"Crowd-Sourcing" PV: Discussion of Mosaic Solar

Solar Mosaic to my way of thinking is a middle-man connecting people with money to invest, with PV owners who wish to refinance their loans.

I'm a cautious fellow, and their prospectus makes me queasy. For the most part I think I can summarize the problems as I see them as 1., The investor shoulders the risk of the PV asset underperforming, while Mosaic's profit model is mostly built on origination fees; 2., Mosaic reserves the right to increase admin fees on historical investments but denies any rights to the investor to withdraw the investment; and 3., the investment is effectively unsecured. Lastly, to date Mosaic is a teeny tiny company that has loaned out ~ 1 million USD. Perhaps they are best described as VC grade for now, yet they have garnered remarkable mass media attention already. I'm reminded of the cute Texas aphorism of 'all hat and no cattle,' and I think it is a red flag of sorts for a company to use it's media connections so lavishly on what is essentially hype.

Sound pessimistic ? I suppose so, but I have been thinking about direct community investment in clean energy production for a while now, and am really happy to see a market example. I'm less sure that Solar Mosaic is the instance of the idea I want to invest my money in though. For a middle-man who is shouldering what I estimate as zero investment risk, they are taking a large chunk of the investment return: $1000 origination fee for a loan that seems to be $50 - 100k for 4 - 6 years, up to 3 months of lost interest while the loan is settled, and 1% annual fee of the capital investment; all told, I estimate Mosaic is keeping about 1/4rth of the loan cost. One of the key lessons I try to remember from the derivatives market melt-down (in progress) is that requiring the lender to eat their own dog food helps keep their interests aligned with the investors.

Moreover, I'm not really sure if this capital vehicle will be a significant driver of NEW PV. It does have the advantage of reducing to zero the risk that the project will not be completed.

Please, share your opinions and expertise. The investment prospectus was very informative.