CrowdSolar

Draft Business Plan

Daniel S. Herr Matthew P. Doyle Patrick Baldwin Draft Date: 19-March-2012

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Company Overview
Crowdsolar allows the average person to invest in solar while providing building owners with the opportunity to generate electricity from the sun without high up-front costs. CrowdSolars vehicle and platform for these investments directly funds solar photovoltaic installations with accredited investors through an easy to use and share online platform.

Product / Service Description

The Need
The most pressing issue that solar energy continues to face is high initial cost. The limited availability of financing opportunities makes going solar unfeasible for many businesses and homeowners. CrowdSolar provides the foundation for a sustainable clean energy catalyst allowing the industry to transition away from government subsidies and artificial incentives, which are set to expire by 2016. More importantly, in the worst economic times of our age investors are searching for alternative investment opportunities and the ability to encourage the development of clean energy in their local communities. CrowdSolar addresses those needs. Crowdsolar aims to change the game in the adoption ability and market penetration of solar energies.

The Crowdfunding Approach

Crowdfunding, the pennies-from-many approach, is the future of investing and has a fresh start as a new financial industry. According to Amy Cortese in her book Locavesting, Crowdfunding is an approach to raising money that aggregates small sums from many individuals via the Internet. Think social networking meets finance. This sort of person-to-person finance (P2P) was popularized by sites such as Kiva.org, a microlender, and Kickstarter, which

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lets people donate to creative projects. More recently the focus is on profitmaking P2P consumer lending, small business lending, and small business equity investing. By eliminating the middleman, borrowers pay less interest and investors get higher returns. In support of crowdfunding Nobel Peace Prize winner and founder of Grameen Bank, Muhammad Yunus said, [In New Yorks financial markets] They do the banking with the world but they dont do the banking with their neighbors.1 Crowdfunding gives investors the opportunity to diversify their portfolios and affect real change at the same time. In the United States Crowdfunding was originally used for charitable means because of regulations, but has recently developed into an investment vehicle. In March of 2012, The House of Representatives passed the JOBS Act which allows startups to raise as much as $2 million in this manner.2 Anyone can now buy up to $10,000 or 10% of the annual income (whichever is less) in equity, says VentureBeats. The final rules are currently being written by the Banking committee in the Senate in order to avoid a lengthy SEC rule-making process. Crowdfunding provides the opportunity for individuals or companies to invest in their local communities, while receiving a return on that investment.

The Technology
CrowdSolars primary purpose is to fill the need of the investor. In order to effectively track, market, and sell individual projects to investors, CrowdSolar is building an online lending platform as its foundation. The online platform will allow customers to learn about potential projects, follow their news streams, share projects on other social media platforms, invite friends, interact with and comment on the projects, and ultimately fund a solar project. Additionally, CrowdSolar requires that every project include real-time performance monitoring which is comparable online to total building usage, predicted energy production, and financial savings. To these ends, CrowdSolar is building a platform, best practice protocols, and transaction mechanics for securely and easily crowdfunding projects. CrowdSolar is not just an idea and a service, but a place where investment happens with the perfect technology and methodology recipe as its foundation.

1 2

GrameenAmerica.com http://venturebeat.com/2012/03/08/jobs-act-passes-crowdfunding-bill-startups/

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By nature people love to find common threads, hear about success stories, and get recommendations from people like them about what to buy, consume, or in which to invest. Providing a platform which allows people to share their thoughts, good or bad, builds an environment of trust and a desire to return and use the service much like Amazon.com has done with online shopping through its ratings system. Our technology is innovative because not only is social media relatively new, and crowdfunding in its infancy, but there is no company in the United States using social medias ability to pool for-profit investments in renewable energy from the largest capital market in the world: the public. Our platform will rely upon building a sustainable technology backbone including hosting servers, data-centers, real-time monitoring solutions, and a fairly complex architectural framework. Our vision requires the work of experienced developers, designers and computer engineers which we are recruiting. This new online and mobile platform is the technology that our country needs in order to reliably and affordably bring clean technologies through the marketplace and into consumer adoption. Our platform model will be scalable so that once we have proven the concept and refined financial procedures with accredited investors, we can develop comparable solutions for the non-accredited average-Joe investor as well. Finally, the platform developed by CrowdSolar will be applicable in a wide arena of future models including regional crowdfunding of local businesses and volunteer action rewards programs which have been developed by CrowdSolars founding members.

