Published on Monday, January 07, 2013
Last updated on 11:25PM, Monday, January 7, 2013
A Mosaic financed solar installation in Oakland.
Oakland-based Mosaic Inc. believes it has created a way to accelerate the nation's transition to clean energy - if all goes according to plan.
Monday, the company launched a crowdfunding investment platform that solves a key obstacle faced by many clean energy developers - access to capital - by making it easy for them to raise money and for regular folks to pitch in a few dollars and earn a return.
Mosaic began offering returns of 4.5 percent to California and New York residents who invest as little as $25 in solar installation projects on three affordable housing complexes in Northern California. It also began offering that return to wealthy individuals nationwide who qualify as accredited investors under U.S. Securities and Exchange Commission guideline. Once the SEC issues rules on crowdfunding investments, as directed by President Obama and expected any day, Mosaic will be ready to offer its crowd funding investment platform to any investors nationwide.
"For too long energy investing in America has been a bank only game," said Billy Parish, president and co-founder of Mosaic, when Mosaic turned the switch on its online crowd funding platform to make it go live. "To rapidly deploy clean energy, the industry needs access to low-cost capital and lots of it."
By 8 p.m. Monday, more than 400 people had invested in the three solar projects listed on the Mosaic platform, already buying up nearly half of the total $603,000 of investment blocks Mosaic made available and leading two of the projects to be sold out.
The projects are all solar rooftop installations on affordable housing complexes; one a 107 kilowatt system on an apartment building in San Bruno; another a 78 kilowatt project on a complex in Salinas; and the third a 55 kilowatt project on a building in Corte Madera. An investment prospectus on each project is available on joinmosaic.com.
Parish and his colleagues said that banks typically only fund large multi-million energy plants and reject small scale projects. Mosaic's platform, he said, goes around banks and will attract people who want to do something about saving the planet from climate change.
"Some (people) will invest only $25, others will invest thousands, but either way, they will become literally invested in building a clean energy future," he said.
"Our mission is to create abundant clean energy for and by the people," said Parish, an erstwhile environmental activist who said he realized the world needed another approach to solving climate change when he watched the U.S. and other governments flounder at attempts to agree to reduce greenhouse gas emissions at international climate talks sponsored by the United Nations.
"After seeing efforts to pass federal climate legislation and get an international treaty in Copenhagen go down in flames, I knew I needed to try something different," he added.
The online crowd funding platform he created with other Solar Mosaic founders lets people go online at joinmosaic.com to invest in increments of $25 in projects, which are described in lengthy prospectuses on the site. At the moment, the company can offer the investments to the general public in only California or New York and to accredited investors - defined by the SEC as individuals with a net worth of more than $1 million excluding residences and who earn at least $200,000 a year - because it has won approval from securities regulators in those two states.? But the SEC is in the process of formulating regulations for crowd funding investments as allowed by the JOBS Act passed by Congress and signed by President Obama in April 2012. Mosaic said once the SEC does issue those regulations, investors anywhere in the U.S. should be able to invest through its platform.
The way it works is that Mosaic, after its investment committee and outside attorneys and engineers perform due diligence on potential projects it has identified, extends a loan to a solar project developer at 5.5 percent. It finances that loan by selling investment blocks to online investors, promising a 4.5 percent return to them and keeping the other 1 percent for itself and its own operations. Payback on the loan comes when endusers, building owners and tenants, buy electricity from the solar installation project developer, some of which are solar installation companies.
Mosaic - which recently changed its name from Solar Mosaic - tried out its crowdfunding investment idea in a privately raised investment to put solar panels atop of Oakland's Youth Employment Partnership last month. The project garnered $40,300 from 51 investors who will earn about 6.3 percent. Before that, Solar Mosaic had used crowd funding to gather about $1.05 million in donations for solar installation on 11 projects serving low income people, but did not provide a return. Three are in Oakland.
The YEP project was the first in which it offered a return. Parish at the time called it "proof of concept" for what the investment platform they planned and hoped to unveil this year.
Greg Rosen, Mosaic's chief investment officer, said "Our underwriting process is very similar to the process used by banks in that we work with third party attorneys, engineering specialists and insurance professionals to review and evaluate each project."
He said Mosaic had several potential projects put before it for consideration. "Our investment committee looks at all the risk associate with each solar project and chooses only what we consider to be relatively low-risk and high-quality projects to finance."
Mosaic's innovation has caught the notice of venture capitalists and the U.S. Department of Energy. The DOE gave it $2 million in a SunShot program grant last year to pursue its crowdfunding platform plan and VC Spring Ventures and others invested $3.4 million.
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Barbara Grady is a freelance reporter who often writes for Oakland Local. Before her current stint of writing about social issues for various news and non-profit organizations, Barbara was on staff at the Oakland Tribune and, earlier, at Reuters. She's a recipient of a Sigma Delta Chi award from the Society of Professional Journalists for a series published in 2008. Contact her at barbgrady1@gmail.com
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