lottery of life that affords some of us favorable passports.
The next six months of remote work under the pandemic made me reflect a lot on my personal life and on my role. I recognized the importance of being closer to family: after almost 15 years abroad, perhaps it was time to come home. At work, I realized that the company’s growth and complexity would need someone local to develop the team and meet the new challenges of scale. With the company on solid footing after a successful bridge financing round, this would likely be the best window – for me and Sistema.bio – to make a move.
I told my colleagues early this year, a company is like a train. We all work on board for a specific segment, ideally the segment where we can most contribute. My replacement, Louis Dubois, is masterfully qualified to get Sistema.bio to the next station and beyond. Our transition is like a high-speed stunt —he jumping on, I jumping off— while the train hurtles into the horizon, out from under the COVID-19 storm clouds and into clear blue skies. From time to time, crew mistakes or track defects will no doubt lurch the train back and forth. Hastily taken corners may even tilt the train dangerously. But Sistema.bio will move forward; its momentum is simply now too formidable.
I leave my role at Sistema.bio after almost exactly 4 years. When I joined, we were just 40 employees with just over 1M in revenue. By the end of 2021, the company will have more than 200 employees (and another 200 contractors and agents), with sales of 9M. I humbly consider myself part of this growing —and global— family. It’s been an honor.
