When Billy Parish and Dan Rosen were living on the Navajo Reservation in Arizona, it struck them that although the Navajo Nation lived on a coal rich region, most of the families did not have running water or electricity. Instead, the Peabody Western Coal company (now Peabody Energy), who operated the Black Mesa coal strip mine, pumped away coal to produce energy for other regions in California, Nevada, and Arizona for a 40-year period since the 1960s.
Parish and Rosen realized the story is not an uncommon one in the energy industry. While giant companies are registering record profits, communities are destroyed, climate is destabilized, and consumers become passive recipients of the energy that companies produce.
Armed with an idea to allow consumers to have a say in the energy they use and to transition the world to one that is powered by clean energy, Parish and Rosen, together with Arthur Coulston and Steve Richmond, who have backgrounds in online platforms and financial entrepreneurship respectively, launched Mosaic in April of 2011.
Mosaic is a crowdfunding platform for solar projects. Acting as an intermediary, Mosaic makes loans to solar project owners that have set up a “special purpose entity” or SPE to either lease equipment or sell power generated by the equipment to a solar customer. Mosaic then sells “Solar Power Notes” to public investors through their online platform to replenish those funds loaned. When the solar project owner earns revenue, it repays Mosaic’s loan with interest and in turn, Mosaic repays investors with interest.
The demand to crowdfund solar power projects is apparent. In January, Mosaic launched their first solar projects to the public and sold out in less than 24 hours, with $300,000 invested. Each investor can contribute a minimum investment of $25, similar to the model used by Kiva which crowdfunds loans of as little as $25 to support entrepreneurs in developing countries.
“We’ve purposefully kept our minimum investment low, $25, because we want to democratize clean energy and make it easy for as many people as possible to invest,” said Lisa Curtis, Communications Director at Mosaic.
To date, over 13,000 people have signed up on Mosaic so that they can be notified when new projects are available to invest in. In total, the company raised over $1.2 million from more than 1,000 investors to finance twelve rooftop solar power plants in California, Arizona, and New Jersey.
Mosaic takes a 1 percent platform fee on each loan, so if it makes a loan to a solar project owner at 6 percent, the estimated net return of that project would be 5 percent on the platform. Returns to investors typically range from 4.5 to 7 percent annually.
When asked about how Mosaic’s business model has evolved, Curtis told Social Enterprise Buzz that originally, they were only able to offer zero interest investments. But the company has since worked with regulators in New York and California to be able to offer return on investment projects to residents of those states as well as accredited investors from across the country to feed the appetite for impact investing, where investors channel investments into projects generating positive social and environmental impact as well as financial returns.
Today, Mosaic launches a second round of investments, beginning with a solar project on the roof of the Ronald McDonald House in San Diego. It is available to residents of California and offers investors a 4.5 percent estimated annual return.
On route to democratizing clean energy, Mosaic expects to have more projects coming soon for investors in other states and outside of the U.S. “We’re looking internationally as well as at some very high-quality solar projects in the United States,” said Curtis.
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