Climatize, a crowdfunding firm in Santa Cruz, Calif., allows ordinary investors to put as little as $10 into small-scale solar energy projects in the US. Since it launched last year, the startup has raised some $4.6 million from roughly 950 individual and institutional investors to fund 11 solar energy projects in states from Tennessee to Colorado.
The company’s $1.75 million pre-seed round was led by Myriad Venture Partners and included Climate Capital, Techstars, Responsibly Ventures and Temerity Capital. Climatize will use its funding to expand its products, develop partnerships and attract key talent.
Climatize’s sweet spot is small and medium-sized renewable energy projects that aren’t large enough for giant institutional investors, but are too big for community lenders. The company has added 965 kW of new solar capacity and 1,357 kWh of energy storage to the grid. Annual returns, it says, can reach 10%.
“We built the Climatize platform to enable anyone to become an active stakeholder in the energy transition by investing directly in renewable energy projects,” says Climatize co-founder Will Wiseman. Lester Crafton, the co-founder of Ovanova, a residential and commercial solar energy company in Cedar Grove, NC, says that Climatize “has made it possible for rural small businesses and farmers to access capital that otherwise wouldn’t be available” for solar projects.
Democratizing impact
From pension and private equity funds to venture capitalists and family offices, institutional investors have poured more than $1 trillion into global impact investments. But ordinary investors are locked out of large-scale impact funds, due to US Securities and Exchange Commission, or SEC, rules that limit high-risk investments to wealthy, or accredited, investors. (See, “New crowdfunding rules set to boost investment in diverse startups and founders.”)
The SEC provides a workaround, through crowdfunding rules that allows companies to offer and sell securities to large numbers of people paying small amounts, with one form of fundraising the equivalent of a mini initial public offering. The rules underpin “community rounds,” also known as equity crowdfunding, in which a startup lets its customers, users and fans invest small sums, sometimes $100, in it alongside venture capitalists and angel funders. Recent rule changes boosted the amount startups can raise under one crowdfunding regulation nearly five times, to $5 million, and allows them to fundraise every 12 months.
Crowdfunding is emerging as a pathway for retail investors to access impact and renewable energy investments. Raise Green, a crowdfunding site that helps small-scale solar developers and green ventures obtain financing for community projects, lets retail investors invest or lend as little as $100. The Somerville, MA-based company raised $1.2 million in 2022. (See, “Raise Green snags $1.2 million to expand access to climate deals for retail investors.”) WeFunder has specialized in “community rounds” that extend investment opportunities to a venture’s friends, family and community.
‘Purpose rounds’
Renew VC in Atlanta is rolling out “purpose rounds,” a twist on the idea that’s aimed specifically at impact founders, women and historically excluded entrepreneurs. “We’re about helping investors align their values with their money, and the idea that only rich people could do that sort of felt like a justice issue,” Mark Hubbard of Renew VC told ImpactAlpha.
Retail investors get the same terms as their institutional counterparts, the company said.
One client: Mela Artisans, a Boca Raton, Fla. company that sources home decor made by artists in India at fair wages and that sells on Amazon. Cofounded by father-daughter team Navroze Mehta and Sonali Mehta Rao, Mela seeks to raise $1.2 million by next February via a simple agreement for future equity, or SAFE. It has so far attracted around $50,000, in chunks starting at $500, from retail and institutional investors. (See, “Startups raise ‘community rounds,’ turning customers and fans into investors.”)
