Crowdfunding platforms raised $113 million for energy access between 2015 and 2019. The energy access sector needs an additional $1 billion of softer early-stage support to generate a pipeline of companies that can meet Africa’s basic energy needs by 2030. As energy access crowdfunding volumes double year on year, will the crowd become a part of the financing mix?
Charm Impact certainly thinks so. We sat down with their CEO, Gavriel Landau, to understand more about their novel approach to unlocking capital for early-stage energy access entrepreneurs in Sub-Saharan Africa and Asia.
First, can you tell us: what is Charm Impact?
Charm Impact (Charm) is a debt-crowdfunding platform that focuses on connecting individuals that want to earn financial returns and benefit society, with inspiring entrepreneurs in developing economies furthering the energy transition.
What inspired you to start Charm?
Since university I have been motivated to create a company that not only earned a profit but also generated a significant social impact at the same time. After a short stint working in Cambodia, I spent five years consulting for Accenture in financial services and energy trading. I then decided to focus on clean energy and began working for a startup in London developing a peer-to-peer solar energy trading solution. While there, I attended a global accelerator programme, Free Electrons, where I met an incredible company called SOLShare. They were creating a similar energy trading platform, but for solar home systems in Bangladesh. This was a real eye-opener for me and shifted my attention to furthering the energy transition in developing economies. An advisor of Charm’s recommended that we focus on our strengths and leverage a platform approach where we could unlock the potential of other companies and, in that way, maximise our impact.
How do you differentiate from other crowdfunding platforms like Trine and Energise Africa?
We focus on the earliest stage of the market. Our loans range from £10,000 - £250,000 ($13,000 - $320,000), whilst the general starting point for loans with our competitors is £300,000 ($386,000). Our target companies are generally in the stage between pre-seed and series A, where they have commercially viable models and some proof of concept but are yet to achieve scale.
This means we generate huge value to our borrowers in the journey to scale as we help them to grow, develop a credit history and get to the point where they qualify for larger scale debt, creating a pipeline for our competitors and the industry.
In addition to the stage of the company, as part of our investment mandate we have a strong positive bias towards companies with local founding teams and a secondary bias for companies that empower women within their organisations.
You are currently crowdfunding equity for Charm with Crowdcube - what made you take this decision?
Part of the challenge in our growth journey is curating and nurturing a crowd of like-minded investors that want to not only earn a financial return but also actively benefit society. As our business model is predicated on scale, we knew we would require additional external capital to help get us to this point. Crowdcube already has a fantastic following with many projects coming through their pipeline that have a sustainability focus. By allowing the crowd to own a piece of Charm, we are able to not only get access to capital to help us scale but also create the next generation of brand champions that can help us grow our following and share our message with the world.
The Charm campaign has already reached the £100,000 ($129,000) campaign target and is overfunding - did that surprise you during this time?
We were pleasantly surprised but we put a lot of work into the campaign prior to launch. This ranged from researching investor appetite to understand the impact of COVID, developing relevant relationships and networks to heighten the likelihood of success and ensuring that our messaging was clear to appeal to a broad audience.
We were unsure how COVID would affect investor appetite so spent a lot of time researching this ahead of the launch. We see individuals falling into two broad categories. Firstly, there are those that want to maintain liquidity at this time and therefore are not investing further. However, there are other investors that see this time as an opportunity to invest in things that create a net positive effect. That means the Charm offering is very appealing, as we can actively demonstrate that there is a way to make money and do good at the same time.