SANTA CLARA, Calif. — Ann Arbor-based Augment Ventures announced Monday it was part of a recent $2 million Series A investment in Santa Clara, Calif-based Mercatus Inc.
Mercatus develops origination and syndication management technology for the energy project finance industry, helping investors make asset-class portfolio decisions.
Of the investment, Augment Ventures founder and managing director Sonali Vijayavargiya said, “Mercatus is well-positioned to transform analytics for distributed energy generation projects by delivering consistent, traceable and measurable metrics to investors and project developers. Rapid deployment of Mercatus will bring standardization to the investment process and documentation, resulting in faster capital allocation, increased return on capital and much needed liquidity to the sector.”
The round was led by Vision Ridge Partners and also included Shah Capital.
Since its 2009 inception, Mercatus, formerly SCS Renewables, has assessed over 3.2 gigawatts of solar projects, while enabling $250 million in investments and transactions. It currently serves more than 40 percent of the United States commercial and utility solar markets and counts the industry’s top global developers, institutional investors and independent power producers as customers.
“Today’s distributed energy industry is facing a significant challenge: how to rapidly deploy capital to projects,” said Reuben Munger, managing partner at Vision Ridge Partners. “By applying best practices and standardization to this critical piece of the value chain, Mercatus is accelerating fund decisions and enabling the creation of effective pooled investment vehicles.”
The energy world has seen massive shifts in the last 12 months. While the cost of technology and installation have fallen dramatically, one factor has remained constant — the high cost of financing. Developers, tasked with originating bankable projects, are failing to attract capital as evidenced by abysmal closure rates of 3 to 5 percent a year. And energy investors, lacking the resources, best practices and in some cases, domain expertise, to make expedient decisions are simply not deploying capital.
To solve this gap, Mercatus introduced origination and syndication management. Based on four years of due diligence and transactions with 40 of the top U.S. financial organizations, the Mercatus platform translates those key investment and underwriting criteria into the first consistent and common language for developers and investors to assess, appraise and ultimately syndicate project portfolios.
Developers simply load project information onto the Mercatus platform and 48 hours later, the project receives the industry’s first FICO score equivalent, which is visible to developers and investors alike.
The Mercatus platform is based on a proprietary appraisal methodology that rates eight key categories, which provides a holistic assessment of each project’s economic and risk profile and acts as a single point of truth for investors as they race to find the best projects. Developers, who once struggled to understand investors’ criteria for bankability, now have a transparent view of what makes a project financeable, while energy investors looking to find the best projects first depend on the Mercatus FICO-like score to accelerate decision-making and reduce diligence inefficiencies for optimal aggregation and syndication.
“As Wall Street begins to eye the industry as an emerging asset class, a sophisticated solution for end to end origination and syndication management is needed to help the industry reach its full potential, both as a mainstream source of distributed generation and a viable asset class,” said Haresh Patel, CEO of Mercatus. “Our comprehensive solution slashing financing costs of energy projects by up to 50 percent and provides a bridge for more than $35 trillion of institutional investment into energy infrastructure projects.”
More at www.gomercatus.com.