1 / 30

Innovative Ways to Finance Your Solar Project

Discover crowdfunding and ICO options for legally financing your solar project at the Midwest Solar Expo on May 1-2, 2019. Learn about successful crowdfunding campaigns and the evolving landscape of solar crowdfunding.

pompa
Download Presentation

Innovative Ways to Finance Your Solar Project

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Innovative Ways to Finance Your Solar Project Midwest Solar Expo May 1-2, 2019 Brian Edstrom

  2. First Things First: Goals of this Presentation: • What is crowdfunding? • What is an ICO? • Do they work? • Options for (legally) financing your solar project

  3. What is Crowdfunding? Utilizing the Internet to raise money from a “crowd” of investors to support your project.

  4. What is Crowdfunding? • Reward-based crowdfunding: contribution is made in return for reward of nominal value– or nothing at all. • Kickstarter • Indigogo • GoFundMe

  5. Rewards-based Crowdfunding(Success Stories) Raised $645,000 through Kickstarter to create Ipad app, Luna Display

  6. Rewards-based Crowdfunding(Success Stories) Raised $2.5 million through Kickstarter; Sold to Facebook 3 years later for $2 billion

  7. What is Crowdfunding? • Securities crowdfunding: Financial return in exchange for investment • Regulation CF • MNvest • Other State Regs

  8. What is Crowdfunding? In Securities Crowdfunding: • Subject to federal and state securities laws!! • Caps on amount of $ raised • Caps on individual investments • Advertising Restrictions • Must be offered through a regulated portal • Must meet disclosure requirements Best to work with an attorney and an accountant first

  9. Disclosure, disclosure, disclosure! What if this was a securities offering? A metaphor: Don't celebrate your sea salt for being "formed by the primal sea more than 250 million years ago" without also disclosing it expires next year. Source: https://i.redd.it/3ent6tkrz4c01.jpg

  10. Securities Crowdfunding(Success Stories) Rustech Brewing (MN): Raised $62,500 Tilion Brewing (MN): Raised $230,000

  11. Securities Crowdfunding(Success Stories) Silicon Prairie: Raised $254,000 to build crowdfunding platform

  12. When is Crowdfunding Most Effective? • When you can B.Y.O.C. • Social/community component in addition to a financial component • Deal terms are clear and simple Crowdfunding is half marketing, half fundraising: its spreading the word about why you are relevant and worthy of investment

  13. MN Community Solar is Thriving! • April 2019: MN Community Solar at 532 megawatts of operational capacity • Xcel data indicates that 84% of all subscribers in community solar gardens saving money Source: https://ilsr.org/minnesotas-community-solar-program/

  14. Solar Crowdfunding is Evolving! At least 2 Registered Portals: • Lake Superior Solar Finance (MNvest) • Silicon Prairie (MNvest & Reg CF)

  15. What is an ICO? • “Initial Coin Offering” • The sale of cryptocurrency or “utility tokens” to raise money for a business venture or (usually blockchain-related) project.

  16. ICOs – Success Stories • Protocol Labs, INC. (Filecoin) - Raised $257 million via two offerings in 2017. - Filecoin represents data storage on a decentralized storage network • Wenn Digital Inc. (KODAKCoin) - Raised $6.75 million in 2018. - KODAKCoin is used for payments for licensing photographs • Telegram Group Inc. –Raised $1.7 billion(!) via two offerings in 2018 - Telegram already has messaging service; now aims to create Telegram Open Network that will become an alternative to credit cards

  17. ICOs – (Not so) Success Stories • REcoin Group Foundation and DRC World– SEC Fraud Charges/ Asset freeze (9/29/2017) • PlexCorps– SEC Fraud Charges/Asset freeze (12/4/2017) • Munchee Inc. – SEC Cease and Desist Order (12/11/2017) • AriseBank – SEC Asset Freeze (1/30/2018) • Cherubim Interests, Inc. – SEC Trading Suspension (2/16/2018) • PDX Partners Inc. – SEC Trading Suspension (2/16/2018) • Victura Construction Group, Inc. – SEC Trading Suspension (2/16/2018) • Centra Tech – SEC Fraud Charges/ Injunction/ Penalties (4/2/2018) Source: https://www.sec.gov/news

  18. Why have so many ICOs gone wrong? • Is the “coin” really necessary? • Over-hyped • Fraud • Ignoring securities laws

  19. Questions before you Raise Money What terms are you offering to investors? Is it a security? Must it be registered with the SEC? Must it be registered with state regulators? *Tip: All securities offerings, whether or not requiring registration, are subject to federal and state anti-fraud provisions.

  20. What Terms are you Offering? Common Options: • Karma • Equity • Interest on debt • Simple Agreement For Future Equity (SAFE) • Solar Garden Subscription

  21. Is it a Security? SEC v. Howey, 328 U.S. 293 (1946) It’s a security if: • A person invests money • In a common enterprise • Expect profits • Solely from the efforts of others

  22. Is a CSG Subscription a Security? Hmmm… not necessarily… but maybe Is it marketed by emphasizing financial benefits? Are subscribers required to make large, up-front payments? Are subscribers “passive” beneficiaries of solar array (e.g., do they not participate in operating/maintaining solar array)? If yes to all of these questions, it looks more like a security

  23. Is an ICO a Security? Probably… Does it meet Howey test? Do investors really invest for the utility, or because they expect a ROI

  24. Must it be Registered? General Rule: • All securities offerings must be registered at federal level, unless exempt • All securities offerings must be registered in each state where offers occur, unless: • Exempt in that state, or • “Federal Covered Security”

  25. Regulation CF (federal exemption) • No geographic limitations (sales allowed in all of US) • Issuer can raise up to $1.07mm in 12 months • Offers/sales must be made via registered Funding Portal • Tiered investment limits based on income/net worth; no individual can invest more than $107,000 • (Limited) general advertising/solicitation allowed • Disclosure form must be filed with SEC and made available to investors

  26. MNvest (Minnesota exemption) • Allows sales to MN residents only • Issuer can raise up to $2mm in 12 months • Offers/sales must be made via registered MNvest Portal • Non-accredited investors cannot invest more than $10,000 • (Limited) general advertising/solicitation allowed • Disclosure form must be filed with MN DOC and made available to investors

  27. Rule 506(b) of Reg D • No geographic limitations (sales allowed in all of US) • Issuer can raise unlimited amount • Offers/sales must be made privately • Sales permitted to up to 35 non-accredited investors, if sophisticated • Disclosure requirements apply • Form D filing required

  28. Rule 506(c) of Reg D • No geographic limitations (sales allowed in all of US) • Issuer can raise unlimited amount • General advertising and solicitation allowed • Sales limited to accredited investors • Issuers must take “reasonable steps” to affirm accredited status • Form D filing required

  29. Exploring other Exemption Options ? ? • How much money do you need? • Do want non-accredited investors? • Do you want to advertise? • Where (in which states) do you want to raise money? • How much money can you afford to spend? ? ? ? ? ? ? ? ?

  30. Questions? ? ? ? ? Brian Edstrom 612-584-3407 bedstrom@avisenlegal.com ? ? ? ? ? ?

More Related