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Crowdfunding & P2P Lending for Energy Access Crowd Power Crowdfunding & P2P Lending for Energy Access State of the Market 2018 IMPACT Crowd Power 2 | State of the Market 2018 1 Contents 1 2 3 Crowd Power 2 Understanding Top 5 Trends Crowdfunding and 2018 P2P Lending 4 5 6 State Of The P2P Business P2P Market 2018 Lending Microlending 7 8 9 Donation Reward Equity Crowdfunding Crowdfunding Crowdfunding 10 Initial Coin Offerings (ICOs) Designed by www.studiopanapo.com This material has been This report has been peer Cover image Morgana Wingard funded by UK aid from the reviewed by our programme UK government; however partners at Cambridge Centre for the views expressed do not Alternative Finance. necessarily reflect the UK government’s official policies. Crowd Power 2 | State of the Market 2018 2 Authors Davinia Cogan Peter Weston Programme Director of Manager Programmes Davinia Cogan is the Programme Manager Peter Weston is the Director of Programmes of Crowd Power 2 at Energy 4 Impact. She at Energy 4 Impact. He manages a team runs the UK aid funded programme, which of consultants that advises off-grid SMEs researches the role of financial innovation in in sub-Saharan Africa and helps them the capital raising process of energy access to implement new business models and companies. technologies. He is an expert in power, renewables and offgrid energy, with over Davinia is also a Research Affiliate of the 20 years of experience as an investor, Cambridge Centre for Alternative Finance lender and strategic adviser, much of it in at Cambridge Judge Business School. developing countries. Davinia joined Energy 4 Impact in 2013 to help launch their business advisory team He is a non-executive director of Thrive in East Africa, and managed the rollout of a Renewables, one of the first crowdfunded USAID funded programme bringing pay- investors in small-sized renewable as-you-go solar to Rwanda. Prior to joining projects in the UK, and a Board Member of Energy 4 Impact, Davinia was a Kiva fellow Renewable World, an NGO which alleviates in Tajikistan, and a consultant at the Social poverty in developing countries through Stock Exchange, London and School for Life, micro renewable projects. Prior to Energy Uganda. 4 Impact, Peter was global head of finance and investment for two power equipment She held positions in investment suppliers: Siemens Wind Power and MAN. management at ING Australia before moving out of the mainstream finance sector. She He led the European energy lending team at holds a MA in International Studies from GE Capital and was an executive director at the University of Sydney and a Bachelor of Westdeutsche Landesbank. Peter has a BA in Business (Finance, International Business) Economics and Politics from the University from the University of Technology Sydney. of Warwick. Crowd Power 2 | State of the Market 2018 3 Introduction Crowdfunding & P2P Lending for Energy Access The report aims to provide entrepreneurs, - State of the Market 2018 captures the growing practitioners, governments and donors with importance of financial technology (fintech) based knowledge on fintech financing models and how financing models for energy access companies. they can be used to raise debt, equity and donations We examine data from two financing channels – for energy access companies. Dedicated research on crowdfunding and peer-to-peer (P2P) lending. Energy this niche area of energy access company fundraising 4 Impact (E4I) has been tracking crowdfunding and is scarce, however fintech-enabled fundraising is P2P lending activity in the energy access sector since growing fast – the amount raised via these channels 2015, and began tracking energy access related initial grew from $3.4 million in 2015 to $31.3 million in coin offerings (ICOs) in 2018. 2018. While this report focuses on the energy access sector, many of the learnings shared here may be The report disaggregates data by fintech financing relevant to other impact sectors. model and explores six models: P2P business lending, P2P microloans, donation crowdfunding, reward crowdfunding, equity crowdfunding, and ICOs. We share the key trends, by fintech financing model, as they relate to energy access companies, which include solar home system distributors, mini-grid developers and cookstove distributors. Buffalo Grid Crowd Power 2 | State of the Market 2018 4 1 Crowd Power 2 Crowd Power 2 is a research-led that examined the role of Mapping the market for programme designed to explore crowdfunding and P2P lending energy access the role of innovative technology- in the financing of energy access driven financing solutions, such companies and projects. Crowd The programme will also support as P2P lending and crowdfunding, Power played an instrumental role P2P business lending platforms, in