Market Analysis
Customers
The initial target markets of Crowdsolar are two-fold: accredited investors electricity-consuming building owners

Building Owners Most building owners cannot afford the up-front capital cost of solar; Crowdsolar partners those building owners with investors looking to diversify their portfolios with a low risk investment.
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According to the Energy Information Administration commercial building floor space is expected to reach 109.8 billion sq ft by 2035 consuming 885TWh of electricity per year3. The standard industry number tossed around is that less than 40% of rooftops in the country are suitable for solar. At over 500 Billion 220W PV modules, that would be a lifetime of work; luckily the National Renewable Energy Labs say that we only need to convince 7% of current rooftop, parking, and building owners to go solar in order to supply all of our energy needs4. Crowdsolar attracts building owners with the ability to immediately begin saving on their electricity bills while reaping all of the benefits of solar power. Most building owners are convinced that electricity rates will increase substantially in the next ten years. Overall electricity prices have increased more than 50% in the last ten years while Solar PV install costs have decreased by more than 30%5 in the same time. Crowdsolar provides American mid-sized commercial businesses the opportunity to hedge against the risk of rising electricity costs.

Investors Accredited investors are increasingly frustrated with low-return investments and are seeking ways to make a return on their idle monies. "Alternative investments are an increasingly important asset class for the industry, including many of the 7,000 independent investment advisor firms that we serve at Schwab," said Bernie Clark, executive vice president of Charles Schwab & Co., Inc and leader of the Schwab Advisor Services division on March 6, 2012.6 Alternative Investments are typically products other than the traditional investments of stocks, bonds, cash, or real property. The biggest
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http://www.eia.gov/forecasts/aeo/pdf/0383(2011).pdf http://www.nrel.gov/docs/fy04osti/35097.pdf http://openpv.nrel.gov/gallery 5 of 27 Tuesday, March 20, 2012

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talking point about alternative investments, such as those offered through CrowdSolar low correlation with traditional financial investments such as stock and commodity shares. CrowdSolar will provide the opportunity to earn a reasonable return, invest in the time-tested alternative investment of solar energy, and fund demonstrable social impact.

Penetration of the Crowd Concept

As was mentioned previously, crowdfunding has been made popular by organizations such as Kiva.org, KickStarter, IndieGoGo and others. The current problem is the large gap existing between philanthropic crowdfunding and sound investment with demonstrated return through crowdfunding in the United States. At this point it has been a sandbox in which many have played and through which few investors have actually prospered. This has more to do with the people in the box than the quality of the sand. Transactions were handled in this manner for multiple millennia before our current mediated securitized financial system was developed. The true answer lies in bringing the appropriate tools to the box. Grameen Bank (the frontrunners of microfinance) started the idea by lending to the unlendable, but forcing them to make certain concessions in order to receive the monies. Grameen created a different type of collateral, a social collateral for repayment. A group of five at a minimum was required to receive the monies which built peer pressure for repayment or the others must foot the bill.7 President Barack Obamas 2008 campaign financing struck a different tune. Their crowdfunding approach took the political arena by storm and dominated by repeatedly asking people for small (less than $100) donations. While the return on investment was new leadership instead of financial, this approach worked only because people believed in the idea of change and the appeal was to the average, middle class family, inviting them to easily and anonymously take part in the process.

http://www.marketwatch.com/story/schwab-endorses-industry-changing-service-foralternative-investments-2012-03-06 7 http://www.grameenamerica.com/how-we-work/social-impact/social-impact.html CrowdSolar Baldwin, Doyle & Herr 6 of 27 Tuesday, March 20, 2012

Kiva.org is a non-profit institution that uses the internet and a worldwide network of microfinance institutions to alleviate poverty by empower individuals to lend as little as $25 to entrepreneurs in need. Kivas success has been through building a network of 187 field partners in the 217 countries which has allowed them to loan more than $292 Million US dollars from 713,398 members since 2004.8 There are over 10,000 documented Microfinance Institutions in the world, but the key to their 98.91% repayment rate has been Kivas selective focus on working with well-vetted, growing, and transparent institutions usually considered Tier 1. These field partners of Kiva are required to post photos, tell the individuals stories, and state specifically for what they will use the money. This personal appeal has fed right to that human desire to connect, find commonalities, and hear those stories. The stories have a common thread of what it means to be in poverty and the difficult process of trying to escape.9 By telling the stories and leveraging the human element, Kiva allows microfinance institutions that lack access to capital markets to efficiently raise money and serve more clients. CrowdSolars approach is our unique tool (our online platform) which will cater to the needs of local community investment and involvement facilitation, vetted NABCEP (North American Board of Certified Energy Practitioners) contractor relationships, secure financial transactions, and transparent energy production and return on investment data.

