DEAL DETAILS
Startup: Neighborhood Sun
Security type: Future equity Agreement (Wefunder SAFE)
Round size: Up to $1.07 million
Valuation cap: $15 million
Minimum investment: $100
Investment portal: Wefunder
Deadline: October 23, 2020
Here in Maryland, where I live and work, we’re an equal opportunity energy provider. The state uses gas, petroleum, coal and nuclear. Diversification didn’t bring lower utility bills though. Energy rates were still high. So eight years ago, I decided to do something about it. I bought a wind turbine.
It didn’t go exactly as planned. I knew installing the turbine would cost nearly as much as the turbine. But I was okay with that. I was going to save a ton of money. And help the environment.
But things went sideways from the start. The installer kept stalling (no pun intended). For six months, he kept promising to initiate a feasibility study (to figure out where to locate the turbine on our property). Finally, we asked for our money back. He balked — of course — asking for more time. Still, nothing happened. Finally, I complained to Home Depot. The installer was listed as one of their “approved” contractors. Home Depot reimbursed us. And that was that.
In Search of Cheaper Alternative Energy
Ever since, I’ve been on the lookout for a chance to use other alternative energy sources. There have been some. But they always cost 10%-to-20% more. I wouldn’t have minded paying a little more. But those prices were too steep.
I’m pretty sure a lot of folks feel like I do. We want cleaner energy. But we don’t want substantially higher utility bills.
Solar panels are not the solution. Depending on the cost of electricity in your state and the local incentives or solar subsidies, it takes 9-to-12 years (some reports say 8-to-16 years) for solar panels to pay for themselves.
That’s not horrible. But it’s not ideal. A lot of people move before they start saving money. And a lot of people don’t even live in houses. Roughly 80% of utility customers can’t get solar because they don’t live in houses or it doesn’t make sense for them.
That includes me. My house faces the wrong way. And our leafy surroundings don’t let in much sunlight on even the sunniest of days.
For years, it seemed that solar was destined to be a niche energy provider. But — thanks to a unique and brilliant new business model — Neighborhood Sun has liberated/unchained solar from its limitations. And it’s made solar’s many pain points — including higher prices — disappear.
In fact, Neighborhood Sun’s solar power program is 10%-to-20% CHEAPER than current utility rates. Customers save money and help save the planet.
All it took was asking local regulators to use a little imagination.
Brilliant Model Enables a New Age of Massive Solar Adoption
Companies that liberate markets from their former constraints can have enormous upside. Uber turned anyone with a car into a taxi driver. Look at how Airbnb brought the hospitality sector to all home dwellers. eBay opened up retail to anybody who could get their hands on merchandise. Regulations, new technology, new business models and increasing affordability can inject explosive growth into formerly slow-moving markets.
The solar sector is about to embark on a new and steeper growth trajectory, thanks to new regulations sweeping the country and Neighborhood Sun’s innovative business model.
The company knows that not everybody has a rooftop. It came up with its new business model by asking: But what if they did?
What if everybody could virtually access solar panel farms instead of installing them on their own properties? And what if those solar farms helped customers save significant money on taxes, distribution charges, etc.? Shouldn’t people who get their energy from a local solar farm be treated the same way people with solar panels on their roof are treated?
Maryland-based Neighborhood Sun put this question to Maryland’s regulators. They thought it was a good idea and passed the Community Solar Act. It allows everyone in the state — homeowners, renters, and condo-owners alike — to share in the benefits of solar.
The end result? Maryland regulators approved Neighborhood Sun’s plan. And while solar costs more than conventional energy sources to generate power, solar’s overall cost to customers is lower because of the money saved on fees and charges. A dozen other states have also passed similar regulations. Another seven or eight states are in the process of passing legislation or policies that support the growth of shared solar energy.
This is a growing regulatory trend that’s not going away. And the numbers show that it’s spurring solar-generated energy use. Solar energy in all its forms has a five-year growth rate of 26%. Shared or community solar — the centerpiece of Neighborhood Sun’s model — is growing at a 53% clip.
Showing the Rest of the Country How It’s Done
Neighborhood Sun’s model works better than what any other company is doing. It typically takes two companies to do what Neighborhood Sun does. The company makes money by signing up customers for its solar projects (it only takes a few minutes to join). Then, it manages those customers as part of its retail operation.
Customers pay for “solar credits.” Solar credits represent a customer’s share of the electricity created by the solar farm. Each customer’s share of solar power covers roughly 80% of the customer’s electric usage in a month (the remaining 20% is paid directly to the utility). And because people pay less for that (solar) energy than the utility would charge them, they save money on their electricity bill.
Neighborhood Sun excels at making the process relatively painless and seamless for customers and solar farm owners alike. It regularly earns five-star ratings on Google Review. It has five active projects — four in Maryland and a brand new one in New Jersey.
No other company is doing this. Each time Neighborhood Sun successfully sells out a new project, community solar developers from around the country take notice. Many want to partner with the company.
“And I guarantee you, some will,” says founder and CEO Gary Skulnik. “The opportunity to expand to other states is staring us in the face. That’s why we’re raising. To help us expand into other states and scale nationwide.”
Apart from New Jersey, the other states heading up Gary’s list include New York, Massachusetts and Colorado. “No company is dominating right now. Our business model has positioned us to grow right along with the space we’re in. And community solar is the hottest space in solar,” he says.
The company is on its way to making more than $1 million this year in revenue. Gary is determined to scale from there. One way is through licensing and white-labeling the platform to companies in other states. Another is by outsourcing customer acquisition.
Next year, he’s aiming for $3 million to $4 million in revenue, which would get Neighborhood Sun to break even (or very close) by the end of the year.
Solar’s New Upside Is Truly Impressive
Beyond 2021, the sky’s the limit in terms of growth and revenue generation. Gary brings 20 years of experience in the green energy space. This is his second clean energy startup. He grew his first one to $22 million in revenue, before selling the solar division to Solar City.
Gary believes Neighborhood Sun has considerably more upside. “We’re a new company playing a leading role in a new and expanding market. On the micro level, we’re letting everybody access this clean source of power, including the underserved and households earning low to moderate incomes.”
Companies that liberate markets from their former constraints can have enormous upside. Neighborhood Sun has the potential upside of a very early Uber or Airbnb. Its path could even be easier. Unlike Uber, it already has enabling regulations in many cities and states. Unlike Airbnb, customers don’t have to own homes.
What’s more, solar technology is continuing to advance. It’s getting more efficient and less expensive with every passing year. The one big missing piece was a business model that truly worked. Neighborhood Sun has taken care of that.
It’s still very early. The unexpected can derail the best of plans. But this company has loads of upside and the veteran leadership to realize its vast potential. The reward at this point in time far outweighs the risk. And it’s not even close.
How to Invest
Neighborhood Sun is raising up to $1.07 million in this round of funding on Wefunder. You’ll need to sign up for an account there if you haven’t yet.
Once you’re signed in to Wefunder, head over to the Neighborhood Sun page. Now enter the amount you want to invest and click the green “Invest” button on the right-hand side of the screen. The minimum on this deal is $100.
Risks
All early-stage investments are risky. While this one has substantial traction and a very reasonable valuation, you can still lose your investment. As always, don’t invest money you can’t afford to lose. You should expect to hold on to this investment for 10 years.