Some of the startups we’re most excited about combine attractive investments with environmental benefits. Because let’s be honest, the world doesn’t need another Monsanto—it needs sustainable innovation and clean energy.
Equity Crowdfunding is Ushering in a New Era of Impact Investing
Credit Suisse predicts that environmental innovation will be one of the dominant investment themes in the next decade, however, there’s been a recent, crippling lack of investment in the cleantech industry, and examples abound of renewable energy companies that received grants and investments only to see early investors abandon them before they could come to fruition. Could it be that investors were expecting Snapchat and Uber-like returns when in reality, sustainable companies may take decades to mature?
Raising funds for green ventures through traditional bank loans may be even more problematic for sustainable entrepreneurs. Many of these institutions thrive on climate chaos and generate enormous wealth from fossil fuels and other environmentally devastating practices: in 2019 alone, big banks funneled $2.6 trillion into practices directly leading to biodiversity loss. This puts them in direct conflict with green startups’ ethical and sustainable efforts.
So how can we replace the broken system of corruption and greed, and move towards a greener future? The answer to that could be—you guessed it—equity crowdfunding. This investment strategy will help democratize the transition to clean energy currently dominated by large companies and public projects.
The Equity Crowdfunding Movement is Democratizing Investing
Interest is growing from individuals to support sustainable innovation to fight the climate crisis, and new equity crowdfunding regulations allow anyone—not just accredited investors—to invest through crowdfunding platforms. This democratization of investing makes it easier for everyday Americans, or “small” investors, to encourage large companies to be mindful of the activities they fund—directly or indirectly.
Equity crowdfunding provides a much-needed alternative for sustainable and ethical startups to raise funds, especially in parts of the world where it’s nearly impossible for an eco-entrepreneur to secure a bank loan. Thanks to equity crowdfunding, recent clean energy projects are often backed exclusively by the crowd.
Even in the developed world, equity crowdfunding can be the ideal route for sustainable innovators because unlike many big banks or VCs, the crowd is ready and motivated to support sustainable efforts en masse. Studies show millennials are already funnelling their money into socially responsible investments (SRI) and environmentally, socially and governance-friendly (ESG) projects. SRIs now account for $26 trillion—more than one quarter of all worldwide assets under professional management.
Sustainable Ventures Are Benefiting from Equity Crowdfunding
More capital being funnelled into sustainable ventures incentivizes both eco-friendly startups and others to lean towards more sustainable initiatives. This forces companies in various industries to reduce inefficiency, waste and pollution, and their vendors to do the same.
It’s the benevolent cycle we desperately need: as equity crowdfunding becomes more popular, competition among platforms will increase along with trust, money, and attention from investors. More funds will become available, and there will be more space than ever in the market for sustainable entrepreneurs. Investors and banks will start to consider the effects of the climate crisis and the role they play in it by holding stock in companies that fuel environmental destruction.
Equity Crowdfunding Investors are Generating Wealth via Impact-Investing Returns
In addition, investors are increasingly seeing sustainable investments as a viable option for generating. Because it is: American impact-investing returns have been found to outperform the market, and 90% of fund managers say sustainable investing is “more than just a fad.”
Sustainable investing means people don’t have to worry that their hard-earned cash is working to benefit companies that destroy the environment and exploit lax regulations in other countries.
Renewable energy isn’t going away any time soon—as opposed to Snapchat, it’s actually something that the world will still need a century from now.
Financial activism has been around since the 1970’s, but the recent democratization of investment means the other 99% of Americans can now support innovative companies and technologies people and the planet desperately need.
So let’s bust the myth that impact-investing returns are bad for your ROI, and encourage people to put their money where their ideals are and become a real part of climate change mitigation.
Because, to reiterate, the world would certainly be fine—or perhaps better off—without another Instagram, but it will definitely not be fine without an economy that supports sustainable, green innovation.
Arora Project is your ultimate equity crowdfunding marketing partner—whatever the color of your venture may be.
Did you know Arora Project is Wefunder’s #1 marketing partner with a 100% success rate in equity crowdfunding campaigns? Let us fundraise your next venture.