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http://www.kiva.org/about/stats http://media.kiva.org/INNOV0201_flannery_kiva.pdf 7 of 27 Tuesday, March 20, 2012

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Competition
Solar Mosaic, SolarCity & SunRun SolarMosaic (solarmosaic.com) based in of Oakland California is the most direct competition for CrowdSolar. Solar Mosaic offers communities the opportunity to purchase tiles of solar electricity (minimum of $100) through a simple online platform similar to Kiva. SolarMosaic is currently focused upon charity work and philantropic investments where the user simply receives their principle back over the course of the investment WITHOUT interest. They are clearly interested in getting into the legitimate investment market as their website states, Were currently working with the Securities and Exchange Commission to be able to offer you a return on your investment by summer of 2012. They recently added by the summer of 2012 in early March when news of the House JOBS & Crowdfunding Bill surfaced and was posted on Forbes by one of their employees. An addition to SolarMosaic, we will have competition from SolarCity and SunRun as they plan to securitize their solar leases beginning in the summer of 2012. There is plenty of room in this game for CrowdSolar to make a dent with well less than 1% market penetration10 at this point. Additionally, CrowdSolar holds a competitive advantage by focusing from the ground up upon the needs of the investor instead of offering securitization as an afterthought. Our platform builds the ease, transparency, and security not established through bundling and selling leases as securities. Additionally Crowdsolar has the ability for broader reach with its platform and quicker market penetration by using boots that are already on the ground. Crowdsolar will only use experienced and existing local NABCEP (North American Board of Certified Energy Practicioners) certified PV Installers. NABCEP is the gold standard when it comes to
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http://www.iea.org/papers/2010/pv_roadmap.pdf 8 of 27 Tuesday, March 20, 2012

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PV installers and currently there are about 2,000 certified PV Installers throughout the US. As a comparison SolarCity currently employs around 1,200 people, only a fraction of whom are installers and few of whom are NABCEP certified. To get the certification installers not only have to demonstrate proficiency in methodologies and concepts, but must have years of documented installation experience prior to testing. Please see NABCEP.org for more information about this certification. Related: United States Below is a list of other indirect competitors in the crowdfunding realm that could eventually become competition or prove a valuable strategic alliance or partnership. SecondMarket is easily the most credible threat and/or resource in the United States and rumor has it that they spent significant resources to help push the crowdfunding bill through Congress.
SecondMarket https://www.secondmarket.com/ Early Shares http://www.earlyshares.com

SecondMarket is the largest marketplace for alternative investments, including private company stock. Secondmarket works with private companies to centralize and control secondary market activity in their shares, positioning them for further growth. SecondMarket is a registered broker dealer and member of FINRA, MSRB and SIPC, as well as an SEC-registered alternative trading system for private company stock. According to Real Asset Junkie and NIREC Entrepreneur in Residence Nicola Kirkslake, SecondMarket lobbied hard for years to get crowdfunding approved in the U.S. Congress.
Prosper http://www.prosper.com

Founded in 2011, Earlyshares is one of the most powerful platforms for raising investments and seeking projects to invest in. They claim to be the first crowdfunding equity platform per CEO Maurice Lopes Our platform EarlyShares.com is a equity based platform (we are the first one). SecondMarket already occupies this space but only for accredited investors.
Microplace https://www.microplace.com/

We connect people who want to invest money with people who want to borrow money. Related: United Kingdom

You get to invest in something you believe in while making your money back with interest! Daily life would become much more difficult without the financial tools most of us take for granted. Unfortunately, 40% of the world lives in poverty with no access to such resources for managing their financial lives.

