Show HN: Turn spare cash into sustainable investments that directly change lives

This is a good idea in theory but in practice it looks pretty scammish, or, at least, not reliable.

The website has none of the typical obnoxious financial disclaimers, which makes it look very amateurish.

It does not appear to be registered with the UK Financial Conduct Authority nor Financial Services Compensation Scheme.

Investing is done by sending money manually directly via bank transfer.

5% return "guaranteed" seems hard to believe. You must be evening out the average returns which each individual solar panel investment provides, which means you must have some significant buffer money. If you have this money, then why don't you have any money to spend on anything to make your business look trustworthy in any way?

Why have you spent resources to develop an app, when it seems to me that the core of your business should be offering reliable financial services - which could be interacted with via a single form instead of an app.

The Terms of Service look like an extremely generic set to describe a website, and not a financial service. They have also clearly not been reviewed properly by a lawyer; for example there are errors like: "Country refers to: Delaware".

I would advise anyone to think very carefully before "investing" via this.

Grabbing a random paragraph from the TOS and searching for it turns up thousands of identical boiler plate.

That, plus the reasons in a comment I made below, makes it difficult to avoid concluding that this is a complete scam.

I am sure that OP will be happy to correct me if I am wrong, and to clarify how the absolutely glaring red flags are simply my misinterpretation.

Hey thanks for this feedback. I'm a co-founder at Nowala. While I can say that we're not a scam at all, why should you trust that haha

We've noted the terms of service point. If you could highlight other issues that lead you to mistrust the service, that would be super helpful!

It would certainly be helpful of me to point out "this is where you're failing to clear the credibility bar"

I'm sure that your professional advisers (Lawyers, Accountants) could do a far better job than I could, I suggest you also consult them.

I have no reason not to give you the benefit of the doubt.

Would you be so kind as to post the link to your entry on the FCA register?

Equally, would you be so kind as to post the link to your entry on the ICO register?

Finally, could you provide a link where I could download the prospectus for this investment?

Those are some things that you could do to increase trust.

The upside of you actually being on the level outweighs the downside of the more likely case that you're not.

So I'll give you the benefit of the doubt and suggest that you've become over-excited at too early a stage and have not fully thought this through (you're only 31, after all).

I would recommend sitting down with a lawyer and making sure you've got everything in order legally. Right now, you're committing a criminal offence by participating in regulated activities without FCA authority (https://www.gov.uk/registration-with-the-financial-conduct-a...)

Please consider your next steps carefully.

We've actually only served family and friends. Everyone else goes to a waitlist. Just to respond to the criminal offense part.

Thanks for your list!

Hey thanks for this detailed feedback. I'm a co-founder at Nowala. Seems like we have some work to do for an online launch as our early customers come from people who know and trust us. Our FCA regulation is in process but we still made sure to launch early.

On the "guaranteed" money, we do state that it's an "4-5% estimated annual return for 2 years"... If you saw somewhere that our returns are guaranteed on the site, it would be helpful for us if you could say where so we can fix that mistake.

On your launch point. We actually launched over email to our family and friends! But I'm a software engineer so it was quite easy (and free) to launch a quick Expo app in attempt to test some of our key assumptions.

Thanks for pointing out the flaw with our Terms of Service. We were originally a Delaware LLC so we'll need to update that.

If you could point out any other issues/concerns that stand out to you, that would be super helpful!

This is insane and these people are clearly not interested in charity.

They’re selling an “investment” with no legal guarantees. You don’t own anything like equity or a bond which are contracts with regulatory oversight.

What’s the lifespan of these solar panels? It’ll take you 20 years to break even assuming their absurd 5% annual return. What happens if the panels need repair? Solar panels are worthless once they die.

If you wanna do charity, do charity…don’t sell a bs investment using sustainability/ethics as your marketing gimmick.

Hey. I'm a co-founder at Nowala. You are definitely correct in stating that we're not interested in charity. As someone who has lived in West Africa and has many family members living in these villages, I can say that charity is not the answer to every problem. We believe in giving these individuals equal access to the opportunities afforded by the financial markets.

Great question on the lifespan and returns! The lifespan is 5 years. The break even period you're referring to are for homes in rich nations that have high energy consumption and use inverters for A/C appliances. They're extremely expensive and not useful for people in the villages of Sierra Leone. The loans provided through Nowala help people in the villages get access to units that are actually affordable for them over a two year period and meet their very limited energy consumption needs. You can check out the solar panel details here: https://www.engineeringforchange.org/solutions/product/sun-k....

Also good questions on repair. We partner with solar panel distributors on the ground in Africa. They actually run existing businesses in a fast growing industry that enables people without energy access to get electricity through solar. Our partner in Sierra Leone, Ignite Power has installed over 100K solar panels across Africa. If a solar panel breaks, they handle the maintenance.

5% annual return on an investment will take 20 years to break even regardless of the underlying instrument (or ~15 years if compounding).

With bonds or equities you will either be paid the face value of that bond or still own shares that hopefully continue to appreciate.

An “investment” into a solar panel doesn’t make sense to me because while you may profit off the electricity being sold the panel itself will be worthless in the future.

Company registered June 2022: https://pomanda.com/company/14201071/nowala-ltd

Office is in an apartment block in London.

Not registered with FCA or ICO

5% returns, when the company has only been running two months, is - ahem - “impressive”

Registered in Delaware. Erm, no. It is most certainly not.

