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Mosaic is a crowdfunding platform for clean energy. Earlier today, the company re-launched its site with new functionality -- the ability for California and New York residents to invest in solar energy. To get a better understanding of how Mosaic operates and why crowdfunding can mesh well with renewable energy projects, our Eric Blattberg recently posed a few questions to Mosaic's founder and president Billy Parish over email.
Eric Blattberg, Crowdsourcing.org: Why are renewable energies and crowdfunding (specifically, crowdfund investing) a good fit?
Billy Parish, founder and president of Mosaic: Clean energy is an enormous and rapidly growing market that until recently a bank only game. Crowdfunded loans for solar energy function much like other fixed-income assets such as bonds. Lenders will provide debt, and borrowers will be obligated to pay down their loan, plus interest, on a fixed schedule. As with any investment, making loans to finance solar energy projects will come with certain risks. In general, however, small-scale solar lending is relatively safe. The investments we make in projects have a senior position in projects, so in the event of a default, the solar equipment will serve as collateral. Manufacturers now regularly offer 25-year warranties on both solar panels and solar inverters, and insurance for catastrophic events such as fires or storms will provide a final layer of protection.
In terms of returns, Mosaic’s projects have offered between 4.5% - 6.38% annual rate of return. This is roughly on par with historical returns for the S&P 500 (7%) and higher than the markets have traded over the past ten years (~3%). It also compares favorably with historic rates for most bonds. Likewise, a return of 5-9% is much higher than returns on CDs and 10-Year Treasuries.
What is your relationship like with the DOE? With the SEC?
We got a $2M grant from the Department of Energy as part of their SunShot Incubator program which aims to reduce the installed cost of solar below a dollar a watt by 2020. They see Mosaic as a promising way to bring more people into solar (thus reducing customer acquisition costs) as well as reducing the cost of capital to finance projects. We have a great working relationship.
We also have a strong relationship with the SEC and are in regular communications with them.
Mosaic has crowdfunded six solar installations so far, but the most recent project (at the Oakland Youth Employment training agency) is the first to promise individuals a financial return on their contribution. Who contributed to this project, and how are you able to offer them an expected return with the JOBS Act (crowdfund investing) rules not yet finalized by the SEC?
The Youth Employment Partnership project was a private offering with a 6.38% annual return over 5 years. 51 investors who were already part of our network (and all either accredited or sophisticated investors) participated in fully funding the project.
Other than solar, what other renewable energy opportunities are you exploring? Do you expect them to become a major part of the platform offerings, or will solar remain the Mosaic's primary focus? Why?
We recently changed our name from Solar Mosaic to Mosaic as we began to more seriously explore financing other clean energy infrastructure beyond solar projects. We will remain focused on solar in the short term, but are excited about opportunities in other clean energy technologies, battery storage, energy efficiency to name a few.
What are Mosaic's goals for 2013?
Our ultimate vision is abundant clean energy for and by the people. We’re beginning to see a huge shift in the energy mix away from fossil fuels and have built a platform to enable everyone to profit from the clean energy revolution. In 2012, we built a strong foundation. In 2013, we’re working to scale towards that big vision.