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Crowdcube http://www.crowdcube.com/

The world's first business finance crowdfunding platform for businesses to raise equity finance. According to Amy Cortese of Locavesting, Crowdcube, an equity-based crowdfunding site also based in London, just marked its one-year anniversary with 2.7 million raised in equity for 11 companies, including Kammerling's, the maker of a ginseng-based artisanal spirit, and The Rushmore Group, which owns three clubs in London. It even crowdfunded itself to the tune of 300,000.
Funding Circle https://www.fundingcircle.com/

Funding Circle is an online marketplace where people lend to businesses. According to Amy Cortese of Locavesting, Funding Circle, a two-year old London-based website, has raised more than 25 million in loans for British small businesses, earning investors average gross yields of 8%.
Seedrs http://seedrs.com/index.html

Solar schools provide a platform for marketing and implementing a fundraising effort for schools to install solar PV on their facilities. Solar Schools provides each school involved with its own social website where families, friends, students, and community members can make donations, post photos, and write short notes about the project. So far in six months (as of 01-Mar-2012) eight schools have raised a total of $70,000. Five schools will have installed PV systems as of the end of March. The projects have also provided non-monetary benefits such as increase community engagement with the school, paradigm shift of people from complacent toward more eco-conscious, and inspirational and motivating for the children. The primary difference here is that Solar Schools is not returning monies to the investors, rather they are fundraising and leveraging that money raised for additional savings through the years.

Seedrs will revolutionise the way seed-stage businesses are financed. As of March 2012 it does not appear that any business is being conducted through Seedrs as of yet. Amy Cortese calls Seedrs, a soon-to-be launched equity crowdfunding site.
Solar Schools http://www.nesta.org.uk/blogs/assets/fea tures/solar_schools or http://www.solarschools.org.uk/

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Energy Share http://www.energyshare.com/

We cant really do what they are doing because we dont have feed-intariffs but we like some of their ideas about market: Their premise is that whether you want to start a community solar garden, place solar on a community building, or convert a business to solar energy they will help you get there.
People Fund It http://www.peoplefund.it/

Cottage, Hugh's Fish Fight and Chicken Out! which brings together individuals with fresh ideas within fledgling community projects. Grass roots action has the power to effect more remarkable change than we really ever imagined. Peoplefund.it gives people the means to take their ideas forward. - Hugh FearnleyWhittingstall.
Zopa http://www.zopa.com

Peoplefund.it is a new crowd-sourcing website from the makers of River

Zopa is a marketplace for money. Lenders get lovely returns, borrowers get low-cost loans and money becomes human again.

Related: Additional & In-Depth List of Crowdfunding Internationally: http://management-of-innovation.overblog.com/pages/List_of_Crowd_Funding_Web_Sites_and_Web_Sites_To_Find_In vestors-4605700.html

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Management
For the immediate future the company is co-directed by Matthew Doyle and Daniel Herr, actively managed by Daniel Herr, and advised as listed below.

Management Team
Matt Doyle, Candidate for MBA @ University of Nevada, Reno Matthew Doyle has a passion for finances and investing. He also has a desire to share his knowledge to help others. Matthew received a Bachelor of Science in Finance in 2004 from the University of Nevada, Reno. After college, he pursued a career with the Nevada Gaming Control Board and was hired as an investigations agent, which led to a promotion as a senior agent in February 2011. As an agent with the Nevada Gaming Control Board he has gained vast experience in gaming compliance, financial analysis, tax analysis and international and domestic background investigations. As a senior agent he has supervisory authority over several agents. This job has also provided him the opportunity to travel throughout the United States, Europe and the United Kingdom. Matthew spends hi spare time with family and friends. He is an avid golfer, skier, runner and outdoor enthusiast. Matthew is also currently pursuing a Masters in Business Administration from the University of Nevada, Reno. Daniel Herr, E.I.T., Candidate for MBA @ University of Nevada, Reno Daniel received his Bachelors in Civil Engineering from Cornell University in Ithaca, New York and promptly returned back to the west in pursuit of outdoor adventure and entrepreneurial opportunities. After working as a Civil Engineer, recreationalresidential community developer, chasing tornadic supercells in Oklahoma and backpacking throughout New Zealand, Daniel rediscovered his passion for sustainable building practices. Since that time Daniel has been committed to renewable energy, green building, and the enhancement of social well-being. In early 2010 Daniel joined the fledgling Clean Energy Center in Reno, Nevada, took the helm and grew the company from $75,000 to $2.5M in annual sales in two years. Clean Energy Center designs, engineers and installs energy efficiency and renewable energy systems including Solar Photovoltaics, Solar

Thermal, Wind Energy, Ground-Source Heating, LED lighting, and Electric Vehicle Charging Stations. Through Daniels efforts the Clean Energy Center was recognized as a leader in the state of Nevada and received the Nevada Center for Entrepreneurship and Technologys Green Technology Company of the Year Award for 2011. Daniel is currently a Graduate Research Assistant at the University of Nevada, Reno where he is also pursuing his Masters in Business Administration (MBA) while building a new holistic commercial energy solutions company in Nevada.

