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We also have a version of this article in Portuguese: Avaliação GoParity – Plataforma Portuguesa Oferece Interessantes Projetos Cleantech

Intro

GoParity is a new Portuguese impact investing platform. Starting from EUR 20, sustainable investors can finance impactful projects that are in alignment with at least one of the 17 UN Sustainable Development Goals.

The company was founded in April 2017 by Nuno Brito Jorge and Luis Couto. Nuno Brito has experience in the energy sector and founded other businesses before. Luis Couto has a large experience in the financial sector, where he worked in different roles for Group Santander.

GoParity has raised EUR 700,000 in three funding rounds, being the most recent one a pre-seed round. GoParity is a relatively new platform with more than EUR 4 million invested in a total of 78 sustainable projects.

Main features

GoParity offers interesting features, allowing investors to have either active or passive role, when investing in projects:

GoParity in numbers

(Updated: Jan/2021)

• Total amount invested: EUR4.0 million
• Total repaid to investors: EUR 0.73 million
• Minimum investment: EUR 5
• Number of investors: 9,750
• Number of projects: 78, being the majority of projects addressing SDG 11 (Sustainable Cities and Communities) and SDG 12 (Responsible Consumption and Production)
• Annual interest rate: 4% – 8%
• CO2 emissions avoided: 19,711 tCO2
• Number of trees (equivalent to the CO2 captured per year): 898.686

How does impact investing with GoParity work

GoParity offers a simple and straightforward platform, where users can easily set up their accounts, add money to their wallet, and start investing right away.

The platform offers crowdlending, or debt crowdfunding, for sustainable projects. Therefore investors will be financing loans to small and medium businesses. The projects are divided into 5 categories:

1. Sustainable energy
2. Blue economy
3. Smart sustainable cities
4. Rural development
5. Social entrepreneurship

Projects have an average interest rate of 4.9%, typically ranging from 4% to 6%, and a project maturity of 5.1 years.

According to GoParity FAQ, investors should pay attention to the following project details:

• Payment periodicity: most projects pay monthly and its value corresponds to fixed capital amount and interest on the outstanding capital on every month
• Grace period of capital: the period when installments are only the interest on the outstanding capital
• Term: the project duration

The amount to the financed per loan is usually on the lower side, sometimes being as low as EUR 10,000. However, some projects can be funded in several rounds. For example, Oceano Fresco is at its fourth round of funding, with a loan of EUR 150,000 that will complement the previously funded amount of EUR 300,000.

Note: Despite the potential diversity of projects that the platform could offer, in October 2020 there were less than 5 projects avaiable for investment at the platform.

Live view of GoParity website and projects available for investment:

How does GoParity perform due diligence and select project promoters

GoParity defines project promoters as “building owners, energy service companies, or simply a businessperson with a big project to be launched”.

To be eligible business promoters need to:

• Be entitled to decision power within the company
• Not to be in debt with the bank
• Have at least two years of registered activity
• Not to be a defendant of a lawsuit containing material evidence

Complementary to the above, the GoParity team also assesses the company’s financial stability to accommodate the payment of loans and consults the company’s register at the respective countries’ central banks.

The result of the due diligence is summarized on a document called “Fundamental Information to the Crowdfunding Investor” which can be found on each project’s page.

What are the risks and guarantees when investing with GoParity

Risks

As a typical crowdlending platform, investors at GoParity are subject to the total or partial loss of the capital invested. Investors are subject to several risks, including insolvency risk, technical and financial risks, and currency risk.

GoParity performs thorough due diligence and risk assesment to evaluate all projects in the platform and evaluate their feasibility.

GoParity’s risk assessment model follows 3 steps:

• Eligibility: they evaluate project alignment with the UN Sustainable Development Goals and if the project promoter is compliant with Tax Authorities, Social Security and Banking systems.
• Statistics credit model: they assess and grade the promoter’s default probability in the following 12 months.
• Technical evaluation: they perform a qualitative analysis based on the project technical and financial viability and promoter’s financial viability.

The outcome of those steps indicates the overal health of the promoter, which is then rates on a scales from A+ to D, where A+ represents low risk and D high risk.

It is also important to mention the illiquidity risk. Projects in GoParity have an average maturation time of 5 years and despite the existence of a marketplace (secondary market) at the platform, traded volumes and number of offers are scarce. Investors should be aware that once invested, there is a high likelihood that they will need to hold their positions until project maturity to fully realize their potential gains.

Guarantees

All projects at GoParity have partial or full guarantees of capital by a third party. In case the promoter does not comply with its financial obligations, the equipment used in the project may be pledged.

The details of the guarantee can be found at the IFIFC (Fundamental Information to the Crowdfunding Investor).

Social and environmental impact

GoParity is straight forward when disclosing the expected impact of its projects. At the project description they indicate which SDGs are being addressed by the project and have a detailed description of each social and environmental impact in bullet points.

On their homepage, they inform the total tonnes of CO2 avoided by the GoParity portfolio. Moreover, signed-up investors can see on their summary page the impact that their own investments are causing. This mainly includes impact metrics in tonnes of C02 avoided. They disclose as well other emission-related metrics, such as the number of trees planted, car trips between Lisbon and Paris, and energy consumption of households being offset.

For example, for the project Oceano Fresco IV, the first open sea off-shore clam farm in the world, has the following impact:

• Capacity to capture 99.4 tonnes of CO2 per year, based on an estimated annual production of 600 tons of clams.
• As an alternative source of protein, the sustainable cultivation of clams will alleviate multiple demands on land resources. Being an alternative to intensive fishing, it will help and restore marine resources and the seas’ biodiversity,
• When the farm’s operation starts, 100 jobs are expected to be created.

Conclusion of GoParity review

For this GoParity review, we can conclude that despite being a relatively new platform when compared to other impact investing and crowdfunding platforms, GoParity seems to have started with the right elements. It has interesting and innovative projects, a good disclosure of impact metrics, third-party project guarantees and useful features.

Their 5 types of projects (sustainable energy, blue economy, smart sustainable cities, rural development, and social entrepreneurship) bring a good amount of diversity to investors that are interested in clean, alternative, and future-proof technologies.

Financial returns are on the lower side (4%-6%) and project maturity is a bit longer than other impact investing platforms.

For European investors looking to diversify their impact investments and who are comfortable with less established technologies, GoParity can be a great impact investing option.

Invest with GoParity and get a 5 EUR discount on your first investment

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