Concentro – a clean energy financing platform – announced it closed a seed round of $3 million in an oversubscribed deal led by firstminute Capital, with participation from Silence VC, LifeX, Plug & Play, & Avesta Fund. Other participants include existing investors J Ventures, Contour Venture Partners, & Dorm Room Fund, and various angels and VC scout networks.
Consent is the fully integrated financing engine for the clean energy middle market. Despite the hundreds of billions of dollars invested annually in clean energy, accessing funds and financing projects remains challenging, especially for mid-sized developers and projects who often struggle to get projects across the finish line.
One example of this problem applies to tax credits, which account for over 30% of the financing stack of clean energy projects in the US. While the Inflation Reduction Act of 2022 allocated over $210 billion in tax credits to subsidize clean energy development in the US and unlocked transferability, enabling projects without sufficient tax liabilities to transfer tax credits to third parties, the middle market of clean energy continues to struggle to leverage this newly unlocked financing mechanism.
For example, a $1 million Commercial & Industrial Solar project earning a $300,000 tax credit would find it difficult to transfer the tax credits. This is because typical buyer tickets start at $5 million, and tax credit insurance providers generally won’t cover projects smaller than this. And the high transaction costs, including legal and CPA, ruin the economics of transferring. As a result, only large developers can access the market quickly, leaving smaller projects at a disadvantage.
This is impacting the US economy and efforts to fight climate change. These middle-sized (i.e., distributed generation) projects are typically located closer to where energy is consumed, leading to a more efficient grid and avoiding (very long) interconnection queues slowing deployment. This is where Concentro can help.
The Concentro platform takes a personalized approach, beyond providing a marketplace, to enable distributed generation companies to sell transferable tax credits without the complexity and hassle of traditional tax equity financing structures. From a buyer perspective, it provides a white glove solution for US corporations to reduce their federal tax liability while accelerating renewable energy projects, making it also accessible for smaller corporations that lack the resources to navigate the opportunity.
Concentro was launched by Inigo & Tao, who met while at Harvard Business School. Both have previous founding experience and strong operational backgrounds, having worked at McKinsey, Goldman Sachs & KPMG. Concentro will use the funding to grow its team and expand its technology product, enabling more transactions to close on its platform. Concentro is based in New York, United States.
KEY QUOTES:
“Today, there are billions of dollars sitting on the sidelines because many developers cannot access cost-effective financing. Lack of scale, high transaction costs as well as complexity to transact means that many developers find it hard to finance their projects, leaving a massive gap in the market for financing these projects. Concentro is leveraging technology to streamline the transaction and diligence process so that middle-market developers can finally access the financing they need to bring their projects to life.”
- Inigo Rengifo Melia, Co-Founder & CEO
“The Inflation Reduction Act was supposed to provide all developers and their projects – large and small – with a more streamlined way to monetize their tax credits, but we feel more needs to be done to enable transferability for the middle-market. We’ve been busy closing transactions this year and our pipeline continues to grow so we feel we’ve hit a clear need in the market.”
- Tao Mantaras, Co-Founder & COO
“We’re incredibly excited about the recent regulatory shifts that have taken place in the clean energy tax credits market. The new rules enabling their transferability are primed to increase the market size of transactions to $40bn annually within the next 10 years in the US. Concentro – by being a trusted financial intermediary and software layer between developers and global corporates – is providing crucial infrastructure to unlock this investment and drive innovation in the renewables and decarbonisation financial markets.”
- Sam Endacott, Partner at firstminute Capital
