Younger Investors Want to Own Solar Too

The founders of Legends Solar joined our Solar Entrepreneurship course recently to talk about their startup. Every month we invite a solar entrepreneur to present their unique approach to the class so we can learn from them and – hopefully – help them succeed. We love seeing interesting new businesses get off the ground.

The full conversation is available inside the course, or you can read the transcript below. Here’s cofounder Lassor Feasley explaining the value proposition of the business and why it’s an interesting opportunity right now:

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Transcript, Legends Solar in the Solar Entrepreneurship Course

Lassor Feasley: All right, well, I’ll jump right into it. Legend Solar is rooftop solar without the rooftop on Legends. You can come onto our site. You can buy one operating commercial solar panel, or a whole rooftop’s worth. Start running cash right away as you start to generate and sell electricity to the grid or a private power purchaser.

So we essentially are taking the product experience that homeowners have when they install residential rooftop solar and opening it up to everyone else who’s a renter or lives in the city or otherwise is blocked out of that market. Part of our theory of the case here is that residential solar is kind of the best impact investment experience available by far.

The most desirable and intuitive, the most fun, the most accountable. As the homeowner, you know exactly what your impact is and you get a nice financial benefit too. and so, There, there’s a huge demographic of younger investors who are incredibly interested in, responsible investing. it’s such a huge trend that every major consumer bank is reorienting their marketing strategy around things like ESG investing – different ways to try and imply that different savings products are impactful or in line with the values of their customers. So what we are doing is we’re redesigning a financial product around the needs and expectations of the customer.

So on Legend Solar, you won’t buy a fraction of the abstract financial security. You’ll own a panel and you’ll be able to monitor the productivity and impact and earnings of that panel in real time. So a lot of homeowners who have residential rooftop solar, they get access to these apps where they can track their, their real time productivity. And, many of them are not that beautiful to look at. Not very intuitive or fun to use. There’s no real reason to look at it in the first place. And yet, homeowners do. You might have a friend or family member who sends these screenshots of their, solar product. It’s me.

Brian Hayden: [Holding up phone, showing SolarEdge App] I’ve got my Solar Edge app! I’m on there every day for absolutely no reason.

There’s nothing I can do in there, but I get on there every day.

Kerim Baran: How new is your solar, Brian?

Brian Hayden: Just over a year.

Kerim Baran: So you still go to it? That’s good.

Brian Hayden: 12 months later I’m in there every day.

Lassor Feasley: Me too.

Antonella Wells: Me too. Same. Same. I have like 24 panel. If charger storage, I’m like obsessed watching everyday.

I’m charging my car, I’m watching charging my house, so, yeah. Yeah.

Kerim Baran: It’s a nice feeling to know you’re not paying anything for energy and that your solar panels are producing more than, or just enough about for what you’re consuming.

Brian Hayden: It’s also something I talk about with my kids. my, it’s been a great way for my kids to learn even how it works, you know, like, why is today not as productive as a day in June?

It’s been great.

Lassor Feasley: Yeah, yeah, exactly. And we’re, we want to lean into that and layer on community features. Maybe there’s a way that you can gift a panel to, to your children and they can use the power payments as a kind of allowance. We might have impact leaderboards, so you can compare your productivity to your friends and.

And then importantly, you’re not going to have to settle for the, panels on your roof. You can always come back on and buy even more panels to accelerate your earnings impact. Yeah. so, so the idea is to, maybe the first one is kind of an impulse purchase and you, you learn the way of the land, but that you, discovered that you, you love checking in on your paddles and you can grow your virtual rooftop.

and, and have a really engaging, rich experience that speaks to kind of this cloud of motivations that yeah, that inspire you to check in your panels. Maybe you wanna feel productive even though you’re having a lazy day on your couch, or you’re worried about your electric bill. Maybe you have climate anxiety.

and. We’re going to learn about those motivations and design the product around them so that, so, so that it’s constantly evolving and adapting to, to, to the way the users are engaging with it.

Kerim Baran: So where are you in this startup journey right now? Do you have a. Minimum viable product?

