What is Crowdfunding?
Crowdfunding provides people with the chance to invest (often smaller amounts than normal) into initiatives and ideas and projects that they feel strongly about or want to see succeed.
So, when it comes to renewable energy, crowdfunding platforms make it possible for individuals and groups to fund renewable energy projects. Crowdfunding is a great way of raising funds to get new and often smaller projects off the ground and up and running. Many financial institutions are new to lending to small renewable energy projects and therefore do not provide the loans required and therefore act as a barrier rather than being an enabler. Crowdfunding overcomes this barrier while presenting an opportunity to support a project that can offer solid financial returns at the same time.
The investors are given the chance to support something which they feel strongly about or want to take place, and this is exactly what needs to happen as we try to shift the paradigm towards a great adoption of renewable energy use.
Crowdfunding Model
A specific amount of money is invested or loaned in exchange for equity (shares) in the company, in a project, or for interest payments.
Crowd-Investing (Equity)
The financial returns from investing into equity are generally much higher than loans. Investments into sustainability projects are generally long term and therefore returns may not be immediate. Part or all of your original invested capital may be at risk and any return on your investment depends on the ability of the company to generate profits, increase it’s value, and pay your returns.
Crowdlending (Loans)
These investments are debt investments, which means you are lending money to CCS, which is then used to fund energy efficiency and renewable energy projects. All of your loan capital including interest is guaranteed to be repaid according to the terms and conditions of the Loan Agreement. Loans have a much lower risk when compared to equity investments, however, the returns are also often much lower.