Wednesday, 8 March 2023

Banyan wants to unlock financing for a (more) sustainable future

by Berkeley Lovelace

When it comes to sustainable infrastructure development, technology is making terrific leaps and bounds. The money to make it happen, however? That leaves a thing or two to be desired. For one thing, the processes remain largely manual, with financing in this sector remaining reliant on emails, spreadsheets and documents in a variety of formats. Streamlined, and indeed sustainable, it ain’t. With its $25 million Series B funding — which takes its total funding to over $42 million — Banyan Infrastructure is seeking to align sustainable project finance with the technology it is meant to support and develop.

Old-school systems probably didn’t quite do it for old-school oil and gas investments, but they damn sure don’t cut it for newer, greener, more sustainable technologies. These are usually smaller deals — typical commercial and industrial deals are between $1 million and $5 million —  where financing comes from more distributed sources, which means that the time required to coordinate them and perform due diligence is sizable. 

For Banyan, these inefficiencies in communication and monitoring are pain points it wants to solve with its purpose-built project finance software. With it, banks, financiers and developers should be able to automate and track complex project finance transactions with a unified risk and data management system. It estimates that it can save up to 1,000 hours for every loan processed.

Farewell tedious and time-consuming manual systems, good morning digitized loans and workflows in addition to automating data ingestion, risk monitoring and contractual compliance for each loan. This, Banyan hopes, will enable its customers to rapidly grow their sustainable infrastructure portfolio and help to close the estimated $3.5 trillion per year investment gap in renewable infrastructure that is required in order to meet our net zero targets by 2050.

“Because standardization is lacking for sustainable technology, risk-averse investors are hesitant to move quickly in this relatively new industry,” Will Greene, Banyan Infrastructure’s co-founder and CEO said in an interview with TechCrunch. “Our software focuses on reducing transaction costs and increasing transparency to create previously unseen speed and scale of project finance.” 

Banyan believes that right now is the moment to push forward with its software, following the introduction of the Inflation Reduction Act (IRA) in the USA. This injection of $369 billion of government money is aimed at supporting and developing clean energy technology, manufacturing and innovation. There’s not just more money coming into the sector, but there’s more attention being paid to it, too. Being able to track, monitor and complete deals with greater efficiency means that these funds can go further, faster. The theory is that it will make investment in sustainable infrastructure a more attractive proposition, too.

“The fresh commitment of $369 billion from the IRA is fantastic, but we believe we won’t be able to deploy it without technology to multiply human capacity,” Greene said. “We’re looking forward to building out new features to unlock the IRA and other opportunities that our customers need to act on.” 

The $25 million funding round was led by climate software investor Energize Ventures. It was joined by new investors SE Ventures and Elemental Excelerator, and existing investors VoLo Earth and Ulu Ventures. Furthermore, Banyan announced that Juan Muldoon, partner at Energize, has joined its board of directors.

Banyan has two focal points for its new funds: people and product. When it comes to people, Banyan is looking to double its headcount over the next year, with particular emphasis on its product, success and go-to-market teams. With an eye on international expansion, Banyan is keen to transition from product-led growth to sales-led growth.

“We’re also growing our product to build best practice new regulatory requirements,” says Greene, “including offering a robust product offering that can support our customers in unlocking the benefits of policies like the IRA, as well as support new and emerging technologies, like carbon capture, hydrogen, batteries and more.”

Greene and his co-founder Amanda Li came together to found Banyan Infrastructure recognizing the skills they each brought to better finance infrastructures that can have an impact on climate change.

Our combined unique backgrounds were exactly what was needed when starting Banyan Infrastructure: with Amanda bringing on-the-ground project finance experience, and myself bringing technical know-how of building enterprise SaaS companies at varying scales,” says Greene.This company is deeply important to us both as we believe the biggest lever you can pull in changing the trajectory of climate change is investing in renewable infrastructure, and project finance is the underpinning industry and mechanism behind the funnel of investment from financiers to projects.”

For Greene, Banyan is about moving project finance from Web 1.0 to Web 3.0 and speeding up the rate at which capital can be deployed in sustainable industries. It’s about at least meeting, and ideally exceeding, climate goals by using technology to remove funding bottlenecks.

In 10 years, I would love to look back and know that the world has significantly more deployed renewable energy and other sustainable infrastructure projects because of what Banyan has enabled, Greene concluded.” 

Banyan wants to unlock financing for a (more) sustainable future by Haje Jan Kamps originally published on TechCrunch