Board of Advisors:
Chunlin Liu, Ph.D., CFA, Professor @ University of Nevada, Reno Chunlin Liu is a professor at the University of Nevada Reno, a certified financial analyst, and has hundreds of financial publications to his name. Gary Valiere, Ph.D. Professor @ University of Nevada, Reno Gary has written over 300 business plans and built and managed 6 multimillion dollar defense industry businesses. Meredith L Bennett, Executive Administrator, Connor Group Meredith is an expert in the public policy and political arenas. Patrick Baldwin, VP of Sales & Engineering, Better Green Building Company Patrick is a NABCEP Certified PV Technical Sales Professional, thought leader in social business, corporate strategy, and relationship marketing. Owen Shieh, NSF Graduate Research Fellow @ University of Hawaii Owen is a Ph.D. candidate meteorologist with research, operational, and teaching experiences that span a broad range of sectors: from private companies to public service; from academia to defense/military. Duncan Campbell, Founder & Co-Chair of Friends of the Children 501(c)(3) Duncan is a very experienced and successful serial entrepreneur with a vast legal background, expertise in real estate finance and founder of Friends of the Children in Portland, Oregon.

Michael Pennington, Special Projects Administrator, Community Services Agency Michael is extremely resourceful, well connected, and informed creative genius in Nevada.

Operating & Development Strategies

Developing the Crowd
The first and most pressing matter for CrowdSolar is solidifying our legal structure to allow accredited investors (and eventually non-accredited average investors) to legally receive a return on their investment and not be taxed extremely. We will proceed by forming the first investment vehicle, getting the necessary licensing, preparing legal structure for tax-credit and depreciation pass-through (as possible) and preparing for our first round of pilot projects during 2012 with construction to begin in 2013. If allowable we plan to use a portion of the monies to fund a small proof of concept pilot project. The initial focus of Crowdsolar is obviously on Solar Photovoltaics. Solar is the most widely visible renewable / efficiency technology in the marketplace and often the easiest to understand for investors. In the future we anticipate branching into investment vehicles that include additional forms of renewable energy, energy efficiency and building performance contracts. We anticipate that home and commercial building performance contracting will be the fastest growing trade in the next decade. Milestones Mar - Jun 2012: Initial Funding & Competition Rounds Mar - Dec 2012: Active Recruitment of Board of Advisors & Investing Member-Employees May - Dec 2012: Online Platform Development Aug - Dec 2012: Beta Platform Testing Aug - Dec 2012: Pilot Project CrowdFunding Rounds Jan - Feb 2012: Pilot Project Design & Planning Feb - Mar 2013: Pilot Project Procurement Mar - May 2013: Pilot Project Installations & Commissioning Feb - Aug 2013: Second Business Funding Round Apr - May 2013: Project Recap, Analysis, & Strategic Implementation Plan May - Jun 2013: Full Online Platform Release May - Aug 2013: Heavy Project Recruitment Jul - Sep 2013: Full-Operation: First True Cash Inflow (Not In Black)

Jul - Jul 2014: Rinse & Repeat: Scale and Work to get in Black

Legal Structure Until proven otherwise Crowdsolar plans to use an asset-backed securities model for investment. If possible we will use the SCOR U-7 Form from NASAA in filing for our Securities and Exchange Commission 504 Rule offering exemptions for selling up to $1,000,000 to accredited investors without registration with the SEC. This will allow us to sell up to 210kW systems without an issue so long as each project is its own offering. There is the possibility of providing a public offering in Nevada up to $5,000,000, but that would require that we only sell to residents of Nevada, and any sale outside of the state, or to someone whose residency is questioned, could violate the exemption. Our legal framework is in the process of being ironed out and a portion of the funds from this competition will go toward that end. Once the CrowdSolar platform is solidified with accredited investors, the company plans to build a vehicle which allows non-accredited investor the abilities to participate in and receive returns from solar projects. For the time being and until legislation and rules regarding non-accredited investor investments are solidified, the average person cannot legally invest (for a return) nor be advertised to regarding investment opportunities (public offerings) without a large (likely $100k + investment) on every project. One other exemption we are investigating is the ability to circumvent the no general solicitation and advertising by focusing on inbound marketing to acquire investors without soliciting. Our plan is not based around this approach and the legality surrounding this approach is uncertain.

