Building A Billion-Dollar Solar Company: Canadian Solar CEO Shawn Qu (Part 4)

Sramana: Your previous employers were willing to work with you because of your reputation as a scientist as well as because of the potential new sales channels your business could provide?

Shawn Qu: Yes, but they were more helpful than they had to be. They also let me talk to their suppliers as well. With my background and their endorsement, I was able to get good terms.

Sramana: What did the structure of the Volkswagen contract look like in terms of cash flow? Did they provide you advance cash or were you able to bank the purchase order to obtain receivable financing?

Shawn Qu: It was a purchase order based on monthly shipments but they paid only after I shipped. There was no advance payment. I financed the working capital from my own savings as well as by refinancing my house. That got me about $200,000. I also received payment terms from my suppliers which made the manufacturing feasible.

I then talked to two companies in China. I landed in China on January 1 and I started to call my business contacts. I asked two companies to make an investment into my venture. Two weeks later both companies had invested. That left me with enough cash to turn around the deal with Volkswagen.

Sramana: Was that an equity financing structure?

Shawn Qu: It was equity financing. Overall the financing was complex. I had a $3 million purchase order, a variety of terms from suppliers, I raised some equity financing and I also put in a lot of my own money.

Sramana: What happened next? The first year you did $3 million and had a factory established in China.

Shawn Qu: During 2002 and 2003, my key product became small solar modules for Volkswagen as well as for rural electrification. I focused primarily on western China. That allowed me to build my team and look for new business opportunities. In 2004, the German government introduced tariff reductions for solar upgrades.

In the past they had similar programs, but there was a cap and people had to apply for it. In 2004, they lifted the cap. The market started to grow a lot after they did that. By that time we had a two-year history and we became one of the first companies to go into the German solar market.

With Volkswagen we had designed a small three-volt solar panel. For Germany we stated all over with design so that we could produce a large solar panel. The panels needed to produce 200 watts. In 2004, our revenue our revenue was close to $10 million.

Sramana: Who were your customers in the German market? Were they individuals?

Shawn Qu: We sold to distributors and local installers. They put the systems together. They bought the inverters and conducted the installations for consumers.

Sramana: How much of your 2004 $10 million of revenue was coming from Germany?

Shawn Qu: A large part. We still had our rural electrification product with Western China and our contract with Volkswagen. Those two areas accounted for $4 million in revenue. They balance of our revenue came from Germany.

This segment is part 4 in the series : Building A Billion-Dollar Solar Company: Canadian Solar CEO Shawn Qu
1 2 3 4 5 6 7