Mosaic: Crowdfund Solar Projects With Just $25, Earn 5% Interest

Mosaic is a new crowdfunding start-up allows investors to invest in clean energy projects with as little as $25. A solar power farm needs financing to get built. They sell the energy produced to customers like major utilities and then pay investors back. Mosaic takes a cut. Mosaic has recently been more projects since their debut (and sellout) earlier this year.

Below is a screenshot of an actual project with a 12-year horizon with expected 5.5% yield that is currently in funding – the one I was looking at yesterday already funded! If you live in California, you’re likely to be familiar with PG&E which made a 20-year agreement to purchase power from this project. On the production end, Panasonic is guaranteeing a minimum power production level for 12 years (or else they cover the difference). I’m not sure what the interest rates on these types of project would be on the open market, but right now Yahoo Finance shows the average yield on a AAA-rated 10-year corporate bond to be 3.60%.

I went ahead signed up for an account and found that they do have some important residency restrictions.

If you reside in a state other than California, Colorado, Oregon, Nevada, or New York, you may only invest on the Mosaic platform if you are an accredited investor, as defined by the U.S. Securities and Exchange Commission.

From my previous small investments in Microplace to LendingClub, I guess I have a thing for crowdfunding-style startups with a profit component. I’m only putting a tiny percentage of my portfolio, but I like the concept. I think it is possible to earn a fair return and still make a positive impact. (Update: I forgot about Realty Mogul, which I haven’t invested in.)

Previous media coverage: Techcrunch, Bloomberg, WSJ

Comments

  1. Interesting concept, but doesn’t seem like a great investment opportunity since you are locked in for 20 years at a relatively low rate (do you get back principle at some point?). The rates may seem decent in comparison to our current artificially depressed interest rates, but I think most people expect these rates to increase significantly over the next few years.

  2. Im sorry but this investment is terrible. This is at best high yield paper, which yields 5.5? I can buy the vanguard high yield etf with a 7.5% and in all likelihood is a better credit.

  3. I agree the interest rates aren’t special, but what Vanguard ETF has a 7.5% yield?

  4. The term is actually 12 years and with monthly cash payments (20 years is the term PG&E has agreed to purchase the energy produced). Compared to 10-year Treasury yields at <3%, 5 year CDs offering <1.5% a year, and investment grade corporate bond indexes in the 3-4% range, Mosaic's expected yields compare favorably with many of the leading fixed income products on the market.

  5. Interesting. One one hand this seems like very safe investments. Its a physical asset based on pretty guaranteed income streams. It seems like there is little risk here. But reading a prospectus it seems its unsecured and no recourse debt that you’re actually buying. I think the interest rate is probably appropriate. Theres really no guarantee here but the actual investments seem relatively low risk.

  6. buckaroo123 says:

    bee careful if you decide to invest in this (sorry, couldn’t help myself).

  7. Yes, I’d like Albert to let us know what ETF is handing out 7.5%…we will all rush to it !

  8. An adequate ROE for Solar is 8-10% after tax. They are passing over debt rates on its equity investors. Also, there are inherent risks here even if secured payment stream with AAA utility. Namely, not all these projects have performance guarantees from the EPC. Secondly, would really have to dive into the contracts to understand all the risks. (Leases/EPC/PPA). What are the obligations in event of casualty, or force majuere? Events of default? etc, etc. What happens if project production was aggressively predicted and there are shortfalls? Does PPA have min production requirements? Are necessary insurances in place? Earthquake for CA. If its on the roof, what happens when require a roof replacement. Solar is a complicated business. It is a relatively safe asset when the structure is tight and the docs are in place, but this company expects you to take their word for it or do they let you see all the docs? And then they expect you to be cool with a debt rate? At least as a lender earning 6% on a project i have security interest in the equipment.

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