Do you have customers? Do you have a solution that’s being.

Lassor Feasley: We raised pre-seed, capital about a year ago, and some of our pre-seed investors were solar finance companies who have been helping us to scout out projects to offer on our, on our site. We have, we have four co-founders now.

there’s me and my background is in product design. We have a technical co-founder, one who leads sales and marketing, and we have Antonella who came on, about three or four months ago to lead finance and acquisition. so in, in the past year, we’ve done a small number of private placements with individual investors who have been using an early version of our web app. So an MVP version where they can see their realtime productivity, they can receive dividends, get their tax documents. All that is up and running. And we’re now going into a seed fundraise that will support our approach to retail investors. So that means acquiring a larger project, and syndicating it out between several dozen or several hundred.

Individual retail investors. We’ve also launched a marketing site. you can go to www.legends.solar and I think you have where you can learn about what that retail product will look like and sign up for early access on a wait list. And we have thousands of investors who have, suggested that they would invest with us, through that site.

Kerim Baran: So I, if I understand it correctly, so you guys, find existing commercial operating commercial assets and then you, you also find,a certain demographic of investors who want to own those types of assets, and then you bring those investors to come in and own those assets.

And in the process you helped take out the. Owners of the asset.

Antonella Wells: So I can structure this question and from different point of view. Yeah. So that’s how it works. We are looking, so now we’re looking for operating, commercial solar facilities. Small, like say one, two megawatt.

Just because we’re not like, tax investors. So we’re not interested to take advantage from tax benefit. In this stage of the company. So normally, you know, when you, when you step here on a project, you and you, there’s like five years before there is a flip on the tax side anyway, so

Kerim Baran: Yeah, I’m familiar with the tax equity.

Antonella Wells: Yeah, exactly. So we’re looking for five years operating project at the moment. . so what we do, we go to the developers.

Kerim Baran: So five plus year old projects, you’ve been well, well,

Antonella Wells: you know we like to stimulate within five, four years because older the, the project become of course, than you. You have to deal with more maintenance and, inverter issue going on, on time Also.

Lassor will mention this later probably, but our clients, or he already did a little bit. Our clients are not looking to make high I r they’re there because they believe in climate change. Yeah. They’re some savings. So they’re keen. And then we, we, they’re keen to invest for 20 years and, and, and they’re not like, you know, they’re not looking for, to get.

and monetize the investment before than that. Yeah. So the way it works when we buy this, this, this project, we, what we buy, you know, reality for our clients is the asset. Yeah. But also for them is the cash flow, which is the P P A, right? Right. So, so say that five years old project and with the PPA of 25, 25, 25, 15 years, which is the average on CNI now.

they, you know, they can get a, like an IRR that’s between 6-7%. so yes, that’s the main reason. how are, so we go to the developers and what we do, we, we, through a buy cold company, we’re gonna buy, the project. So work with our equity, and then we’re gonna syndicate this, the, the, we’re gonna syndicate equity through our retail.

and so that, that’s how it works in a simple way. So what’s happening that once the clients go on the website, as laser said, and buy the panel, it’s gonna be the owner of a piece of that project and it’s gonna get every month the proportion piece of the

Kerim Baran: Bringing crowd, crowdsourcing, crowd financing to that asset.

Lassor Feasley: Yeah, that’s right. And there’s kind of a growing industry taking alternative assets and crowdfunding them through, relatively new crowdfunding regulation called Regulation A. so they, they’re firms like Masterworks, which. Syndicates out fractional ownership in fine art works, you go and buy a $500 share of a 20 million Warhol, for example.

This new, regulation, this new regulatory framework that makes it somewhat easier to approach the retail market. and, and Legend Solar wants to, be, be the first to create a really great product experience around, fraction ownership of solar facilities. Got it.

Antonella Wells: And then like, you know, coming back to your question on the origination side, so there are two things that are very important and make like, Legend potentially very successful, scalable.

So there’s a lot to develop there. There’s many developer coming out now, especially with a new bill. And many of them, they’re small and they don’t have a easy way to, reach, you know, flexible capital, cheap capital to invest in their projects. So we can give them this flexibility, cheap, easy, flexible capital to that.

