Blog
Context
Atheva was created to provide the most efficient way for buyers and sellers to transact clean energy tax credits. The goal was to maximize value for both parties with a seamless and hassle-free process. We chose an auction mechanism to do this. Auctions have historically proven to be incredibly effective in clearing markets.
Talking with customers
In the course of sharing our product with buyers and sellers, and hearing about what they cared about, it became clear there was room to add features.
The auction mechanism is great in ensuring that sellers are matched with the highest bidder and the buyer knows that it paid no more than necessary to purchase the credit.. But if buyers and sellers are interested in optimizing for speed and want to close a transaction immediately, another mechanism is needed.
Buy credit now
To that end, we have added a new feature to our sales process. Sellers can opt to use a pure auction mechanism, or add a ‘buy credit now’ option for buyers. How it works is very simple. A seller still sets a reserve price and auction duration. But in addition, they’ll set a ‘buy credit now’ price. Buyers can bid whatever they like for the auction, or they can choose to just pay the ‘buy credit now’ price to lock in the credit.
As an example, Seller Inc. might set a reserve price of 85 cents in the dollar for their credit. They could then choose a ‘buy credit now’ price to be 90 cents on the dollar. Buyer Inc. comes along, does their due diligence and concludes this is a credit worth buying. They’ve done the diligence and don’t want to risk not getting the credit. So they just pay 90 cents on the dollar to lock in the deal right away.
Maybe Seller Inc. could have gotten 91 or 92 cents on the dollar. But that would have meant waiting a little longer for the auction to close. Maybe buyer Inc. could have won the auction with a bid of 87 cents on the dollar. But that would have meant taking a risk that they may be outbid.
This new feature provides an extra option for buyers and sellers with different risk and time preferences. The feedback has been fantastic and we’re looking forward to sharing it with more folks.
Sign up to Atheva today with the link below to learn more. If you have any questions about this feature or anything else about the product, please email me at leng(at)atheva.com.
