Syndicated Financing with Energy Access Crowdfunding Platforms
Energy 4 Impact’s Crowd Power programme, supported by UK aid, has launched a new report on syndicated financing involving crowd lending platforms. Energy access-related crowdfunding has grown rapidly, raising $160 million for the energy access sector between 2015 and 2020. Between 2015 and 2019 energy access-related crowdfunding volumes doubled each year on average. Crowd lending now accounts for approximately 90% of the volumes raised.
As crowd lending platforms scale, partnerships between crowd lending platforms and traditional impact investors are increasing. While there is increased collaboration between financiers, there are few syndicated financing transactions that involve crowd lending platforms. While syndication may involve additional cost and complexity, it has a number of benefits for impact investors, crowd lending platforms and borrowers alike.
This report provides impact investors, crowd lending platforms, energy access company borrowers and practitioners with an introduction to syndicated financing. It explains how syndicated financing works, the main benefits and challenges for different participants, its relevance for crowd lending, and the key considerations for anyone developing syndicated financing structures. The report also includes links to a simplified legal agreement template we have developed to simplify, and reduce the costs of, syndicated financing transactions involving crowd lending platforms.
The energy access-related debt crowdfunding market is dominated by two types of platforms. Growth debt platforms such as Trine (Sweden), Energise Africa (UK), Lendahand (Netherlands), bettervest (Germany) and Crowdcredit (Japan) provide larger ticket loans of $300,000 plus. Venture debt platforms such as Kiva’s direct lending initiative (USA) and Charm Impact (UK) offer smaller tickets of $10,000 to $100,000. Syndicated financing is mainly relevant for the growth debt platforms because they can manage the larger, more complex transactions that are likely to be brought to them by potential arrangers.
Crowd Power is funded by UK aid through their Transforming Energy Access initiative and implemented by Energy 4 Impact.