It took Mosaic two years to create a crowdfunding platform for solar projects, but on Monday, the platform opened for investment in California and New York, and nearly a quarter of a million dollars was invested in just eight hours.
Some 335 people invested an average $670. Two projects, including a 55 kilowatt installation for an affordable housing complex in California, were sold out completely, says Mosaic’s president and founder, Billy Parish.
Mosaic has opened up an asset class to the general public that until now had been reserved to just banks, Parish said. That’s a benefit to solar developers, because financing that comes through Mosaic is more flexible and cheaper than they might receive from a bank, Parish says.
Some want to invest in projects that are good for the environment. Others are looking at the merits of the investments, themselves. They see nice returns, an attractive risk profile, and unitl now, it was an asset class they were unable to access, Parish says. Yields on the projects have been about 4.5%, while the loans offered to date matured in five years or more.
Investors don’t lend directly to the solar projects. Mosaic puts up the capital and then raises money from the public at a lower interest rate. The firm then pockets the difference and charges an origination fee, explains Parish.
One of the firm’s challenges will be to come up with enough projects to sustain the current momentum and interest. Each deal needs regulatory approval. Parish hopes that process will become easier with each new project.
In the meantime, Mosaic hopes to grow the ways in which people can invest. For instance, people may soon be able to invest in projects through their Individual Retirement Accounts. The firm also wants to create a secondary market for people to trade the loans they’ve bought.
Up until now, Mosaic has lost money. For the first half of 2012, it lost $1.16 million, according to a prospectus for one of its projects. But it hopes to break even this year after about $10 million in equity that it will put toward operations. The firm is currently backed by $3.5 million in equity and convertible debt from investors such as Spring Ventures.
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