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WEBINAR | CROWD POWER | Crowdfunding Energy Access Ventures - Davinia Cogan

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Smart Villages/LCEDN webinar series

For more information, please go to e4sv.org

https://e4sv.org/events/webinar-crowd-power

If you are a start-up or a smaller energy access firm looking to raise funds, then energy-targeted crowdfunding may just be for you.

Raising the necessary finance for start-up and scale-up energy access ventures on terms that make commercial sense is one of the biggest challenges in the sector. In the search for appropriate finance, innovative energy access projects are increasingly turning to crowdfunding to address their financing need.

Energy4Impact has spent the last 3 years looking into the challenges and opportunities in crowdfunding energy access. In this webinar, they will share some of their findings and recommendations, covering donation, reward, debt and equity crowdfunding. Energy4Impact will be joined by crowdfunding platform partner Lendahand, as well as crowdfunded entrepreneurs Sosai Renewable Energies of Nigeria to present their experiences.

This month, our presenters/discussants will be Energy4Impact's Davinia Cogan, who has been managing their crowdfunding research programme, Koen The, CEO of Lendahand Ethex and Habiba Ali, Managing Director of Sosai RE. In addition to presentations on their experiences, the webinar will include a panel discussion on the various challenges and opportunities of crowdfunding energy access between the presenters, as well as - of course - an opportunity for Q&A with all webinar participants.

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WEBINAR | CROWD POWER | Crowdfunding Energy Access Ventures - Davinia Cogan

