Crowdfunding “could deter future investment in green business”
Green businesses that raise finance through crowdfunding could have trouble getting bigger investors on board further down the line, according to an expert speaker at Sustainability Live.
Rob McGrigor, the founding partner of cleantech specialist Kinetix Corporate Finance, warned small businesses to think twice before going the crowdfunding route.
“I think its great if you already have an established brand, but it might stop you getting big institutional investors on board later on.
“Do you really want thousands of people all claiming a share when in reality they have a very small stake?”
McGrigor warned that crowdfunding is still very much “an emerging market”, with only two platforms accredited by the Financial Conduct Authority, and 15 platforms pending.
“There will be some failures, I am certain of that, and it will give crowdfunding a bad name,” he said.
Crowdfunding is becoming an increasingly popular form of green investment, with platforms like Abundance and Trillionfund attracting millions of pounds for projects, particularly renewables.
In January international wind giant Endurance and UK company Earthmill, launched a crowdfunding campaign to raise a record £2.5m to finance 10 new wind turbines across Britain. It is the company’s second major crowdfunding campaign having successfully raised £1.25m on Trillion Fund last year.
Endurance commercial vice-president Brett Pingree told edie: “Crowdfunding is this really powerful model. People can participate without this large transactional overhead and we expect to carry out more such raises in the future.
“It’s an additional source of funding for us to grow our business. Instead of all eggs in one basket with one bank, this diversifies our financing sources and that’s good for us.”
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