Reward-Based Crowdfunding

Overview

 The idea is to raise money using online platforms where interested funders can make a financial contribution. In return, the funders might either get a small reward or a gift (mentioning the names on the websites, Tshirts, solar lights). The funders are usually motivated by altruism.

Results-based crowdfunding is mostly used by companies who are in their pre-seed to seed stage.E.g, off-grid companies can organize crowdfunding for buying the technologies. Off-grid solar companies that have done crowdfunding include: Okra Solar, Pollinate energy and solaris off-grid .

Popular crowdfunding platform include: indiegogo and kickstarter.

Benefits

• Allows for pre-seed and seed funding for companies
• Faster than applying for other grants.
• Opportunity to engage and build network of supporters which can later be tapped for building product awareness and getting new talents .

Challenges

• Mostly suitable for early-stage companies or a specific project/outcomes.
• Must leverage existing network and have innovate solutions. Entrepreneurs without existing network and an innovative idea that appeal to the funders might be at disadvantage.
• Cost of reward needs to be considered when they are offered to the funders.
• Difficulty to find the right platform - international companies might not be familiar with the local platforms and the international platform may have limited payment options (e.g only credit card) which might not be feasible for all the contributors .

Case studies

Gravitylight - Kenya

Gravitylight

GravityLight is a low cost light (15 lumen LED) and is powered by kinectic energy i.e you hang the light with a bag and then fill the bag with heavy objects, as the pulley does down it creates light. In 2013, they raised USD 400,000 in 40 daysvia reward based crowdfunding and the reward ranged from a "thank you"  on their website to gifting the light (depending on the contribution). In 2015, the company started another crowdfunding on Indiegogo. The campaign funding was matched with funding from Ben & Jerry. They raised USD 400,000 to lauch commercial pilot in Kenya. In 2018, they raised again USD 115,000 on Indiegogo. .

Okra Solar - Cambodia

Okra Solar

Okra Solar is an Australian company piloting a "plug-and-play smart controller”. In December 2016, the company raised USD 45,0000 via the Austaralian crowdfunding platform Pozible. They used this money for seed funding and to build a prototype. Their fund raising campaign also received more than USD 10,000 match funding from DFID' .

Further Information

• Financing and funding portal on energypedia
• Role of Crowdfunding in Raising Finance for Energy Access Businesses and Projects