A young impact investment company named Raise Green has launched “the first crowdfunding platform for investment in clean energy projects nationwide,” including the first listing on the marketplace, the National Energy Improvement Fund (“NEIF”). NEIF is apparently “the nation’s only Certified B Corporation® specialized energy efficiency and resilience lender” and in 2019 was named a “U.S. Department of Energy Home Improvement Expert Partner.” NEIF got early support from Greentown Labs, which is an incubator for cleantech and sustainability focused firms that we’ve covered a few times.
The investment opportunity running for another 22 days on the fresh Raise Green platform offers the following:
Coupon Rate: 5% per annum, paid quarterly
Maturity Length: 5 years
Maturity Date: 08/15/2025
Founded by Peter Krajsa and Matthew Brown, NEIF currently manages more than $800 million worth of “innovative energy financing programs.” This fundraising round is to provide more “loan options for families and small to medium businesses conducting energy efficiency retrofits and resiliency improvements to essential infrastructure.”
Of course, we’re not encouraging investment and do not offer investment advice of any sort, but NEIF looks like a solid, established, and well regarded company to launch the Raise Green platform, which I think it an exciting concept turned into reality. You may recall that the U.S. Securities and Exchange Commission’s (SEC) finalized equity crowdfunding regulations nearly 5 years ago. Now, “Raise Green is the first company to offer equity crowdfunding focused on investments for climate solutions nationwide since” under that option.
One cool feature about the platform is it will help you to really see how far your money went on the climate or energy side of things, as well as the financial side. “Raise Green aims to give people the direct impact they have been looking to make on climate change by providing access to verifiable investment opportunities. If you invest in a solar project listed on Raise Green, you’ll know exactly the amount of clean power your dollar has produced. Raise Green is a two-sided marketplace that brings together innovators seeking financing and a wide range of investors, empowering anyone in the U.S. to participate.”
On a side note, I think the rise of Tesla [TSLA] and other cleantech stocks has shown that the world, especially younger investors, are looking for solutions that we can see thriving in 2030, 2040, and even 2050. Furthermore, I think that is becoming more clear to everyone in this industry. “A whole new generation of investors are eager to make a difference with their resources, and most Millennials today want to actively invest in sustainable companies,” as David Burt, CFA, Founder and CEO of DeltaTerra Capital, said. “Raise Green empowers changemakers who want to support environmentally and socially impactful projects in their communities, so they can do good while doing well.”
Curious to learn more about the inspiration for starting this, the founding team’s thoughts on the investment climate today and in the coming decade, and a few other matters, I asked Franz Hochstrasser, CEO and Co-Founder of Raise Green, a few questions to supplement the news and add more context. Those questions and his answers are below.
1. We reported recently that fossil fuel industries have performed very badly on stock markets around the world in the past decade. Looking backward and forward, how much do you think the biggest investors have decided that it’s time to pull money out of old, polluting industries and into cleantech? Have we hit some big crossovers in that regard?
Fossil fuels are not the future. Fossil fuels are the primary driver of global warming and air pollution both of which threaten the public health, economic and environmental well-being of society. It has taken the financial industry far too long to recognize that. By financing fossil fuels they are not only making a morally bankrupt decision, but they’re also making a bad risk return assessment. The inclusive financing of clean energy is how we will rebuild our economies and make our communities resilient.
Investing in fossil fuels simply does not even make economic sense — natural gas lines are being scrapped and the cost of solar projects are plummeting. Investors are recognizing that and redirecting their investments to projects that have long term viability. Clean energy is a more “future proof” investment with respect to both environmental sustainability and economic prosperity.
Around $14 trillion has been divested from fossil fuels now, and more than 1 in 4 dollars in public equities are now invested using some type of ESG screen. I absolutely think we have hit a crossover in that regard. It’s the reason why companies like Raise Green and interest in ESG investments are taking off. This is particularly true among the younger generation who have shown an increased interest in sustainable investments amid COVID-19, and an overall tendency to focus on sustainable products.
The climate movement is united and deeply intertwined with the social and racial justice movements. While Raise Green is just one piece of a much more comprehensive solution to climate change, it also doubles as an avenue for communities and individuals to join hands together in building the future that we want. A future that is centered around healthy, just, equitable, and sustainable practices.
2. Clearly, the US federal government pumped an enormous amount of money into the stock market this year in response to the COVID-19 crisis and ensuing economic shutdown. Therefore, the stock market has done quite well for people while being essentially disconnected from the economic realities of most Americans. How do you see this in relation to the new Raise Green opportunities? Do you think people are looking for or going to be looking for more secure, lower-risk investments? Do you think people are increasingly looking for ways to diversify their investments?
We’re at a catalytic point in history, where we have compounding public health crises, economic, social and climate crises and we have a choice of either doubling down on the same extractive capitalist approaches that got us into this, or instead seizing the opportunity to emerge with a more inclusive capitalism that works for everyone.
We connect capital to community, and let everyone play a role in financing an inclusive future. Raise Green is really laser-focused on providing investment opportunities for individuals or institutional investors who, more than anything, want to make a meaningful impact against our climate crisis—and that goal can, of course, come alongside seeking more secure or diverse investment opportunities. We are a way for people to do good while doing well. Raise Green is your local “Green New Deal” — empowering anyone to make a direct impact with their resources or start a project without having to wait on the government or big financial institutions.
3. Naturally, there is much concern about the future of our planet and human society. Can you speak a little bit about how you have seen that shaping or shifting the investment world on both the large institutional level and the smaller individual level?
We are at a truly pivotal moment in battling the climate crisis. Experts estimate there needs to be at least $1 trillion in global investments into clean energy and climate solutions each year between now and 2050 to avoid the worst impacts of climate change. Presently there is about $600 billion per year flowing into clean energy and climate finance, so we need a rapid acceleration for the solutions to outpace the problem.
While we do need large institutional investors to focus on sustainability and the circular economy, it’s even more essential that we provide a way for all people to take direct action against climate change. Raise Green provides that by allowing individuals to invest in the resiliency of local communities with a chance to earn a return while building sustainable infrastructure. It’s critical that we encourage widespread investment across the country, giving equal access to new investors as well as big businesses and high net worth investors.
4. What does equity crowdfunding for clean energy projects offer that wasn’t on the table for people like me before?
You actually get to know what impact your money is making. Crowdinvesting offers investors direct transparency into the impact their money makes, which has been a big challenge that impact investors have faced to date. As a Raise Green investor, you should know exactly the amount of wind, solar, clean energy or efficiency your dollar has produced. This is very distinct from today’s common impact investing opportunities, which are primarily focused on deploying capital to S&P 500 companies without direct impact tracking.
The transition to clean energy shouldn’t just belong to big banks and investment insiders. We started this journey with the idea of creating a platform that would allow anyone to join the fight against climate change. That means making it easy for anyone to start their own clean energy or climate resilience project – and making it easy for anyone to become investors in those projects.
Raise Green is the first company to offer inclusive crowdinvesting nationwide for clean energy or climate resilience projects since the SEC’s 2016 finalization of the equity crowdfunding regulation. Our team of veterans from the renewable energy industry and sustainable finance have been working behind the scenes for years to make this possible.
Raise Green looks like a compelling addition to the cleantech revolution. We look forward to covering them more in the coming years.