Differentiated Marketing Focus

True to our companys modern name, Crowdsolars approach to marketing is focused around inbound marketing. The first and most important building block is being found by those who are looking for you. More than ever people are turning to the internet to find and get references for what they should purchase and from whom they should buy. The facts dont lie, 77.3% of people in the United States are on the internet. Within out target market 95% of all households earning over $75,000 / year use the internet and have a cell phone.11 Approximately 50% of internet users in 2011 used a search engine daily12 and of those 66% used Google to search.13 Online we can engage the majority of our market, and in
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http://pewinternet.org/Reports/2010/Better-off-households/Overview.aspx http://askville.amazon.com/percentage-internet-users-search-engines/AnswerViewer.do? requestId=13926336 13 http://www.forbes.com/sites/greatspeculations/2012/01/17/bings-market-share-squeakshigher-google-still-gorilla-of-search/

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the information age you need to be Google-able. Our foundation will start by allowing all 50 million14 plus mobile Internet users to pull out their iPhone or Android and Google for us. Building upon this foundation, our crowd-involved business is all about the lifetime value of customer as opposed to the one-time sale. The simple fact of the matter is people buy from humans, not from companies, or logos, websites, or buildings. We will weigh heavily on social media marketing by building and curating valuable content that will attract and convert consumers into customers. The real key in social media marketing is not about being ON social, its about BEING social. Speak with your customers, not at them. The personnel strategy for CrowdSolar includes the initial focus on recruitment of experienced platform framework engineers and graphical design personnel. We are looking to recruit the best with competitive salaries, and emphasis on personal freedom and healthy lifestyle. Being relatively close to Silicon Valley and offering all of the diverse recreation opportunities of Lake Tahoe and the Sierra Nevadas, we believe CrowdSolar provides very compelling opportunities in Reno, Nevada. We will administer and manage these employees and the company with effective communication, inclusion, and a focus on the company values of Integrity, Respect, Honesty, Compassion, Healthy Lifestyle, Curiosity, Solutions, Intellect and Determination. Research and development strategy is to use social media monitoring software as much as possible to determine the needs and desires of our customers. Financially we aim to be transparent and aggressive looking to build and maintain an edge beyond simply compliance. The largest gorilla for our guerilla marketing strategies to tackle is the overarching mindset that solar is too expensive. Right now business owners throughout the country are inactively looking for solutions to their rising electricity costs. Most peoples immediate tendencies are to complain about a problem well before considering how to solve it. One of our tactics for attracting and identifying customers will be to create social pages and groups where individuals can Like campaigns such as Peak Demand Charges Suck or Commercial Energy Bills in Reno are Too High. If we own these pages, we can begin to interact with the customers that might be interested in saving money on their electricity bills by going with CrowdSolar.

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http://www.digitalbuzzblog.com/2011-mobile-statistics-stats-facts-marketing-infographic/

Working with and finding Building Owners

Our firsthand experience show that corporations and small business owner alike are often unwilling to dive into making a big change such as going solar without significant consideration and time for thought. The typical sales cycle for photovoltaic projects is approximately 6-8 months. Part of our focus in developing our inbound marketing efforts will be to provide business owners with tools which allow them to discover the value potential of a solar investment, read case studies of similar businesses and property owners, and ultimately evaluate the risk and return for their building. The people most willing to commit to a large PV project have done much research on their own. The second tier to CrowdSolars success hinges upon our adequately trained and experienced technical sales professionals. The number one guiding principle of sales staff is be honesty. Our focus is upon relationship sales, lifetime values of customers, and technically proficient but easily understood explanations. Two of CrowdSolars found members & Board of Advisors have been personally responsible for building a solar photovoltaic installation company from ground zero to $2.5 million in annual sales in two years. CrowdSolar will help national and multi-national businesses decide which of their locations are most appropriate for a solar upgrade and CrowdSolar investment. The selling point we are shooting for is if the business owner can pay forward 3 months worth of energy bills, their utility expenses will be dramatically reduced over the next 40 years. The terms of CrowdSolars leases will be 15years while the life of the system is roughly 30 to 40 years. Not only will the building owners be saving money on their electricity from day one, but come year fifteen they have the right to purchase the system for $1.00 and pay nothing15 for electricity for the next 15 to 25 years. Solar is generally a 15-20 year asset with a 40 year life and a 5-year MACRS depreciation schedule. For more information about these incentives please visit the Database of State Incentives for Renewables & Efficiency at dsireusa.org.

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The only caveat being that most electricity provider have a minimum monthly bill (say $15.00 / month) to stay connected to the grid and receive net metering privileges.

