Gridshare is one of the newest Reg CF crowdfunding platforms to receive regulatory approval. While the number of Reg CF portals is growing, Gridshare is the first and only platform to target the specific vertical of renewable energy and Cleantech.
Originally launched as an accredited crowdfunding platform under Title II of the JOBS Act (Reg D 506(c)), GridShare wants to make investing in renewable energy projects accessible to a wider audience. Using Reg CF, any investor may help fund a solar or wind project – typically alongside professional investors.
Founders Jack Jacobs and Jon Norling are leveraging their experience and contacts at Cleantech law partners to source promising deals and assure quality deal structure. They also intend to launch international offerings at some point in the near future.
Crowdfund Insider recently connected with Jacobs to better understand his vision for the future of GridShare and renewable energy crowdfunding. Our discussion is below.
Crowdfund Insider: Congratulations on receiving Reg CF approval. How long did the process take for you? And why did you decide to go with Reg CF?
Jack Jacobs: Thanks. We’ve been refining the platform for a few years now, but the process for receiving approval from SEC and FINRA to operate as a Funding Portal was a 4-5 month process. We decided to focus on Reg CF in the United States because of the ability to reach ordinary, non-accredited investors using this exemption, which we believe offers issuers a relatively low-cost and easy method to access capital.
Crowdfund Insider: You previously launched as an accredited crowdfunding platform. Will you be doing side-by-side offers? (Reg D/Reg CF). Do you think the $1 million cap is sufficient for your issuers?
Jack Jacobs: At this point, we plan to focus on Reg CF offers in the United States and not plan to also offer Rule 506(c) or Regulation A+ Offerings.
Our affiliate, GridShare International, LLC, will be listing offerings in foreign jurisdictions that allow equity crowdfunding. With respect to the $1 million cap, we believe this is low, and support the $5 million cap proposed under the Fix Crowdfunding Act.
Because, however, most of the listings on GridShare site will be project-specific offerings, and because issuers are typically combining the crowdfunding financing with other capital sources, such as tax equity investors or sponsor capital, we think the present cap of $1 million will allow us to continue to develop a robust deal pipeline.
Crowdfund Insider: Do you expect to see more debt offers on Gridshare?
Jack Jacobs: We absolutely do. The platform is really geared towards offerings of project-specific debt that is secured by assets. Also, because of the regulations related to tax credits and benefits for renewable energy, it is difficult to have crowd-based equity in the project companies. Therefore, secured debt financings will likely be the most common project-based offering on Gridshare. That being said, however, most issuers raising capital for venture Cleantech companies may seek to offer equity or debt that converts into equity.
Crowdfund Insider: How is deal flow? How are you sourcing issuers? And what types of Cleantech companies do you foresee listing on your platform?
Jack Jacobs: Deal flow is good! We have a ton of interest in the site and are vetting numerous projects to determine which meet our rigorous listing standards.
Regarding sourcing, it has been a mix of organic (i.e., users posting their own projects) and us reaching our through our network to let people know about the capital raising opportunities on GridShare.
We expect to see a steady mix of project finance offerings and corporate offerings for clean technology companies.
Crowdfund Insider: Are there any tax exemptions issuers may take advantage of? What about for investors?
Jack Jacobs: While renewable energy and Cleantech companies are often eligible for tax benefits, GridShare was not designed as a site for tax-motivated investors. While our issuers structure their financings to maximize tax credits, at this point, the investors will receive monetary returns without additional tax benefits.
Crowdfund Insider: How did you decide to launch a platform for Clean Energy & CleanTech?
Jack Jacobs: We (myself and Jon Norling) are renewable energy develop and finance attorneys, and originally started the platform as a financing tool for our clients.
We started the platform soon after passage of the JOBS Act, when there was a need for lower cost of capital for renewable projects. By the time the SEC finally adopted the rules, however, lower cost capital was available to sponsors, but ordinary non-accredited investors were not able to participate in these investments. Thus, we decided to allow these ordinary investors to have access to the same type of project-finance investments available to institutional investors.
Crowdfund Insider: Any comments on how Reg CF could be improved for issuers? For investors?
Jack Jacobs: For issuers, it would be great if there was a broader array of entities able to serve as escrow agents for offerings, and if issuers could “test the waters” prior to committing to filing a Form C.
For investors, educating these folks is key to success of this market, and we hope the SEC and FINRA will continue their efforts to educate investors on what to look for when purchasing crowdfunded securities.
Crowdfund Insider: What are your expectations for platform growth for 2017?
Jack Jacobs: We anticipate steady growth in offerings and investments, and anticipate an increasing number of clean-technology offerings on the site. We expect that solar offerings will remain strong, but also hope to see other renewable technologies being listed as well.
Last, we think that our international division will grow significantly with the increasing interest in crowdfunding globally.