Context
RaiseGreen is a new crowdfunding marketplace/platform for green projects. Individuals, startups, non-profits or even local governments looking to start their own green projects can utilise the platform to create and develop the project, set their own terms, and present their offering on RaiseGreen’s platform for potential investors.
The platform offers a wide variety of replicable, templatised investment opportunities for solar power, affordable housing, EV charging stations, agriculture, water projects, and microgrids.
Stakeholders involved
- Originators: Project Developers seeking capital (business owners, nonprofits, local governments, school districts etc.)
- Partner/Originator Engine developer: IBM
- Platform/intermediary/due diligence: RaiseGreen
Problem
- Small projects that may have powerful local impacts especially for disadvantaged communities, face obstacles including high upfront capital costs, high interest rates on loans, and lack of verifiable impact certification.
- Financing challenges also mean scarce community ownership of projects and a lack of usable metrics that would make the projects logical for ESG portfolios.
- Originators also lack nuanced legal knowledge, industry connections, and access to resources that can help create and develop their concepts into viable projects.
Innovation
- Unlike other crowdfunding platforms, RaiseGreen is a ‘crowdinvesting’ platform that sells debt notes or equity stakes in green projects with a minimum investment determined by the originator.
- A two-sided marketplace: one side for investors and the other for project creators, or “originators” which will roll out as the originator engine (saas tool), providing legal templates and financial modelling to determine returns.
- All project listed on the site, must go through an evaluation process which assesses the project’s revenue, ambition, impact, social, and environmental metrics.
Timeline
Results and impact
- By November 2020, RaiseGreen has worked with over 100 potential project developers. This process has reduced barriers and complexity by providing communities with tools they need to create, finance, build, and run their own green projects.
- The originator engine allows project developers to utilise existing document templates (ex. legal documents) and financial modelling used on previously successful projects. Through financial modelling, RaiseGreen has been able to assess the kinds of capital outlays projects would need for ongoing operations and maintenance. These processes have helped to reduce the risk profile of investments.
- This type of equity crowdfunding has created opportunities for a wider range of people to invest in green projects and initiatives - allowing ordinary people, retail, accredited, and institutions to invest in the same security at different elected amounts, creating blended capital.
Key lessons learnt
- Securities structuring - The shorter maturity period (~1-2 years) of the development capital investments aligns with the operational needs of these small-scale projects. It offers flexibility to the investor, and allows them to see profits in a relatively short amount of time.
- Targeted financial incentives like access to development capital helps communities by lowering barriers to entry for new project developers, making the project creation phase more accessible and inclusive. Access to capital for underserved and disadvantaged populations increases the probability of projects being implemented for communities in need. Experts at the Department of Energy’s Lawrence Berkeley National Laboratory found that these types of incentives can be catalytic to accelerating solar adoption and other green initiatives for the underserved.