the energy access sector. The in the growth of P2P lending and by assisting with the set-up costs programme seeks to understand crowdfunding for energy access of capital guarantees and local the impact of innovative forms of businesses, and supported over currency lending facilities. Crowd capital raising on energy access 250 energy access campaigns to Power 2 will also encourage companies, and the appetite of raise £3.4 million ($4.53 million) in investor participation in the investors in high-income countries funding. sector, through investor outreach for investment opportunities with activities. environmental and social returns. Crowd Power 2 seeks to continue The Crowd Power 2 programme researching crowdfunding and is managed by E4I a UK-based P2P lending, while supporting charity, which supports market- energy access companies to raise driven solutions to clean energy pre-seed, seed and growth-phase access in off-grid communities in capital via crowdfunding and P2P sub-Saharan Africa. lending platforms. Crowdfunding & P2P Lending for Energy Access Crowd Power 2 is funded - State of the Market 2018 is the through the UK Government’s first of three annual reports on Transforming Energy Access (TEA) the state of crowdfunding and P2P programme. TEA is a programme lending activities in the energy from the UK Government’s access sector. In addition to Department for International publishing three annual reports, Development (DFID), designed E4I will conduct and publish a to support the progress of clean white paper on the feasibility energy access in developing of equity crowdfunding for countries in sub-Saharan Africa the energy access sector, with and South Asia. TEA seeks to publication planned for Q3 2019. identify regional issues, and solutions, relating to energy Earlier research papers can be access. TEA aims to lead the found below. development of innovative technologies, business models, Powering the crowd into the partnerships and skills designed future to have a transformative impact on the progress of clean energy Who is the crowd? access. Up to £100 million will be invested until 2024. Success & failure: the key to a winning campaign Crowd Power 2 began in 2018, following the successful Can the crowd close the Crowd Power programme, a financing gap? pioneering research programme Crowd Power 2 | State of the Market 2018 5 Crowd Power 2 focuses on five key areas + Donation & Equity P2P 1/ Reward 2/ Crowdfunding 3/ Lending Crowdfunding The programme supports seed and The programme will support P2P growth-phase companies to raise business lending platforms to The programme supports seed-stage equity on equity crowdfunding establish foreign exchange hedging companies to raise seed capital platforms by providing lump-sum facilities to enable local currency from their networks via donation investments to eligible campaigns. lending. In addition, CP2 aims to and reward crowdfunding platforms Lump-sum investments tend to support the creation of guarantee through the provision of match be $10,000 to $25,000 and usually facilities, which protect investors on funding. Match funding is typically account for <10% of the campaign P2P lending platforms in the event of 20 to 25% of the campaign target, target. Relevant equity campaigns default. CP2 can assist platforms with but not more than $10,000. Relevant tend to have targets of $100,000 the set-up costs of these facilities. donation and reward campaigns tend to $1 million. In addition, CP2 will to raise $5,000 to $50,000. conduct an equity crowdfunding feasibility study, which examines the opportunities, challenges and suitability of equity crowdfunding for energy access companies. Investor 4/ Outreach 5/ Research The programme will fund outreach The programme will continue to activities designed to attract millennial publish industry-leading research on and diaspora investors (and donors) the energy access crowdfunding and to energy access crowdfunding and P2P lending market. Three annual P2P lending. Outreach activities reports will be published, based on include events, podcast interviews, fundraising activity in 2018, 2019 and influencer marketing and other 2020. In addition, CP2 will publish channels. E4I seeks to understand three white papers over the duration the effectiveness of various channels of the programme, which examine key in converting new investors, with a issues impacting the market, such as particular focus on millenials and the availability of local currency loans diaspora. from P2P business lending platforms. Crowd Power 2 | State of the Market 2018 6 Crowd Power 2 Goals Crowd Power 2 is a three-year programme, and will run through to August 2021. The programme aims to achieve the following outcomes: Focus Area Intervention Anticipated Outcome + Support 8 energy
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