Blog Published: June 2017
Namaste Solar has concluded its second successful private offering, raising over $3.1 million from over 91 investors. The company’s private offering, which officially closed at the end of 2016, sought financing primarily for working capital, the national expansion of the company’s commercial and utility-scale solar energy division, and new initiatives such as a clean energy credit union.
Unlike traditional stock offerings, as an employee-owned cooperative, Namaste Solar provides a class of non-voting preferred stock to external investors with an annual 6.5% target dividend, which is non-cumulative and non-guaranteed.
“Since Namaste Solar was founded in 2004, we’ve needed a lot of capital in order to fund our rapid growth, which has been at a 50% compound annual growth rate during our 12-year history. In our first several years, all of our money came from our employee-owners investing in the company, but we started to reach limitations,” said Blake Jones, Co-Founder of Namaste Solar.
“As an employee-owned cooperative, we had always thought that we wouldn’t be able to raise money from outside of the company. We were concerned that we couldn’t find values-aligned investors who wanted to support our cooperative model, but we’ve since learned that this isn’t the case,” said Jones.
Raising outside capital can be a challenge for any small or medium business. Traditional private investors demand high returns in a short timeframe, pushing most entrepreneurs to build the business fast and flip it within a few years. In addition to imposing liquidity pressure, venture capital and private equity firms generally demand direct control through stock ownership and seats on the company’s board.
But as an employee-owned cooperative, only employees of Namaste Solar can vote for the board, and they hold the majority of board seats. Because Namaste Solar does not plan to sell, the company sought financing from long-term investors who valued employee-ownership and environmental stewardship over fast returns.
A growing number of entrepreneurs are starting companies with the intention of creating a financial return while also having a positive impact on society and the environment. Such entrepreneurs are seeking capital from the growing “impact investing” movement in which investors look for both financial returns and positive impacts on other stakeholders.
“Impact investing is not just about trying to make as much money as you possibly can and accepting the collateral damage that happens to the environment, to our communities, to society. Instead, we can use business as a force for good,” said Jones. “More and more people want to invest in a way that’s aligned with their values. If more people realized there were more opportunities to invest in companies that are locally based, employee-owned, B-Corp certified, and not just the usual investments in Wall Street, I think they would do it."
"And that’s exactly what we’ve seen during our two private offerings," Jones said. "There is a tremendous opportunity to make positive impacts on our economy, society, and environment while still working within the framework of capitalism.”
“We saw the positive examples being set by other cooperatives that raised capital, like Equal Exchange, an employee-owned cooperative in Massachusetts, and Organic Valley, a farmer-owned cooperative based in Wisconsin, and this gave us the confidence to conduct our first private offering in 2012. We were thrilled by how many investors were looking for exactly the kind of investment opportunity that Namaste Solar represented,” said Jones.
“After raising almost $750,000 in 2012, it boosted our confidence that it was possible to tap into a different, values-aligned source of capital to fund our ongoing growth needs in a way that doesn’t compromise the way we do business," Jones said. "This helped set the stage for our second private offering, which helped us raise over $3 million.”
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