Have I got a deal for you: Invest as little as $25, or as much as you want, in clean-energy projects. Earn a princely 6.38 percent interest annually for the next five years. Make the world a better place.
Sound too good to be true? A promising startup is betting otherwise. Mosaic, based in Oakland, Calif., has figured out how to crowdsource solar projects in a way that seems to be a win-win for everyone. For each project, it seeks investors — including smaller fries, like you and me — to fund a given project, promising a respectable rate of return. As loans get repaid, investors can roll the proceeds back into new projects, or take the money and run.
Think of it as Kickstarter for clean energy.
Mosaic was founded in 2009 by Daniel Rosen and Billy Parish. I’ve known Parish for a few years, and have watched him even longer. He dropped out of Yale in 2002 to help build a youth movement for climate solutions. He founded and led the Energy Action Coalition for four years, bringing together more than 50 diverse, youth-led organizations into a joint campaign to promote clean energy. Rosen, who has coordinated business development for cleantech companies in Arizona and Israel, was named one of the “30 under 30” in energy by Forbes.
Their company started slowly, garnering interest-free investments from individuals to fund solar installations on five community projects. They range from homes on a Navajo reservation in Arizona to the Asian Resource Center in Oakland. All are smallish installations, from 1.5 kilowatts to 29 kilowatts. (For reference, most residential solar systems in the United States range from 2 to 5 kilowatts.)
I invested $100 in the Asian Resource Center installation in 2011, in equal parts to support both the fledgling company as well as a social-service organization located about a half mile from the GreenBiz Group office in my hometown.
Those first projects were funded using a zero-interest investment model similar to Kiva, where investors get their principal back over time, but no interest. This allowed Mosaic to avoid federal regulation and to go to market, learn the business, get feedback, and show traction for the idea. At the same time, it launched into the process of registering with the Securities and Exchange Commission, the federal agency that governs investment firms.
More recently, the company started raising money for projects in which it would pay interest. It can do this while waiting for SEC approval thanks to something called Regulation D, which exempts from regulatory oversight the offer and sale of up to $1 million of securities in a 12-month period.
Mosaic’s first such project is a 47-kilowatt installation on a youth employment center, also in Oakland. A small group of investors was invited to put in as little as $25 and have been promised a return of 6.38 percent over five years. The ribbon-cutting for the installation is taking place this week. The project is projected to save the youth center more than $160,000 through reduced electricity costs.
Next page: My modest roll of the dice