Crowdfunding rules relaxed in the USA, to the benefit of renewables.

REW.com: “The SEC has finally proposed its rules to allow crowd-funding under the Jumpstart Our Business Startups (JOBS) Act. What do they mean for small-scale investments in renewable energy companies and projects? “ “Title III of the JOBS Act created an exemption under securities laws for crowdfunding, which set the table for its regulation by the SEC — that was supposed to happen by the end of last year. Two weeks ago the SEC finally issued its proposed rules on crowdfunding ….Here are the highlights:
– Companies are capped at raising $1 million cap per year through crowdfunding.
– Investors with less than $100,000 annual income and net worth, could invest up to $2,000/year or 5 percent of annual income or net worth (whichever is greater).
– Investors with at least $100,000 annual income and net worth, investment amount levels rise to 10 percent of annual income or net worth (whichever is greater), and purchase no more than $100,000 of securities through crowdfunding.
– Non-U.S. companies are ineligible for the crowdfunding exemption, as are companies that already report to the SEC, some investment companies, those who aren’t compliant with certain reporting rules, and others with no business plan or pending M&A deals.
– Securities purchased via crowdfunding can’t be resold for a year.
– Under the proposed rules, issuers publishing notices advertising an offering can include terms: the nature and amount of securities offered, their pricing, and the closing date of the offering period.
So how do these proposed rules affect companies seeking to get funded by the masses? “Renewable energy companies seeking to enter the new territory of offering a security legally may find it easier to raise start up capital or additional capital because they can offer investors a return on investment” such as stock or debt with interest payable, explained Debbie A. Klis, attorney with Ballard Spahr. “It would not be difficult to create a compelling campaign to raise funds for renewable energy products especially if it brings revenue and jobs to areas of the U.S. (and abroad) that it need it the most.”
For small businesses and entrepreneurs seeking to raise capital, the rules “may be a God Send” to help solve delays common in formal full-blown SEC registration and disclosure, observed Lee Peterson, senior tax manager with CohnReznick. Some entrepreneurs dream of building the next Apple or HP on the renewable energy side; others might see crowdfunding as a way to bridge the “valley of death” in startup-up financing to bring their company to market. “So as long as folks act smart and understand the investment risks,” he added, “it may be a good thing.”
….One of the early renewables crowdfunding success stories has been Mosaic, which has amassed investments for projects totaling $5.6 million in value and “tens of millions of more dollars in the pipeline,” according to a company spokesperson. It has pitched 25 offerings in over 19 projects, with 2,500 investors spanning nearly every U.S. state, and roughly half its projects sell out within a week. Its newest offering is a 12.3-MW installation across more than 500 homes at Joint Base McGuire-Dix-Lakehurst in New Jersey. The company has been working with the SEC as the agency wrestles with understanding how crowdfunding meshes with traditional finance, though it claims it doesn’t and won’t rely on the JOBS Act for its business. “There are different provisions of the securities laws that we have relied on in the past, and I would expect that this would continue to be the case in the future,” noted Nick Olmsted, Mosaic’s general counsel and corporate secretary.
The Natural Resources Defense Council (NRDC) recently announced its own crowdfunding plan, to build an online platform to help organize and direct groups how to put solar on schools: site assessment, approvals, funding, the RFP process, etc. “Like most NGOs, we go out to big donors and foundations,” explained Jay Orfield, environmental innovation fellow in NRDC’s Center for Market Innovation. This effort, though, means going to “people who are going to use and benefit” from such solar installations, getting them to fund this $5, $10, $50 at a time, he said. “That market validation is specifically what we find really exciting about crowdfunding.”