It’s hard to come across cheery cleantech news these days. But Mosaic, a Bay Area startup that’s merging one of the most popular trends out there--crowdfunding--with solar and the promise of making some money, should provide some cause for celebration.
We first wrote about Mosaic in the summer of 2012, when the startup had just raised $2.5 million for what it was calling a "Kickstarter for solar"--a solar installation crowdfunding platform. The Kickstarter moniker didn’t really make sense at the time, when over 400 investors on the platform had raised over $350,000 to finance a series of rooftop solar installations in California, with the promise of getting paid back without interest in up to eight years. It was more like a Kiva for solar. Now that’s changed.
Mosaic works like many other crowdfunding platforms, to a point: projects requesting help financing solar installations are listed on the site, and investors pony up cash. But then the similarities stop. The solar installations generate revenue by selling power to solar customers (through power purchase agreements), and that money is used to pay back investors with interest.
Mosaic president and co-founder Billy Parish explained to us in an email: "We’ve now completed our first solar project where people are earning interest on their investments. This new model allows people to earn solid returns investing in something they can see, touch, and feel good about."
So instead of just getting paid back for investing in a solar project, you can now make money. One recently completed project, a 47 kW system at a youth employment training agency in Oakland, is offering an expected 6.38% annual rate of interest over its 60-month term. Pony up enough cash and that kind of interest rate can yield some real returns.
There are risks, just as there are with any investment. A solar customer might fail to make their monthly payment, for example, or the rooftop solar system could have technical difficulties. In the prospectus for the 47 kW system, Mosaic makes it clear: "Neither we nor any other party will guarantee payment of the Notes or the Lease."
Fortunately for the risk-averse, the minimum investment is $25. But investors shouldn’t necessarily fret over larger sums of money. "Banks have been earning great returns investing in solar projects for years. We are just passing on those returns to individuals," says Parish. "We carry out a rigorous underwriting and due diligence process and only take the projects that meet our high standards. Our top priority is to return capital with interest to the people who invest on our platform."
It’s a promising model, offering hope at a time when traditional investors are skittish about renewable energy projects. Whether it works will depend on Mosaic’s ability to scale. The startup doesn’t have any unfunded projects on its site at the moment, but Parish says that will change soon.