Dannan Leads Generate Capital’s Waste-to-Value Investment Strategy

John Dannan, vice president of waste-to-value at Generate Capital, is a driving force behind the company’s investment strategy in organic waste. He has grown the pipeline of available waste investments to more than $2 billion. 

Generate Capital is a specialty finance company that builds, owns, operates and finances infrastructure assets for the energy storage, solar photovoltaics (PV), solar thermal, energy efficiency, biomass, agriculture and wastewater sectors.

Dannan, who was recently named a Waste360 40 Under 40 award recipient, has gained a reputation for his ability to both identify new market trends and apply his extensive knowledge of finance to the waste industry in order to create opportunities for his firm.

Waste360: What types of clients does your company serve?

John Dannan: As an owner of organic waste disposal infrastructure, Generate Capital serves many constituents, including local waste generators (residential and commercial), haulers, utilities, land owners, municipalities and more.

Waste360: What are your major responsibilities?

John Dannan: Investment strategy, investment origination, diligence and execution, partner management and asset management.

I lead the waste-to-value investment team. We buy projects (not companies), discrete facilities, whether they are solar or energy efficiency, or whatever it is, with the view of owning them for 20 years or their useful life. We run them really efficiently and make money from them.

In the waste industry, we have particularly focused on the organic diversion trend, which is driven by state rules and regulations and new incentives to divert food waste from landfills. Food waste goes to composters or anaerobic digesters. Generate Capital is the biggest private owner of anaerobic digesters in the country, I think. It is hard to tell because the industry is so fragmented, and there is no real good information. We own four food waste digesters and one diary digester. We will probably own 10 food waste digesters by the end of the year.

My responsibilities include investment strategy, which means asking, “How do you access this industry—the biogas industry?” Digesters and composters are generally known as biogas because they create natural gas, or methane, through their processes. I put together a strategy to buy digesters in the biogas industry. I ask questions such as: “How do we find these digesters?;” “What do we think the returns are?;” “What is the business risk;” and “How do we go about acquiring them?”

At Generate Capital, we consider ourselves the leading operator of small- to medium-scale infrastructure in the U.S., in the sustainable industries. We generally partner with operators. We don’t have a team of operators, we partner with the best in class in the space.

In the biogas industry, we ran lots of request for proposals (RFPs) and other processes to identify the best operators. Now, they are our partners, and we sign a long-term operating contract for them to run our digesters for us. We incentivize them, so we are all rowing in the same direction and trying to achieve the same goals.

Waste360: How does Generate Capital help create solutions for your clients and their communities?

John Dannan: Generate Capital provides capital and expertise to companies and sectors that haven’t broken into the mainstream yet. Our partners generally have proven technologies but don’t have a stable business model yet, and we are able to provide capital and sector specific expertise to help our partners grow and be successful. As such, Generate Capital acts a “bridge to bankability” for our partners.

Waste360: Was waste management your original career path choice? What brought you to the waste industry?

John Dannan: No. My background is in finance, and my role is still finance driven as an investor in organic waste disposal infrastructure. I was drawn to the biogas industry by the opportunity to “roll-up” the industry, based on its fragmentation and lack of clear leadership.

The broad waste industry has great leadership, and it is a very consolidated industry, with [companies like] Waste Management, Republic Services and Waste Connections. I am talking about just the biogas industry. It is completely fragmented, and a fragmented industry, just by definition, has no leadership.

There are a few companies that have done pretty well, but they never quite made it—either as technology providers, owners of assets or just as operators. We now work with those operators. We hire them, and we are buying projects from a lot of those other companies. It’s not meant to be rude to anyone, it’s just meant to be a clear statement of fact, objectively.

Waste360: What advice would you give to a young person starting out in the industry?

John Dannan: Take the long view. This industry is entrenched and doesn’t react well to change unless forced to by regulation. To enact change, work on lobbying … the industry is ripe for disruption. You’re starting to see some of the changes, like the use of artificial intelligence (AI) in sorting or software to optimize hauler routes, but the industry still has a long way to go if it’s going to grow. Young people can inject that enthusiasm and fresh thinking to make sure the industry evolves to meet the demand.

Waste360: In your opinion, why is the waste industry a good opportunity for young people to consider?

John Dannan: Notwithstanding the challenges, waste management is a key piece of the “circular economy,” and so for young people looking for a new frontier to make an environmental impact, the waste industry offers a great opportunity to make a difference.