Lee Barken and his team at Collective Sun have figured out the holy grail of commercial solar financing.
Collective Sun can provide solar financing to non-profit solar projects from 50kW and up. Currently, they’re offering their product in California but are interested in doing the securities and legal work to open up shop in other states, if there is a non-profit that has serious interest in working with them.
Listen to the interview below to learn more about Collective Sun (CS) and how, specifically, their underwriting process is different than a traditional investor. Their key advantage is their unique underwriting process. It’s a really interesting strategy. Their process has more to do with selecting investors that see specific non-profits as low risk, rather than finding the non-profits that meet the stringent constraints of a tradition solar investor’s risk profile.
Why focus on non-profits?
There are several reasons why there has been such focus on non-profit clients.
- Non-profits operate on small budgets and they always need cash. Having lower and predictable operating expenses is very valuable to these organizations. It’s an easy sell to get your foot in the door.
- Non-profits have a social mission that tends to fit well with solar.
- There’s A LOT of non-profits! So the potential target market is huge. According to NCCS, there are 1.4 million non-profits in the US. Figuring this problem out will result in a huge increase in sales for the firms that provide this service.
- They can’t purchase a system in cash, because they don’t have a tax appetite, so financing is a natural fit for them.
A few months ago, we did a live Q+A that was specifically on performing due diligence, using crowd-funding, and finding investors for financing non-profit solar projects. You can see the 50 minutes of video answering 5 question here. If you want to learn how to finance commercial solar projects from start to finish including all of the legal contracts, financial modeling tools, click here to read more about Solar MBA that starts on Monday April 14th. You’ll walk through the financing of a project in 6 weeks.
Listen to the Interview
In this interview, here’s what you’ll learn.
- How many projects Collective Sun (CS) has financed.
- The types of non-profits that CS is focused on.
- The size of non-profit that CollectiveSun will work with.
- The spark that made CS decide to focus on financing non-profits.
- Lee Barken’s background and how that led him to CS.
- Why financing non-profits is more than a tax problem.
- How CS deals with non-profit risk by working with a very specific type of investor.
- How CS provides a product that is very similar to impact investing.
- Why CS is not bending their screening checklist to find a suitable non profit. client based on a traditional investor’s risk appetite, but finding investors that find non-profits to be low risk.
- How CS has standardized their operations to lower due diligence and transaction costs for each deal.
- The specifics of the how CS decreases the transaction costs for small projects.
- How CS works with the non-profit on community outreach to raise the funds for the project.
- Why the power savings from the non-profits projects is less valuable than you’d think.
- When would CS ever turn away a non-profit project.
- How CS supports the non-profit clients to run a campaign to raise the funds for the project.
- How they frame this as an investment versus a donation to their non profit clients and why this increases participation.
- Why asking for an investment and not a donation allows nonprofits to raise funds more effectively.
- What they tend to notice is response rates for nonprofit investment campaigns and what they do to get those numbers as high as possible.
- How the structure of the investment into a project can be structured so that the person investing can determine if they want a return or make a 0% investment.
- How working with CS’s product is different than working with Solar Mosaic and other crowd-funding platforms from an installers perspective.
- Is CS too good to be true?
- What is the largest challenge for CS? What is stopping them from exponential growth?
- How CS address donor fatigue for non profits.
- What CS’s goal is in the next 18 months.