  1. 1. Crowd Power Crowdfunding Energy Access Ventures March 2018
  2. 2. 2 Crowdfunding Energy Access Ventures Overview ▪ Crowd Power ▪ The Seven Archetypes The 7 Campaign Profiles for Energy Access Crowdfunding - Donation: Philanthropically motivated donation ① Partnership model ② One-off fundraiser - Reward: Contributors receive ‘gift’ in return for their contribution ③ Aggregate network contributions (quasi-equity) ④ Mega-campaign - Debt: Lenders receive their money back with or without interest ⑤ Microloans ⑥ SME loans - Equity: Investors purchase units in the business, sometimes with voting rights ⑦ Equity Davinia Cogan Programme Manager, Crowd Power Energy 4 Impact davinia.cogan@energy4impact.org
  3. 3. 3 Crowdfunding Energy Access Ventures Crowd Power • Three-year programme launched in 2015 to research and stimulate energy access related crowdfunding – funded by UK aid • Over 100 energy access campaigns have been supported via direct support (~$600k) on nine platforms; supported campaigns have raised over $4.4M
  4. 4. 4 Crowdfunding Energy Access Ventures Crowd Power • Funding was split across four mutually exclusive campaign types: - Donation: Philanthropic motivation – similar to general donations - Reward: Contributor receives a ‘gift’ in exchange for their financial contribution - Debt: Lender funds a loan to a consumer, entrepreneur or SME – with or without i% - Equity: Energy access company issues shares on the platform, investor purchases them 22% 13% 4% 61% $600,000 DEPLOYED Crowd Power Spending by Platform Type
  5. 5. 6 Crowdfunding Energy Access Ventures Donation Model Description Campaign Size Platforms Partnership model Non-profits supplementing income through recurring campaigns; frequent DD ~$10k GlobalGiving One-off fundraiser Non-profits and social enterprises raising funds for a specific milestone or project ~$20k StartSomeGood Chuffed • Partnership model is based on non-profit becoming a ‘field partner’ of a particular platform – they must fulfill due diligence requirements, submit quarterly and annual reports on activities and financials (10% - 50% annual budget raised via CF) • One-off fundraiser is similar to the ‘Reward CF / Aggregate network contributions’ model, however the crowd does not receive a reward in exchange for their donation – success is about network size/capacity, outreach strategy and quality of campaign materials
  6. 6. 7 Crowdfunding Energy Access Ventures Donation One-off Fundraiser by RAFODE LTD. on M-CHANGA Raised $18,300 with 1:2 MATCH FUNDING LINK
  7. 7. 8 Crowdfunding Energy Access Ventures Reward Model Description Campaign Size Platforms Aggregate network contributions Social enterprise formalising contributions from network/F&F – to raise seed capital / quasi equity $30k - $50k Indiegogo/Generosity Pozible Mega-campaign High profile campaigns, raising capital to develop new product $100k - $400k Indiegogo Kickstarter • Aggregating network contributions is the most common reward CF type, and depends largely on the network of the campaign-maker, the quality of the campaign materials (e.g. video) and the outreach strategy • Mega-campaigns are rare and successful campaigns have a similar profile so successful equity campaigns – novel/innovative product, own their IP, and strong, well-connected international networks; the success stories get a lot of publicity but in reality difficult to replicate
  8. 8. 9 Crowdfunding Energy Access Ventures Reward Aggregate network contributions fundraiser by MUSANA CARTS on INDIEGOGO Raised $27,288 with LUMP SUM LINK
  9. 9. 10 Crowdfunding Energy Access Ventures Debt Model Description Campaign Size Platforms Microloan debt Loans to entrepreneurs or consumers, often originated by an MFI/social enterprise <$1k Kiva, Zidisha, Milaap SME lending SME working capital loans, often paid direct to manufacturer; DD carried out by platform $50k - $1m TRINE, bettervest, Lendahand, Kiva DSE • Microloan platforms are used by MFIs and social enterprises to finance consumer purchases – SHS, cookstoves, biogas digesters; borrowers are vetted by intermediary and often charged interest, however lenders do not earn interest • SME lending is the highest area of growth in energy-access CF; it covers the gamut of working capital requirements from the Kiva Direct to Social Enterprise pilot (<$50k) to larger platforms: TRINE, bettervest, Lendahand
  10. 10. 11 Crowdfunding Energy Access Ventures Debt SME Loan by PAWAME on TRINE Raised $185,000 with CO- GUARANTEE (50%) LINK
  11. 11. 12 Crowdfunding Energy Access Ventures Equity Model Description Campaign Size Platforms Equity Company issues shares to platform members – often include company’s network $150k - $1m Crowdcube Oneplanetcrowd • Seven equity CF campaigns have been launched to date – by cos/platforms based in UK, Netherlands and Sweden – however only suitable for a specific company profile: companies that have a novel/innovative product, own their IP and have an international management team • We saw incredible growth in 2016 from $80k in 2015 to $3.4m (43X growth), however there was little activity in 2017 – growth restricted by regulations, mismatch of off-grid company profiles to the typical equity CF profile, and awareness of equity CF as a viable fundraising option
  12. 12. 13 Crowdfunding Energy Access Ventures Equity Equity campaign by BUFFALO GRID on CROWDCUBE Raised $685,000 with LUMP SUM LINK
  13. 13. 5 Crowdfunding Energy Access Ventures The Seven Archetypes Type Model Description Campaign Size Other Examples 1 Donation Partnership model Non-profits supplementing income through recurring campaigns; frequent DD ~$10k TAHUDE Fdt GlobalGiving 2 Donation One-off fundraiser Non-profits and social enterprises raising funds for a specific milestone or project ~$20k Pollinate Energy Chuffed 3 Reward Aggregate network contributions Social enterprise formalising contributions from network/F&F – to raise seed capital $30k - $50k Okra Solar Pozible 4 Reward Mega-campaign High profile campaigns, raising capital to develop new product $100k - $400k GravityLight Indiegogo 5 Debt Microloan debt Loans to entrepreneurs or consumers, often originated by an MFI/social enterprise <$1k Kamworks Kiva 6 Debt SME loans SME working capital loans, often paid direct to manufacturer; DD carried out by platform $50k - $1m BBOXX TRINE 7 Equity Equity Company issues shares to platform members – often include company’s network $150k - $500k Buffalo Grid Crowdcube
  14. 14. 14 Crowdfunding Energy Access Ventures Crowd Power Impact 50,000t CO2 REDUCED Funded by Crowd Power – Musana Carts, Uganda Musana Carts raised $27,288 on Indiegogo for proof of concept; to create a MVP and pilot concept in Kampala $4,400,000 RAISED 250,000 BENEFICIARIES 120+ JOBS CREATED

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