Increasing lending to early-stage clean energy companies
Charm Impact is a debt crowdfunding platform focused on lending to early-stage clean energy companies operating in Africa and Asia. They address the 'missing middle' by lending £10,000 to £250,000 to local entrepreneurs. By comparison, the majority of debt crowdfunding platforms in the space target growth-phase firms with a minimum ticket size of £300,000-plus. Charm Impact launched in mid-2019.
Crowd Power has supported Charm Impact since mid-2019 through the provision of first-loss match funding, ongoing support of operating costs and a convertible equity investment during their seed round. Crowd Power provided 25% first-loss match funding for Charm Impact’s second loan, which was to Winock Solar in Nigeria.
Charm Impact co-founder, Gavriel Landau, explained the match funding allowed the platform to expand their network beyond family and friends, to other potential funders. Gavriel also believes the match funding allowed Charm Impact to fill the loan quickly: "While the match was a small amount [~£2,000] it was the largest single investment we had received at that point; it significantly de-risked the project for us by reducing the risk of campaign failure, while investors benefited from the first-loss layer."
The borrower Winock Solar, which leases solar units to micro-enterprises in Nigeria secured an early-stage equity investment from Acumen Fund in late 2020 and raised a further £65,000 in debt via Charm Impact.
As an early-stage start-up themselves, Charm Impact also needs equity to grow. In late 2020, Charm Impact launched a campaign on UK-based equity crowdfunding platform Crowdcube to raise £100,000 in seed investment. But before the launch, Charm Impact needed to secure 60% of their target as an anchor investment.
Crowd Power provided £20,000 as an anchor investment (convertible into a grant), which proved an “important part of communications during the raise" according to Gavriel. He believes the funding reduced the time it took to raise their anchor investment and helped convert a high percentage of the investors they approached.
Charm Impact's campaign far exceeded expectations, raising £270,000 (270% of the target). Crowd Power also supports the ongoing operating costs associated with the running of the platform through quarterly grants to cover the costs of origination and due diligence.
Crowd Power is funded by UK aid through the Transforming Energy Access initiative.