Energy Access Crowdfunding: Who Funds It and Why?

Introduction

Energy 4 Impact, a non-profit working with businesses to extend access to energy in Africa, today released a report examining the profile of those that fund energy access-related crowdfunding campaigns. Energy 4 Impact, with funding from UK aid, has supported over 250 energy access-related crowdfunding campaigns to raise close to $4.5 million, over the past three years, through its Crowd Power programme.

This report, Crowd Power – Who is the Crowd?, is the first of its kind for the sector, exploring not only the profiles of those funding energy access-related crowdfunding campaigns, but also their motivations to contribute.

The report gathers research from surveying around 900 individuals that funded energy-access related crowdfunding campaigns, from more than ten countries including Australia, Germany, Kenya, the Netherlands, Sweden, the UK and USA.

Research was conducted across donation, reward, debt and equity crowdfunding platforms, which have hosted energy access-related campaigns. Participating platforms included GlobalGiving, M-Changa, Pozible, Kiva, bettervest, Lendahand, TRINE, Energise Africa and Crowdcube.

Interestingly, the report finds that the number one motivation to contribute, according to all energy-access crowdfunding backers surveyed, is the campaign’s alignment with their personal values. The most frequently cited challenge of participating in crowdfunding was the potential for business failure.

Different crowdfunding types

The report explores the nuances of participant profiles, their motivations and their challenges, across the different crowdfunding types:

Donation Crowdfunding for Energy Access

Those that donate on partnership model donation crowdfunding platform, GlobalGiving, tend to be women, aged 25 – 34 years with an undergraduate degree. They were mostly one-time donors and contributed around $100 to a campaign. According to GlobalGiving, the number one reason individuals donate is “to help a cause to their heart”.

Donors to one-off fundraisers by energy access start-ups and businesses on Nairobi-based donation platform, M-Changa, were mostly male (4 in 5) and were 34 years old on average. Only 2 in 5 respondents had a university-level qualification, the lowest level of educational attainment across all crowdfunding types examined. The most frequently cited motivation by respondents was “to help a specific community or project”.

Reward Crowdfunding for Energy Access

Contributors to energy-access related reward campaigns – which typically aggregate contributions from campaign-makers’ network – had the highest level of education across all archetypes; 92% had a university level qualification and 15% held a PhD. Around 70% of respondents were male and over 3 in 5 had an income above the national average (in Australia, where the Pozible platform is based).

Debt Crowdfunding for Energy Access

Respondents from microlending platform, Kiva, were more likely to be female than any of the other platform archetypes surveyed (1 in 2 were female). Respondents were also older than those surveyed from other crowdfunding platforms – only 1 in 5 respondents were 40 years or younger. The main motivation for these lenders was “to help others and give back”.

Lenders on SME lending debt platforms surveyed were predominantly male (4 in 5). Employment sectors were mixed, although ‘Banking, Finance, Accounting’ had the highest representation (13%). 2 in 5 respondents had a Master’s degree. The most frequently cited motivation to lend from these respondents was “it is aligned with my personal values”.

Equity Crowdfunding for Energy Access

Respondents that had invested in an energy-access related equity crowdfunding campaign on Crowdcube, the UK’s largest equity crowdfunding platform, were mostly male (91%). 1 in 4 respondents earned less than $40,000 and 70% of respondents had a university level qualification. Almost half of the respondents were under-40. Perhaps unsurprisingly, “financial return” was the most frequently cited motivation on equity crowdfunding platforms.

What others have to say about this report

Crowd Power – Who is the Crowd? includes in depth interviews with individuals that have funded energy-access crowdfunding campaigns. Eloise*, a UK-based environmental lawyer in her 30s, told Energy 4 Impact:

“Investment is an underutilised mechanism to effect change that people often don’t think or know about.”

And Brian*, a UK-based environmental professional in the offshore wind industry says:

“The main challenge [when contributing through crowdfunding] is to know which platforms to pick and trust... referrals from friends, colleagues and family are very important to vet the plethora of platforms”

Finally, Netherlands-based social impact investor and property surveyor, Thijs explained his investment rationale:

“Of course I want to make a good financial return, but the campaigns I invest in really have to do something extra – something that does good and that will help people.”

““This study is really the first to look at who funds energy-access crowdfunding campaigns and why,” says Davinia Cogan, Crowd Power Programme Manager, at Energy 4 Impact.

“We were particularly interested, and encouraged, to see that most donors and investors were motivated to participate because the campaign aligned with their personal values. We hope that platforms, entrepreneurs and funders in the sector can harness the knowledge shared in this report to build scalable, sustainable approaches to the financing gaps in the energy-access sector. FinTech based solutions like crowdfunding are likely to play an ever-increasing role in our sector so it’s important that we understand the mechanisms and the underlying investors so we can fully leverage financial innovation.”

Reference

• To download the report please click here.

Further Information

• Funding and Financing portal on energypedia
• Crowdfunding for Energy Access