Financial Highlights
Three Years to Real Revenue
CrowdSolar collects money in three parts for any given project via an Administrative Fee, Markup on Materials, and a Management Fee for Monthly Payments from building owners. The total amount of any given project coming into CrowdSolar is approximately 11.5 - 12%. 50kW will be the largest of the year-1 pilot projects, but within five years our goal is to perform multiple projects per year between the 100kW and 1MW mark. For a typical 50kW PV system (a $233,000 project) CrowdSolar would retain the following:
Income Source Administrative Setup Fee - CrowdSolar Monthly Payment - CrowdSolar Profit on Materials - CrowdSolar Amount $ 3,441.81 $ 3,740.40 $ 20,000.00

The administrative fee is paid by the building owner at the outset of the project. At 1.5% of the project cost, or the equivalent of about three months of current electricity bills, that amount should be manageable yet require the building owner to have some significant skin in the game. In exchange for the signed contract and three months utilities, the building owner will receive a 15-year lease which provides a 14.5 times savings (net present value) on their money invested. This amounts to in excess of a 40% ROI which does not include the savings for years 16-40 where they receive free electricity for their $1 buy-out (if they so choose). The breakdown in overall system costs that an owner pays throughout the 15-year lease of the system are approximately as follows:

Based upon our milestones defined above the financial plan expects to bring revenue to the table starting in August, 2012. During 2012 (year 1) CrowdSolar plans to begin raising funds for 4 projects totaling 90,000W (or 90 kilowatts) with a total investment cost of approximately $412,000. Monies will likely be held in an escrow until the project is fully funded, however, so CrowdSolar will first see a cash flow in early 2013. One of the largest benefits of the model we have crafted is the absence of a need work working capital once the business is off of the ground. Major costs, including full system design and materials purchases, are not incurred on projects until they have full funded by a group of investors. With the help of our NABCEP certified PV Technical Sales Professionals we can size a system, determine the investment requirements, and estimate annual production with a level of certainty for every project prior to providing offering details. We will provide our potential investors with pictures of the site, descriptions and models of a potential system, and a story about (as well as an appeal from) the building owner about the need for the system.

Break Even Analysis

Our biggest financial hurdle is the cost of the platform development to which we have been referring. We have estimated that our development expenses in hiring for and managing the development of the platform will take $1,000,000 by year three to see us over the hump. We anticipate break-even by forthquarter of year five. Assessed System Value One trick of the trade that is employed by SunRun and SolarCity is in appraising the value of the system higher than the installed cost. The typical and accepted method employed (see the Appraisal Journal of October, 199816) for the value of photovoltiac systems is to calculate the Net Present Value of 20-years of electricity generation and consider that the value of the system. In locations where the electricity prices are significantly high (say California or New York) this trick can dramatically change the dynamics of a systems cost be increasing the tax-credits (by increasing the tax basis) thereby decreasing the overall investment cost. For example with the 50kW system described above, if I can appraise that system in California where the electricity costs are $0.20/kWh, that $233,000 system will appraise for $367,000 knocking an extra $34,000 off the final price tag via the Investment Tax Credits. While our ultimate goal is to make our investments sustainable without the use of these incentives, for the time being our numbers only look better with their use. CrowdSolars numbers do not rely upon nor consider rebates. Any rebate addition to the project will improve the returns dramatically for all involved. Currently in the State of Nevada, the Renewable Generations Rebate programs rolls around semi-annually though the Public Utilities Commissioned moved this month (March) to drop all incentive levels by $1/Watt. The current levels are as follows: Category Residential/Small Business Schools Public
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Incentive Rate Per Watt $1.70 $4.70 $4.70

http://www.ongrid.net/AppraisalJournalPVValue10.98.pdf

California requires that all utilities within the state serving more than 75,000 customers offer a rebate or a feed-in-tarrif. The California market is very saturate, though there are a wealth of opportunities in the eastern Sierra Nevadas not currently served by communities other than Reno. Our goal, however, it to perform projects throughout the Western / Pacific states within five years.

Economic Impact
Through our workforce demand and recruiting CrowdSolars plan will bring high-skill, high-income employees to Northern Nevada as well as putting local contractors back to work installing commercial photovoltaic systems in the area. Thirdly CrowdSolar will fill its need for professional services through local companies, partnerships and individuals such as Lawyer, Brokers, and CPA. These high-income low overhead professionals are strategic areas for development in-line with the Governors of Nevadas economic plan and EDAWNs forwarding looking strategic efforts. The platform and model developed by CrowdSolar will be applicable for crowdfunding and volunteer incentivism projects in the future. CrowdSolar aims to turn the Reno / Tahoe area into the crowdfunding knowledge-base and mecca in the west, though we are a long way out from that yet.

