Crowdfunding for investments in solar energy projects

Currently, tens of thousands of banks, investment funds private equity and investors around the world are eager to include ESG investments (Environmental, Social & Governance) in their portfolios.

Enterprises generating photovoltaic solar energy They are sought after targets in this environment due to their strong sustainable appeal and high income predictability.

According to a study released this year by BNEF (BloombergNEF), around half of the new power generation projects that came into operation around the world in 2019 were solar energy ventures, which elevated it to fourth position among the most used energy sources globally, behind only thermal energy (resulting from the burning of coal and gas) and hydroelectric energy, surpassing wind energy in absolute numbers.

Recently, in your annual letter aimed at CEOs of companies, Lerry Fink, CEO and founder of BlackRock, the largest investment manager on the planet, with more than US$ 7 trillion under his management, announced a series of initiatives to put ESG investments at the center of portfolio construction and asset management. fund risk, giving a clear message that BlackRock will liquidate investments in companies with high environmental risk, such as coal-fired thermal power plants, thus freeing up an extraordinary volume of financial resources for ESG investments.

However, these financial resources are generally not within the reach of small and medium-sized entrepreneurs in the photovoltaic solar energy generation sector, either due to their low financial capacity to grant loan guarantees, or due to the size of their projects, which They are generally below the interest range of major players in the financial market.

Given this scenario, investment crowdfunding, regulated by Instruction 588/2017 from the CVM (Securities Commission), becomes an excellent alternative for small and medium-sized entrepreneurs to raise funds to carry out their photovoltaic solar energy generating plant projects.

Through electronic investment crowdfunding platforms on the internet, small and medium-sized entrepreneurs can publicly offer a large number of people the opportunity to invest safely in solar energy generation projects, guaranteeing a good financial return, and thus raising capital resources. quick and low-cost way to carry out such projects.

In this type of public investment offer, entrepreneurs can offer potential investors shares in the company, which will hold the rights to the invested solar energy generation project, without the need to register the companies targeted for investment or the investment offer itself. investment in CVM.

Companies qualified for public offering of investment crowdfunding

To raise funds through investment crowdfunding, the company targeted for fundraising must be classified as a small company under the terms of CVM Instruction 588/2017, simultaneously fulfilling the following requirements:

• (i) be incorporated and have headquarters in Brazil;
• (ii) have annual gross revenue of up to R$ 10 million; It is
• (iii) not have registration as a securities issuing entity with the CVM.

For purposes of meeting the revenue limit required by CVM Instruction 588/2017, the gross revenue calculated in the fiscal year ending in the year prior to the availability of the offer on the electronic platform is considered; If the target company is controlled by another company or investment fund, annual gross revenue will be considered the revenue from the group of entities that are under common control.

Electronic investment crowdfunding platforms

To raise funds through investment crowdfunding, entrepreneurs must hire an electronic platform that will structure and publicize the fundraising operation.

According to the CVM website, there are currently only 31 investment crowdfunding platforms authorized to operate in Brazil.

Electronic platforms are controlled by companies that mediate public investment crowdfunding offers that connect investors and target companies.

These platforms must be registered with the CVM and perform the function of gatekeeper (guardian) of investment crowdfunding operations, assuming obligations relating to the guidance of investors, the dissemination of information on invested companies and offers, the transfer of resources from investors to companies investees, as well as verifying compliance with legal and contractual aspects of operations.

Features of public investment crowdfunding offers

The maximum value of each fundraising operation is R$ 5 million, which may comprise the total or partial value of the investment necessary to carry out the project to be financed.

The duration of the public offering must be defined before its launch and cannot exceed 180 (one hundred and eighty) days; During this period, the electronic platform will make essential information about the offer and the issuing company, the risks and contractual aspects of the funding available to the public.

Investors have the right to withdraw from the investment within seven days from the contract date without any fine or penalty being imposed on them; After this period has elapsed, once the offer has been successfully completed and investments have been made in the company targeted for fundraising, the electronic platform will be responsible for sending investors the investment contract duly signed by all parties.

The company that successfully completes a fundraising operation through investment crowdfunding will not be able to carry out another offer of this nature within 120 days, counting from the closing date of the operation.

Target investors of public investment crowdfunding offers

Qualified investors (those with investment net worth exceeding R$ 1 million) can freely invest in crowdfunding operations, without limitation on the amount; Ordinary investors may invest up to R$ 10 thousand per year, except if they declare investment income or net worth exceeding R$ 100 thousand per year, in which case they may invest in investment crowdfunding operations the amount equivalent to 10% of the value of annual income or of your invested net worth, whichever is greater.

As an example, an investor who has an annual income of R$ 150 thousand and net worth in investments of R$ 500 thousand may invest R$ 50 thousand per year in investment crowdfunding; Another investor who has the same annual income of R$ 150 thousand but invested net worth of R$ 100 thousand, will be able to invest only R$ 15 thousand per year in investment crowdfunding.

According to the CROWDINVEST (Brazilian Investment Crowdfunding Association), between 2014 and July 2017, when Instruction 588/2017 was published, 60 investment crowdfunding operations were successfully completed in the country, resulting in the raising of R$ 20 million by small companies and estimated It is expected that over the next 5 years, investment crowdfunding operations in Brazil will generate between R$ 150 million and R$ 200 million in funding for small companies.

Due to the great demand for ESG investments, it is very likely that a significant volume of financial resources will be allocated to the execution of photovoltaic solar energy generation projects, with investment crowdfunding being a simple and accessible way of raising funds for small and medium-sized entrepreneurs. of the photovoltaic solar energy generation market.