Payment by bank transfer - which has no recourse in the UK.

Based on observed evidence, it’s very very difficult to avoid a conclusion of “scam”.

Thanks for pointing out these issues.

Just for transparency, I'm a US citizen so I originally registered a Delware LLC. But I now live in the UK and our early customers are here so made sense to create a UK entity instead. Foolishly we haven't updated all of our documents on that. Will do that ASAP!

We've highlighted that the returns are "4-5% estimated annual return for 2 years". I stand by this as it's unrelated to how long our company has been registered in the UK. It's based on the schedule of payments agreed to by our partner on the ground who distributes, installs and maintains the solar panels. The unit economics work, I have been to the villages and seen solar panels installed in homes. Our partner has been distributing small solar panels in Africa for almost 10 years for over 100K homes. We help them solve the energy access problem by giving them more flexible access to financing and the loans are directly tied to the solar panels.

Fair point on the bank transfer. We're working on upgrading that.

Jacobin wrote a good analysis on the whole microloan industry a few years ago. it's not great...

> https://jacobin.com/2015/11/microcredit-muhammad-yunus-bono-...

isn't it a treat that they've made microinvesting in other continents 'fun'

Thanks for sharing this article! It accurately describes the damaging effects of small cash loans to entrepreneurs in these regions. Our company is a direct response to that.

Having lived in Sierra Leone and having family members in the village, I actually have personal experience with various sides of this market and it's impact.

It's important to note that we do not provide microloans to individuals or small entrepreneurs. The loans our users provide through our app go to vetted businesses and are directly tied to life-changing products to people in need. As Jacobin's article correctly states, people cannot afford these assets outright. However access to credit, for those who have been identified to have some level of stable income enables them to have access to products that directly improve their lives and wellbeing. If a person in SL cannot pay for some unfortunate reason, the asset can be recovered rather than being trapped in a terrible debt cycle.

It sounds like you're quite knowledgeable about this area. I'd love to connect and discuss these nuances. Getting your detailed perspective might help us communicate these difference better upfront.

i believe in gift economy and don't agree that extending credit even at favorable rates to the global south is fair. even in your description here you use euphemism to cover the forceful removal of what you in the same paragraph as 'life-changing products'

> life-changing products to people in need ... to have some level of stable income ... the asset can be recovered

they NEED the LIFE-CHANGING asset as long as they can PAY interest. if they default, i guess they don't NEED it.

it's not ethical! sorry. it's the same old neoliberal capitalism, just tied to a product which can't be exchanged for food like the old microloans, and can be more easily repossessed.

i'm glad you enjoyed the Jacobin article, but you missed the forest for the trees. if you want to do it right, don't charge interest and restructure as a co-op.

In that case you should create a gift economy product in Africa. I encourage you to spend time on the ground speaking with people and seeing what individuals need/desire.

We're not a dispassionate westerners building products for our personal gain. My own family members face these issues. You're advocating denying people access to financial markets and making them dependent on your donations. But these individuals have jobs and desire self-sufficiency. I'm working to give them that.

I love this idea and definitely be interested once this is available in the US.

> you’ll get back your money with interest as the households use the solar panels.

Does this come from households paying money for electricity? If so, how affordable is solar for the average household in Port Loko?

Hey. Thanks for the question. It come from the households paying money for the solar panels every month rather the electricity. They pay for 2 years and then they own the solar panels.

The average home in Port Loko can afford it as long as there's a member of the household with stable income (e.g. Farmer, police officer, teacher). We run this through a partnership with Ignite Power who has over 4K solar panels installed across villages in Sierra Leone and over 100K across Africa. The pricing and payback period has been optimized to make it affordable for rural residents in Sierra Leone. Currently their default rate is less than 2% and the return is based on Ignite Power's pricing model.

If you send an email to kekura@nowala.io I can add you to our US mailing list and let you know when we launch there.

Is anyone aware of a similar thing for the US?

I've been using Kiva for years with monthly injections of more money and "reinvesting" everything I get paid back. It's a little different as I'm not exactly looking for profits. I don't think you really get more/interest back on Kiva but I could be wrong since I've had a few loans default so that might have just wiped any meager gains.

I deleted my Kiva account after there were obvious signs of a data breach.

Clickable link: https://nowala.io

Great idea. I loved the idea of microloans when they first came about, and this feels like a similarly good social enterprise.

I don't see the usual investment disclaimers though... E.g. "risk" ... "May not get your investment back" etc. Where can I find that please?

I found it in FAQs and then Risks

Is 5% a proper return for the risks associated with this kind of investing? I get the social enterprise aspect of this type of investing but what's a normal return for these types of projects and are there stats on default frequencies?

At 5% plus whatever amount they take for profit it seems like they'd be able to get some large investors on board and wouldn't need us plebs at all.

Sounds similar to Trine - https://trine.com/ - based in Sweden.

This would probably be classified as a security under U.S. law, meaning generally that because you are soliciting investment from U.S. citizens you would be required to satisfy the requirements of a public offering.

(Note that this is distinct from companies like Kiva, as microlending is its own separate thing.)

The FAQ says only UK investors are currently allowed, will this change soon?

What are your management fees?

Thank you for this. Only UK though?

But the company is incorporated in Delaware?

https://www.nowala.io/terms-and-conditions