Use of Funds
CrowdSolar aims to leverage 25% of the funds from this competition in conjunction with rebate monies from NV Energy for a small proof of concept project for a non-profit or school building in the Reno / Sparks area. CrowdSolar will likely perform the first project in conjunction with Black Rock Solar, a local not-for-profit solar installation company with offices in San Francisco, leveraging their ability to pull together grants, and approach the Energy Foundation (based in San Francisco) and others for a grant. Additionally, pursuant to the availability in the rules, a small portion of the award (likely 10%) will be used to pay off educational debt incurred through the MBA program which will allow the team members to focus more upon securely establishing the business and pulling together future funding. The remainder of the funds (65%) will go toward building the online foundations for our social media marketing campaign, our website, and travel for establishing investor relationships, meeting with strategic partners, visiting potential installation sites, and recruiting the most powerful board of advisors possible. Idealistically this would include some of the following players: Elon Musk, Founder / CEO of SpaceX, SolarCity, PayPal, & Tesla Matt Flannery, Co-Founder and CEO, Kiva.org

Eric Schmidt, Executive Chairman of the Board, Google Jeffery Wolfe, President & CEO of groSolar Peter Aschenbrenner, VP of corporate strategy, SunPower Kevin Shimokobe, CEO, SolarNet Holdings (Owner of SolarDepot & DC Power Systems) Mr. Ulderico Calero, Jr., Executive Vice President - Community Banking of Umpqua Holdings Corporation Tony Fadell, Founder & CEO, Nest Labs

Our most directly accessible is Matt Flannery of Kiva who is a family friend of one of our current advisory board members. Others are a few degrees away still.

Risk Assessment
Solar energy is great from a risk and design perspective as it is understood, measurable, and has a calculated risk of production. Production varies day to day based upon cloud cover and direct sunlight at any given hour, but for a given location, especially in the United States, we have years of climatological weather data and know the average and distribution of sun-hours per day. Based upon 30-year weather records we know for instance that Reno, Nevada receives on average 5.96 sun-hours per day, accounting for inclimate weather for all times of the year. Tools such as NRELs PV Watts allow us to generate precise production values for any location in the United States. We will provide as much detail about production-risk as possible to every investor for every project. CrowdSolar will provide a stamped letter from an independent state licensed Electrical Engineer indicating the estimated annual production for every system. For larger systems (in excess of 1 MW) CrowdSolar can eventually provide power performance insurance from vendors such as G Cube17. The largest risk for CrowdSolar projects is loss of building or business owner. Business relocation, reorganization, foreclosed-upon properties and bankruptcy are unfortunately part of the game. CrowdSolars management is working hard to hedge against these risks by develop a lease agreement that survives the current building owner and provides contingencies for sale and transfer of property. We are currently sorting out the specifics of these agreements.
17

http://www.gcube-insurance.com/

Secondly, online security is a must and CrowdSolar aims to make every precaution and adopt best practices against invasion of privacy, fraud, and theft online. Thirdly, in terms of system performance and warranty, CrowdSolar will only contract with licensed, project bonded, and insured contractors who are NABCEP certified. By contracting solely with locally certified NABCEP PV Installers, the majority risk regarding workmanship warranty is maintained where it belongs, with the state-licensed electrical contractor. We plan to establish working relationships and written agreements with our select local contractors to ensure timely response to service needs should they arise.

Offering
CrowdSolar is currently seeking investors, strategic partners, and a board of advisors in getting us to the next level. Ideally we are recruiting investorpartners who will help feed the coffers and dedicate substantial efforts toward this business. We expect to hit the black prior to year five. To make it over the hump, CrowdSolar is seeking investments of $1.25 million over the next three years with a requirement of $600,000 during year 1. Our initial assessment of the return potential is less than seven years. Our expectation is $700,000 in annual earnings (before interest, tax, depreciation, or amortization) by year five. Our model has the potential of global reach and expansion well beyond Nevada, California and the pacific states. Solar projects are large and the sales cycles is long, so while we would like to have a huge return within five years, the promise is on a longer steady growth path.

Appendix A: Financial Background Information

Appendix B: References & Notes