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We review, rate and compare side-by-side the best crowdfunding impact investing platforms available for European investors: Lendahand, Trine, Energise Africa, GoParity, Abundance and Miris X.

Intro

When investing for impact, individual investors from Europe and the United Kingdom have several crowdfunding impact investing platforms to choose from. In this post, we will rate the main impact investing platforms and compare them side-by-side based on selected criteria.

How to select your impact investment platform

Impact investors are willing to go the extra mile and look beyond financial returns. However, it is not sufficient to look only at the social and environmental impact caused by an investment. Investing in crowdfunding impact investing platforms is the same as investing in crowdfunding projects or loans, and it brings similar financial risks as investing in peer-to-peer lending platforms.

It is important to investigate the company’s financial performance, assess how they select their partners and projects and, evaluate the volume and type of projects necessary to create and maintain a healthy impact investment portfolio.

We have used the following criteria when evaluating an impact investing platform and have rated each criteria from 1 (poor) to 5 (excellent) for each impact investing platform.

• Company financials: assessment of the current financial situation, total equity raised, funding partners, financial reports (whenever available)
• Return on investment: assessment of the expected financial returns in annual terms and operational fees (when applicable)
• Diversification: assessment of amount, size, type, and frequency of projects offered in the platform
• Due diligence and Risk: assessment of selection and onboarding process for partners and projects, quality of loan/offer document, average default rate and guarantees
• Impact: assessment of social and environmental impacts, disclosure of impacts, relevance of SDGs being addressed and societal reach

Platforms available for European investors

List of crowdfunding impact investing platforms

Compare investment platforms by their basic statistics:

Investment platforms ranked based on final YGW Rating average. Rating is from 1 (low/poor) to 5 (high/excellent), for each criteria (company financials, return on investment, diversification, due diligence & risk and impact):

Brief description of crowdfunding platforms

Description: Lendahand, a Dutch impact investing platform was founded in 2014 and has raised a total of 2.9 mEUR in equity, the last 1.2 mEUR through an equity crowdfunding campaign on Seedrs. The company focuses on proving working capital for small entrepreneurs in emerging countries.

Project types: solar home systems, agriculture, local entrepreneurs, SMEs

Guarantees: some projects have up to 50% guaranteed by SIDA, the Swedish International Development Agency

Who can invest? Investors from the European Economic Area, Switzerland, and the UK. US citizens cannot invest.

Description: Trine, the Swedish impact investing platform was founded in 2015 and has raised 6.3 mEUR in equity, mainly through Series A rounds. The company focuses on proving solar home systems to off-grid communities in Africa and Central America.

Project types: solar home systems

Guarantees: some projects have partial guarantee by SIDA, the Swedish International Development Agency

Who can invest? Investors from the European Economic Area, Switzerland, and the UK. US citizens cannot invest.

Description: GoParity is an impact investing platform founded in 2017. They focus on financing projects that are in alignment with at least one of the 17 UN Sustainable Development Goals.

Project types: clean technology and renewable energy

Guarantees: all projects have partial or full guarantees by a third party.

Who can invest? This crowdfunding platform targets mainly European investors. However, when creating a profile, personal identificaiton from Canada, UK or US seems to be acceptable.

Description: The Energise Africa impact investing platform was founded in 2017 and is the result of a joint venture between Lendahand and Ethex. The platform connects UK investors with off-grid sub-Saharan African communities in need of solar power.

Project types: solar home systems

Guarantees: some projects have first loss provision

Who can invest? Mainly investors from the UK. Also available for Investors from selected European countries (Austria, Belgium, France, Germany, Ireland, or the Netherlands). US citizens cannot invest.

Description: The oldest of the crowdlending platforms on this list, Abundance Investment, is a British impact investing platform that was founded in 2009 and has 5.1 mEUR in equity, being most of it raised in 2013. The company’s mission is to implement democratic finance by allowing individual investors to invest in green and sustainable projects in the UK.

Project types: renewable energy (wind, solar, tidal), energy storage, waste management, social housing, and councils

Guarantees: no

Who can invest? Mainly investors from the UK. Investors from the European Economic Area and Switzerland can also invest, however, an extra fee of £5 is charged per international withdraws. US citizens cannot invest.

Description: MIRIS X is a Norwegian impact investing platform that was founded in 2016, however, no information was found about the company equity. MIRIS, the company behind the platform, offers several technology solutions, including green computing and network solutions. MIRIS X, the platform, is part of the green building unit and offers a single project on its platform, the Svart Hotel.

Project types: green building

Guarantees: asset-backed investment, maximum Loan-to-Value (LTV) ratio of 75%

Who can invest? Institutional investors through US Capital Global and individual investors through the MIRIS X platform.

How to invest in impact investing platforms

The risks of investing in crowdfunding impact platforms

Impact investing is an investment strategy with the potential to have the most positive impact on society and the environment. The companies behind the crowdfunding platforms are purpose-driven, meaning that their core business is related to the impact that they are creating. Moreover, they are not publicly listed companies and as a consequence are not subjected to the short-term, profit-driven mindset of the stock market.

However, crowdfunding impact investing platforms are a relatively new business model. Most companies on this list have less than 5 years of operations and probably no platform has reached profitability yet. Operational expenses need to be supported by additional equity investments.

None of the crowdfunding platforms offers a full guarantee over the capital invested. Investors should not expect 100% guarantees on this type of investment. However, some of the platforms (e.g. Trine and Lendahand), offer partial guarantees from reliable institutions such as SIDA, the Swedish International Development Agency. MIRIS X green bonds are partially guaranteed by the asset value of Svart Hotel.

When investing in crowdfunding impact investing platforms investors are subject to capital risk and might lose all the capital and interest invested. Moreover, impact investments are subject to several risks, including but not limited to market risk, country risk, currency risks, and project performance risk.

How much to invest in crowdfunding impact investing platforms?

Crowdfunding impact investing platforms are high risk and investors should invest in line with their risk appetite. There is no definitive number of how much of your portfolio should be allocated to crowdfunding.

As a rule-of-thumb, the Dutch Autoriteit Financiële Markten (AFM) “advises investors to only commit 10 percent of their investable assets via crowdfunding”.

How to diversify your impact investments?

It is recommended to diversify your investments across different crowdfunding platforms, local partners, and types of projects.

Considering the crowdfunding impact investing platforms on this list, it could be a good idea to spread your investments by impact type. This way you could have in your portfolio some projects with positive environmental impact and others with positive social impact.

For example, if you are from the EU, one option would be to use Trine to invest in solar projects and Lendahand to invest in community projects. For UK investors, Energise Africa and Abundance could be used, respectively, in a similar way.

Conclusion

Investors based in Europe – including the UK – have several good options of crowdfunding impact investing platforms to add to their portfolio of sustainable investments. Despite those being relatively new businesses and crowdfunding being a riskier type of investment, the platforms presented on this list have a good diversity of impact projects to offer, and so far, have a good business reputation in the impact investing industry.

If you are looking to make a direct impact on local communities and invest your money towards SGDs-related projects, then investing via crowdfunding impact platforms is a good way to start. Remember to only invest what you are willing to lose.

The list of crowdfunding impact investing platforms presented in this post is not exhaustive and does not cover non-European platforms.

Let us know if you are aware of other crowdfunding impact investing platforms that could be worth reviewing and including here. We aim to keep this list updated going forward, and our ratings might change accordingly.

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Not investment advice: The information provided on this website is intended for general information purposes only and does not constitute investment advice, financial advice, trading advice, or any other sort of advice. You should conduct your due diligence and, if necessary, consult a qualified independent financial advisor before making any investment decision.

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