BOULDER – Wunder Capital – a Boulder startup aimed at connecting accredited investors with medium-sized businesses looking to install rooftop solar equipment – closed recently on a $3.6 million Series A funding round that will help the company continue to expand its reach.
Boulder-based Techstars Ventures, Washington-based Fenway Summer and New York-based Fintech Collective led the round.
The cash infusion comes as Wunder is fresh off of a move from Galvanize’s Boulder campus to a new office at 17th and Walnut. CEO and cofounder Bryan Birsic said the seven-person company will grow by three or four employees over the next couple of months and likely double to 15 by the end of the year – adding to its engineering, design and marketing teams.
“We think even in a very conservative case this gives us two years (to reach profitability or raise another round of funding),” Birsic said in a phone interview. “It’s a nice amount of time.”
Wunder, founded in 2013 and a 2014 graduate of the Techstars Boulder accelerator, currently offers a pair of funds in which investors can place as little as $1,000 and have immediate diversification across a number of large-scale solar projects.
The company’s first fund is aimed at lending directly to businesses installing solar. The businesses essentially receive a 6 percent loan paid back to investors in the fund over 10 years. The second fund, which launched in November, provides shorter-term bridge funding to installers and offers investors 11 percent annual interest over two years.
Wunder originates, underwrites and services the loans, making its money by charging an upfront loan origination fee and an ongoing loan-servicing fee to the borrower.
Wunder has brought in more than $1 million across the two funds that has been used to back an undisclosed number of projects to date. Birsic said the average investment has so far been more than $15,000.
The investment in solar is a strong one for investors, Birsic said, not only because of the increasingly strong market for the industry but also because the asset and structure of Wunder’s loans help reduce risk. In the case of the first fund, for example, part of Wunder’s original contract with borrowers is to grant the company a $1 per year site lease. So if the borrower defaults on the loan, Wunder still can access the panels to service and operate them, and can sell the power they generate either back onto the grid or to a new tenant of the building they’re installed on.
The model gives individual investors who might not have the capital to invest in major utility-scale solar projects an in to the solar industry.
But Jason Seats, a partner at Techstars focused on the organization’s investment arm, said the Wunder model also is providing loan capital for solar to businesses for smaller-sized projects for which large institutional investors won’t generally bother lending money.
“They’re aiming at a segment of the market of commercial solar that is typically understood to be hard to underwrite from a risk standpoint,” Seats said.
The model is particularly timely, Seats said, because as the cost of solar decreases relative to retail power costs, the financing payments start to feel more and more just like a monthly utility payment and less like a business is paying a premium for solar power.
“Eventually those curves are going to cross,” Seats said. “That’s started happening over the last year, and it’s just going to get more dramatic. There’s a lot of hunger in the market for this type of capital. It’s just figuring out the structure.”
Birsic, who cofounded Wunder with Dave Riess and Sam Beaudin, declined to disclose revenue for Wunder. He said he believes Wunder is fully capable of reaching profitability within the next couple of years and could stand on its own at that point.
“But my suspicion is we’re growing quite well and would like to bring in more capital to grow even faster,” Birsic said.
Correction: The original version of this story stated the minimum investment to Wunder Capital funds as $5,000 instead of $1,000.