A new startup founded by two UC Berkeley Haas Business School students aims to give homeowners going solar the leverage to affect more than just the environment.
Window Street Financial—which emerged last fall from an idea generated by Johnny Gannon and Ben Purvis—wants to give them the option of taking a solar loan made up of capital from the endowments of universities, nonprofits and foundations.
“Big banks aggregate their capital and you don’t know where it’s coming from,” said Gannon, a student at Haas’s evening MBA program and a solar product engineer. “I want to eliminate the ‘wall’ in Wall Street and put a window there—so that the people who are investing and borrowing know who each other are.”
By giving their business to their alma mater, say, instead of a big bank, Gannon argues that alumni could also influence the way the endowments invest their money—and help support a favorite mission-driven cause to boot. In theory, Window Street Financial would make money by managing the investment for the endowment; homeowners would pay loan origination and processing fees. Gannon and Purvis refined the idea for the company over the last school year with feedback from Haas lecturer Carl Nicholas and fellow students in Nicholas’s entrepreneurship class.
“We’re focusing now on universities because people have so much pride for their alma matter…we believe that’s a great way to support your university,” Gannon says. “It’s also good for endowments because they’re looking for ways to connect with their community. It’s a lasting connection because a solar loan from them is about 20 years.”
Yet it appears the universities themselves are not ready to jump on board: Although Gannon has had exploratory meetings with UC Berkeley and Stanford endowment officials, he says all told him that Window Street Financial’s operations needed to be more mature before they would consider investing. University of California spokesperson Dianne Klein declined to comment. (Last week, UC Berkeley—and the Cal Alumni Association, which publishes California—announced a 10-year business partnership with solar service provider Sungevity, Inc.)
“Endowments in general need to invest their capital in sure things,” Gannon acknowledges. “Our barrier is trying to prove the model before conservative capital can move in.”
But the idea got some support from the U.S. Department of Energy’s SunShot Catalyst program, which provides startups with the resources needed to produce innovative products in the solar market. It granted Window Street Financial $30,000 in January, just a few months after Gannon presented the idea to other entrepreneurs at Oakland solar incubator SfunCube (and where Gannon recently set up office space). Window Street used the money to develop an early version of Sundowment, an online portal that enables endowments to track metrics such as the total dollar amount invested and earned from the solar loans, as well as the solar systems’ environmental effects (such as kW of clean energy created and million metric tons of CO2 savings). Homeowners can also track their metrics.
Window Street hopes to capitalize on growing enthusiasm for alternative energy, prompted by the concern about how fossil fuel use exacerbates climate change. Many universities, cities and religious institutions have already heeded the call to divest in fossil fuel companies—although UC Regents have resisted.
For now, the startup is searching for about $1 million in seed money from venture capitalists. Then Window Street wants to sign up a big debt source such as an educational endowment and scale up operations from there. The company sees Cal’s approximately $3.9 billion endowment as a great starting place ($2.4 billion of the pot is controlled by the UC Regents, while the remaining $1.5 billion is controlled by the UC Berkeley Foundation.)
Yet John Walker, an expert on impact investing and an adjunct professor of business at Columbia University, believes the startup may have a tough time meeting this goal. “My quick initial impression is the space is challenging as there are numerous other participants in the loan origination, processing [and] fulfillment space,” he says. “They may well do better by approaching individual investors who are willing to place money through their own family/individual offices and manage it as a venture investment directly. Most of the funds that get invested in impact-oriented early-stage ventures are sourced through these routes.”
Gannon hopes that Window Street Financial’s online Sundowment tool could also prove valuable to universities, nonprofits and foundations. “We believe that as endowments move into more sustainable investments, they’ll want to make it transparent what they’re holding and communicate through some sort of metrics—such as the total clean energy created, how much money has been invested, the total money earned, and where in the community you’ve sold systems,” Gannon says. “This gives the alumni collateral to show the impact that they’re making in the local community.”
Posted on June 30, 2015 - 3:41pm