Conversation with Advantage Capital: Impact investing, tax equity partnerships, and on-time payments

We caught up with Kyle Nesselbush, a senior associate at Advantage Capital, to learn more about how our software influences his work and enables Advantage Capital to continue funding projects with real, concrete impacts.

Can you tell us about yourself and Advantage Capital’s work?

I’ve been with Advantage Capital for about a year and a half, where I syndicate renewable energy credits and manage tax equity investments near their closing. My role is primarily fund management, but I also work on asset management and originations/executions for our renewable energy tax equity deals.

Advantage Capital is all about impact investing—if we can improve communities or the environment or our social impact, then that’s what we’re interested in. We’ve been around since the early 1990s, and our firm is structured around tax credits. We started with State CAPCO’s, broadening into New Markets Tax Credits with the program’s inception and then moved into low-income housing tax credits. And in 2016, we began working on renewable energy tax credits.

Where did you see opportunities for change in your team’s day-to-day operations and workflow? 

Without a central platform to manage our projects, it’s tough to streamline our data collection and portfolio management processes. Advantage Capital has a very tight due diligence process to ensure that we bring in viable deals; after those deals were closed, they were harder to manage because we did not have all the closing items in one central database. We needed a solution that could hold all of our deal details in one place so that all of our models, reporting, and obligation management could pull from that single source, keeping all our reporting consistent and standard across the board.

How were you introduced to Banyan Infrastructure, and what initially caught your eye?

A colleague met Banyan Infrastructure representatives at a conference and suggested it to me as a potential solution. I saw that it had most of what I wanted in a data management platform, and after talking with your team, I saw there were other features that could fit most of our needs. 

Ultimately, we’d like to get all our deals in there to track their progress and have all our data in one place. That way, if someone calls and says, “Hey, what’s your portfolio look like?” We don’t have to go to each fund and pull all the numbers individually to prepare a report. We can have it all in Banyan Infrastructure. And as our business line grows, so will our use of the platform. 

What kinds of projects do you work on through Banyan Infrastructure?

So far, all but one of the projects we manage through Banyan Infrastructure are solar projects — we have one project that’s refurbishing a hydroelectric dam. Our solar projects run the gamut from utility-scale solar to much smaller residential solar projects. We’re also on the equity side of things, not on the lending side, like many of Banyan’s customers; we’re primarily interested in the tax credit piece. We’ve worked with both investment tax credits and production tax credits, and we’ve structured them in partnerships and transferable credits. Banyan Infrastructure has been critical to help us keep all of our project data in one spot. 

Can you walk me through the benefits you’ve experienced from using the software? What stands out to you as the primary value proposition of Banyan Infrastructure?

It’s already saved me and my team a lot of time on data aggregation and production. We’ve appreciated how easy it is to use and navigate. It also reduces our reputational risk because having all our data in one place helps us avoid potential errors. Everything that we use Banyan Infrastructure for has been producing excellent results. 

Currently, Banyan Infrastructure is managing all of our covenants and compliance tracking to ensure our sponsors/developers deliver their reporting on time so that we can give our reporting on time to our investors. We’re also using the platform to manage our projections and forecasting; now that we have all our deal data in the platform, viewing deal health has been easy. 

Trusted Compliance Solution

Before using Banyan Infrastructure, we managed compliance reporting and payments from Sponsors manually and piecemeal, i.e., we didn’t have a centralized system. Banyan Infrastructure provides a central source of information regarding upcoming deliverables, allowing us to stay on top of reporting and payments in a fraction of the time.  We also have someone focused on using the right tools and procedures to handle that cash flow. Technology and the right people have made our investor relations management much smoother and more predictable. 

Purpose-Built Platform

Banyan Infrastructure was the only platform we found explicitly geared toward renewable energy finance. No one else could tell me they had even one customer working on renewable energy. The specialized tools and knowledge of the space have allowed us to work closely with the Banyan Infrastructure team on product development and feedback. 

Mission Alignment

Banyan Infrastructure’s commitment to impact reporting has also made our reporting process much smoother — I know that more and more impact reporting items are being added to the platform. It’s been great to store all that data in one place and produce accurate, clean reports for our investors, demonstrating our positive impact. 

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How do you see Advantage Capital moving forward, and where does Banyan Infrastructure fit in?

Through last year, we’d closed over $1.6 billion in tax equity deals, and at least a billion of that was within a recent 13-month span. The entire market in 2023 was about $20 billion. The four big banks take in about half of that, so we have a pretty sizable market share for such a small firm. I see this continuing to grow exponentially if the Inflation Reduction Act remains in place. We also have plans to double our business and maintain the current headcount. Efficient processes and leveraging technology will be vital to growing successfully. 

Since corporations will always pay taxes, we’ll always have the mentality that we can help them lower their taxes and funnel some of that money back into renewable energy and low-income/disadvantaged communities.

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Curious to see how Banyan Infrastructure can help your business manage deals, automate reporting, and digitize compliance? Contact us today. 

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