In Box readers often enjoy pointing out problems – problems with government policy, with business practices, with personal behavior. I’d hope that In Box readers are also on the lookout for possible solutions.
When it comes to energy issues, there’s been much discussion in this blog about the playing field. Many say it’s far from level – which means new technologies face steep disadvantages.
Is this something best left to the free market? Is there a role for active government intervention? How? Why? Who decides? Should taxpayers get sucked into the mire? (On and on it goes.)
So, what if there was a way that anyone with a few extra bucks could invest, earn a decent return, support green energy technology – and do all that without leaning on taxpayers? Sounds aluring, doesn’t it? Rather win-win.
Of course when it comes to solutions (and investments) the proof is really in the pudding. Still, I was intrigued by this recent New York Times article, Crowdfunding Clean Energy, by David Bornstein.
The article cites just one company as an example, which isn’t really enough to prove anything. But it sounds amazing:
When Mosaic posted its first four investments online – solar projects offering 4.5 percent returns to investors who could participate with loans as small as $25 — the company’s co-founder, Billy Parish, thought it would take a month to raise the $313,000 required. Within 24 hours, 435 people had invested and the projects were sold out. The company had spent just $1,000 on marketing. All told, Mosaic has raised $1.1 million for a dozen solar projects to date.
Frankly, aspects of the narrative bring to mind the old caution: be skeptical about anything that sounds too good to be true. (This post takes no position on any of the companies cited, they are just introduced for the purpose of discussion.) And yet…
Crowdfunding or crowdsourcing is pretty trendy these days. All sorts of projects have been launched by way of Kickstarter campaigns. There’s great interest in its potential – and real concern about possible downsides, as explored in another NYT article:
To its advocates, crowdfunding is a way for capital-starved entrepreneurs to receive financing that neither big investors nor lenders are willing or able to provide. To others, it represents a potential minefield that could help bad businesses get off the ground before they eventually fail, and in some cases could even ensnare unsophisticated investors in outright fraud.
Without a doubt, any new investment model requires lots of “buyer beware” or an ability to kiss the money goodbye, should the investment fizzle out. Practically anyone can throw up a good-looking web site that showcases a non-existant or dubious company. It’s not too hard to employ pyramid scheme payments to lure investors in either. Environmental do-gooders might be especially easy marks, lulled into thinking that a fellow environmentalist couldn’t possible be a rip-off artist. (Do-gooders need to harden their hearts sometimes.)
Also, for all that many want clean, renewables to succeed, solar energy in particular carries a lot of volatility right now.
Not the technology itself, that’s pretty good and swiftly getting better. Rather, the business side of manufacturing and distributing the equipment – or investing in the same – seems quite challenging at present. China seems to have taken a lead that might be hard to regain, or compete against.
But is crowdfunding’s risk so very different than buying stock on the stock market? (It might be! I’m looking for reader input on this question.)
Finding new things that work – in technology and in funding – is going to be hit and miss. Results (or necessary regulations) will emerge over time.
Still, I like the idea that lots of “little people” can make a difference – and maybe even reap financial rewards for getting new goals accomplished.
File this under “stay tuned” I guess. Along with a big dollop of buyer beware!