Crowdfunding Solar Projects with Mosaic

Crowdfunding, according to Wikipedia, is the collective effort of individuals who network and pool their money, usually via the Internet to support efforts initiated by other people or organizations. You may have heard of such platforms as Lending Club which allow anyone with capital to invest in other people’s loans. In increments as small as $25, you can spread your capital across many different consumer loans (allowing for diversification) while at the same time assessing the consumer’s credit worthiness and picking your loans much in the same way a bank does. One company that is taking this concept to the solar industry is Mosaic.

Crowdfunding Solar Projects with Mosaic

Mosaic_Logo

Founded in 2011, Mosaic has taken in just over $20 million in funding from Spring Ventures and the US Department of Energy according to Crunchbase. Mosaic is a finance company with a simple business model. The company solicits smaller scale community solar projects and allows retail investors to invest in said projects with an average IRR of 4.4% to 7%. The minimum investment amount is $25, however according to a recent Forbes article, the typical average project investment is actually around $2500. The availability of solar projects to invest in largely depends on your state of residence. In April 2013, Mosaic received approval from securities regulators to offer $100 Million worth of solar investments to residents of California. An example of a Mosaic project can be seen below:

Mosaic_Project

According to a recent article by Cleantechnica, Mosaic is the dominant player in crowdfunded solar having raised $6.6 million from 3,000 investors around the U.S. to fund twenty projects so far. While Mosaic specifically addresses the question “Why is crowdfunding useful for solar?” in their FAQ, they seem to avoid labeling themselves as a crowdfunding company with the prominent statement below made on their homepage:

Mosaic’s services do not constitute “crowd funding” as described in Title III of the Jumpstart Our Business Startups Act (“JOBS Act”).

The concept is certainly an interesting one, however with interest rates likely to rise, locking in capital for the lengthy period of 8-12 years (based on sample projects displayed on Mosaic website) at a return of 4-6% seems like quite a commitment. A marketplace where one can buy or sell loan contracts similar to the one offered by Lending Club could help mitigate this risk. Mosaic has stated their intent to expand their offering to emerging market communities where there may be no electric grid currently which certainly adds a “feel good” aspect for investors. Going forward, one of Mosaic’s key challenges will be to match the supply of investors to the demands of those solar projects needing capital.

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