Publication - Clean Cooking: Scaling up With Crowdfunding
Clean Cooking: Scaling up With Crowdfunding
Crowdfunding is the practice of funding a company or project by raising small amounts of money from a large number of people through online platforms. It is often overlooked as a source of financing for clean cooking. While crowdfunding for clean cooking is still relatively small in volume, both as an aggregate amount and as a proportion of energy access crowdfunding and overall clean cooking funding, it can be an important source of future funding for the sector. It is particularly interesting as a source of lending for clean cooking companies that might struggle to raise funds elsewhere. Energy access crowdfunding reached a cumulative total of $159 million between 2015 and 2020. It roughly doubled every year until 2019, but fell 17% in 2020 due to the COVID-19 pandemic. This compares to a cumulative $8 million of crowdfunding raised for clean cooking between 2014 and 2020 in relation to a total investment of at least $70 million in clean cooking in 2019. Despite the challenges during the recent pandemic, most crowdfunding platforms have held up well since the outbreak of the pandemic and crowdfunding is likely to remain resilient because the majority of crowd lenders are driven by environmental and social impact rather than financial returns. Energy 4 Impact has a strong interest in crowdfunding for the energy access sector. In 2015, Energy 4 Impact began the Crowd Power programme to examine the role of crowdfunding and the impact of incentives on crowdfunding campaign performance. In 2017, the peer-to-peer (P2P) business lending platform Energise Africa was launched, following a competitive tender run by Energy 4 Impact and funded by UKaid. Energy 4 Impact continues to work closely with Energise Africa as the manager of UK aid’s endowment to the platform. Crowd Power 2 began in 2018 and seeks to understand the impact of innovative forms of crowdfunding on energy access companies, as well as the appetite of investors in high-income countries for investment opportunities with environmental and social returns. Crowd Power and Energise Africa have collectively raised over $30 million for energy access companies since 2015.