The market came directly to Scott Harmon and Noesis

Scott Harmon
Scott Harmon

The CEO of Noesis Energy discovered his software was so effective in one area it opened up a completely new path for the company.

Scott Harmon is a featured speaker at Crowdnetic’s Crowdfinance 2015 Conference which takes place in New York City on Sept. 28. He is speaking on a panel addressing specific verticals in marketplace lending and will be joined by providers of specialized health care and automotive financing.

Noesis started four years ago with a focus on software, not lending.

“Our original focus was on building software to help companies understand their energy consumption and how to reduce it,” Mr. Harmon said.

Noesis’ clients included movie theaters, hotels and hospitals, for whom they designed software that tracking energy usage patterns and helping identify ways they could reduce their overall use.

Of course, software is the trick to great loan underwriting, and Noesis had that part figured out. They also had a channel of customers wanting to purchase energy systems who might benefit from attractive financing.

And an opportunity was born.

“The market almost came to us,” Mr. Harmon admitted.

Noesis connects building owners to sellers of energy systems like Trane and Honeywell. When a manufacturer’s sales force meets with a prospective client, they can show them the different financing options available through Noesis financing partners.

Noesis also provides tools to assist with conversion. These include a one-page “CEO friendly” sheet making a clear business case for the project. Another is a project specific automated web page with charts, graphs, estimates and document storage.

Corporate energy expenditures are a vertical worth addressing. Mr. Harmon estimates companies spend between $30 billion and $50 billion each year on everything from LED lighting to air conditioning to heating.

But this area also comes with financing challenges, he cautioned. Most lenders prefer asset-backed lending, so they have something to repossess should the borrower become delinquent.

“In our case, once a product is installed you typically cannot repossess it,” Mr. Harmon explained. That is the main reason why many potential financiers shun the sector.

Noesis works with five large institutional lenders who offer financing to purchases of energy systems. They have found that, especially since the recession, companies considering such a large expenditure need very clear documentation of savings before committing to such a large expenditure. This is why those sheets clearly explaining every expense and savings are so important.

“Since the recession, the tighter economy has forced businesses to look for ways to save money,” Mr. Harmon confirmed. “In tight times they might like to do it but they do not have the money around to do it.”

Mr. Harmon said the alternative energy sector is a captivating space. One sector gaining steam is residential solar energy. Many homes are adopting the technology, and are helped by a combination of municipally-supported financing and more affordable panels being produced in China.

While it has not been as popular on the commercial side he believes that area offers tremendous potential.

Low natural gas and oil costs make solar energy a more expensive proposition, but investment tax credits and other incentives currently available dramatically shrink the cost difference between it and more popular options, Mr. Harmon said.

He enjoys working in this sector because the service he provides produces several tangible benefits for his clients.

“When lending is exciting is when you are unlocking credit that is doing something to make businesses better. They spend less money and also help the environment.”