A Baltimore company that provides financing to make solar panels more accessible to small businesses has raised a $20 million series A round.
Sunstone Credit plans to hire 20 people with the new funding, mostly focusing on software engineering and financial operations. The round comes as new federal incentives along with a global focus on sustainability and energy security are massively increasing the market for solar energy in the United States.
The 25-person company, which is currently entirely remote, plans to move into a physical office in Baltimore City or the county. Sunstone provides loan financing for companies that want to install solar panels on a commercial building, like a warehouse.
An affiliate fund of green energy investment firm Greenbacker Capital Management led Sunstone Credit’s round, according to a release Tuesday. Earthshot Ventures, Grotech Ventures, Cross River Digital Ventures and Forbright Bank also participated. As part of the funding round, Grotech Ventures General Partner Lawson Devries will join the Sunstone board of directors.
Unlike traditional banks that treat solar like other more traditional pieces of commercial equipment, Sunstone provides loan financing customized for solar. Sunstone loans are more flexible with five to 20-year terms. Co-founder and CEO Josh Goldberg said Sunstone also works faster than traditional banks. Sunstone underwrites a loan in two or three business days, he added, compared to a traditional commercial loan that can take two or three months.
Sunstone Credit is trying to fix a problem that has plagued the solar industry since Goldberg began working in the nascent field in the early 2000s. Goldberg found that many of his residential solar clients at Annapolis Junction-based Astrum Solar were interested in having solar panels on their business along with their homes. No financing existed to facilitate a large commercial project like covering a warehouse roof in solar panels. Though solar panels are often a good economic deal for a business because it reduces long-term electricity bills, it has a large startup cost.
"Imagine if you could only buy commercial real estate by paying cash up front. People wouldn't buy as much. You need financing," Goldberg said.
Goldberg and Sunstone Credit co-founder Wilson Chang founded Sunlight Financial in 2014, a company that provides financing for homeowners to install solar panels. The company went public in 2021.
Sunstone Credit has quickly found an audience since being founded in 2021, fielding $200 million in loan applications last year. Goldberg hopes to triple the number of loans in 2023. The company’s loans are financed by Cross River Bank and Forbright Bank.
The series A round is not the first time Sunstone Credit has attracted venture capital attention. The company previously raised around $4.5 million in a seed round with participation from Forbright Bank, Cross River Digital Ventures, Grotech Ventures, Early Light Ventures and the University System of Maryland Momentum Fund.
The Sunstone funding round comes as the federal government is making a large push toward expanding the solar industry with a variety of new tax breaks. President Joe Biden hopes to increase the community solar sector alone by 700%, creating a massive opportunity for companies to expand. Customers are also demanding that businesses pay more attention to environmental sustainability and the impacts of climate change, so solar panels are a way to gain new customers. The recent failures of electrical grids in Texas and other areas have made solar an appealing prospect for businesses that want to have more control of their own electricity without relying on the grid, Goldberg said. Baltimore-area companies have already begun to jump on the solar trend. For example, local developer St. Johns Properties is adding solar panels to all its new buildings.
"The nice thing with solar is if you're the homeowner or business is that it's truly like a life-changing experience," Goldberg said. "If you go solar, you're saving money and you're doing something good."
