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Comment by arcticbull | Hacker News Reader

I see, your argument is that like (for instance) LendingClub, the economies of scale always favor large investors, and that this platform simply cannot get large investors onboard. That may be due to a lack of connections, or due to some other potential fundamental issues with the business model. At the end of the day if the business is sound it makes more sense to target fewer large investors - not many, smaller ones. If this model makes sense, it would probably just pivot like LendingClub and cut off access for small investors. And if not, small investors will be holding bag.

I buy that.

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What we are doing is super simple. Equity ownership in real, operating solar panels. There is nothing particularly synthetic or structured about these investments (i.e. like BNPL, etc.)

We need enough scale to move a large (20M+) facility, but beyond that scale will only help insofar as bringing on follow on investments and referrals becomes a bit easier. We may also do some institutional stuff, but for the time being, we are 100% consumer focused and always will be.

Our innovation is to bring a consumer experience and true design focus to investing. Instead of treating retail investors like tiny little hedge funds, we design the product to match their expectations of what 'ownership' should be.

That is not a competitive differentiator.

Show me where I can buy an operating solar panel if I don't have a suburban rooftop. Would make my life so much easier!

You can buy dividend paying shares of companies who operate utility scale solar power plants. No, those shares dont equal a specific panel, but should that really matter to an investor?

Owning a specific solar panel seems strictly worse. What if yours malfunctions and has to be replaced? Averaged over all the solar panels in the plant that might be a negligible risk, but if you own just one then you could be the unlucky investor that randomly suffers a total loss

Fair point. But what about insurance? Certainly that would cover it.

That said, for some there's the appeal of investing locally, presuming the panel is say intra-state. That type of investing pays different dividends (e.g., grow local tax base, grows local jobs, etc.) Some accept the trade-offs.

No one in their right mind wants to build a pseudo-investment company dealing with tons of small investors in the few hundreds of dollars to few thousands of dollars range. The only thing missing here is a crypto coin.

If they really have a business model that can yield 8+% annual, assuming they get a cut, then they would raise real capital and not deal with randos. They don’t.

We will never work with crypto because we care about our investors and don't intend on defrauding them.

There are plenty of small retail investing companies that deal with small account sizes. Acorns, Robinhood, etc. come to mind. Over time, I'd hope that our average account size would be in the 10K+ range, but depending on CAC, small dollar would be fine.

Our innovation here is investment UX. The realized return might be a point or two north or south of 8% depending on the risk profile we go with - not far off course for the industry. Our current accredited investors get about 10%, but that's with tax equity incentives we might not be able to pass to retail investors.

We will be 100% transparent about our pricing model.

I'm ~20 pages from finishing the book "Local Dollar, Local Sense" by Michael Shuman. Your approach is refreshing and creative yet (I presume) SEC compliant.

Kudos for letting the unaccredited have an influence on the future too.

https://m.youtube.com/watch?v=Q9WkwIX2MHA

There's quite a few companies doing this where I live (Japan), e.g., https://change-x.jp/equipment. One important clause I saw was that the ownership of the panels automatically transfers back to the operating company after the panel's useful lifespan (defined to be 20 years). I also saw an example that originally did small investors but then at some point found a large investor, but can't remember their name at the moment.

Similarly, what do you think about the fact that solar panel manufacturers and all inbetweeners could "just" build their own power plants rather than sell to individuals?

Solar panel companies are in business of making the panels, wholesalers are in wholesaling business, those who install are in installation business. Each setup to be somewhat optimal in their own segment.

This just looks like extra costs for actual running of sola plant. Compared to straight up existing structures for funding.

I think they only need a return on equity that is similar to residential (rental) real estate. For many places, that is 2-5% after taxes.

P2P lending is a thing, and was quite popular in the UK until most of the big players (e.g. Zopa) went private. You can invest a small amount, usually as low as $100 and it goes either to personal or business loans. There are companies that offer both. Usually they'll offer automatic diversification, so every $10 goes to a different investment.

Your point is valid though. These places typically lend to companies that would struggle to get loans from banks. While I've worked for legitimate places that had this problem, you do need to ask why these places need crowdfunding. A lot of them are sole proprietors who want to start e.g. a food company. So it's still up to you as an investor to understand the risk and to go through company financials before lending. With personal loans you usually get details of default rates, etc.

The only thing missing here is a crypto coin.

There's a "wallet". They keep your returns until you ask for them and get them to pay out.

If you're really buying a solar panel, you're buying a depreciating asset. Someday the solar panel will wear out and your investment is gone. So the return has to cover the amount invested. An annual percentage rate is not the way to evaluate this.

What you buy does not seem to be resellable. It looks like you're stuck with it for the life of the hardware.

Who audits this thing?

This is almost exactly the classic situation in SEC vs. Howey, where investors bought trees in an orange grove. So this is probably an unregistered public offering.

I think REIT is better comparison. I agree large investors are better, but that does not mean small investors are worthless.

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