Maybe because they’re too small, they don’t really easily can, you know, reach the kind of,service. Yeah. Found. And the other important things is also that what, We can also on our calculation in the way we are structured, our fee, our, like IRR for the clients, we are able to offer, you know, we can buy project at a wac, like a, at like a price in the market, which is an average price.

So it’s very, we can be competitive in buying project to developers. So we did already this analysis. So that’s, that is like, a pro for us because we can give flexible capital for small developers. And we are competitive in the market to buying this kind of project and the clients. And, and coming back to your question about demographic, yes, our clients can buy project in any part of United States.

There’s no, there’s no limited, you know, there’s anybody else where you can buy the, the facilities, which is the more very similar.

Kerim Baran: How are you different from competitors doing similar things?

Lassor Feasley: I guess the way, the way I would put it is that Legends offers a much more streamlined product experience than a firm like, like raised green. Which kind of invites the user to come on and sift through different project performers and investment overviews and choose the best one we’re offering.

Something that’s much closer to a consumer experience, where it’s, it is almost a gamified experience where you mo most of the investments will have more or less the same. Return profile and features. So we’re not inviting you into prove your weight or gile or your, your, your worth as an investor, to, to, or to outcompete the market.

it’s, you come onto our platform more with the mentality of a homeowner who is installing residential rooftop solar. That then as a investor going on to Robinhood or trying to allocate your capital in the most efficient way. so, so it’s more intended for the busy professional who, who doesn’t have time to, to, to try and, outcompete the market.

Lassor Feasley: So we’re, we’re very upfront and clear about what the IRR and risks are. But, but you’re really there for the product experience.

Kerim Baran: So in the raise green, I, I remember the early peer-to-peer platforms like prosper.com and Lending Club. Mm-hmm. , if you are familiar with them. Yeah.

Lassor Feasley: I’m a little bit familiar with them.

Kerim Baran: Yeah. Their early days, they would let people, Who they wanted to finance and so forth, but then they eventually consolidated all into one bucket or into, fewer buckets. And I guess you bought a portfolio, and I guess in your case that is the approach to like a investor, when they put their money, is it going to one particular project or is it getting distributed? Five projects and therefore it will go to one particular project. So taking the risk of that one particular project

Lassor Feasley: essentially. Yeah, that’s right. And you will be able to diversify across multiple projects. If, if you want o o over time, you will have multiple solar facilities. And then eventually we’ll want to expand into adjacent asset classes.

So we might do, other types of, renewable infrastructure like wind or batteries or, different types of project carbon projects as they become available.

Individual investors to come and submit their funds and so forth. Is that a fair Right. Is is that

Lassor Feasley: a fair? Yeah, that’s right. So we’re, we’re raising seed funding so that we can launch our first regulation a offering that we, we any type of investor can participate in.

Kerim Baran: Guys, I think what you’re doing is really cool.

Brian Hayden: I’m would like to see succeed. What are some key things that have to go right for the business to succeed, and how can we and other people help make that happen?

Lassor Feasley: You know, I think, the, the biggest challenge in the near term is finding, projects to acquire in syndicate. So we’ve been, we’ve only for about a month or so been, reaching out into the market, and, and looking for these smaller projects.

So we’re currently seeking to purchase probably a, a two megawatt, project, so that we can syndicated it out to our first investors, one

Kerim Baran: single two megawatt, or a sum of two megawatt, sorry. Or a one of two megawatt, one si, one single two megawatt, or a sum of two megawatt.

Brian Hayden: If people hear this and are interested in following up with you or staying in the loop on your work, maybe becoming investors, if they have a project, you know, to send it your way, what are the best engaged with the company and kind of stay.

Lassor Feasley: Oh, you can come to our site, which is www.legends.solar, or, let’s be legends.com. We’ve got ’em both. and, and you could also, reach out to me or Antonella directly as well. is, is there a way that we can provide you with, an email that maybe you can put into show notes or something? Yeah, sure.

Absolutely.