Crowd-funding - Abundance Generation Projects
Crowd-funding is a collection of finance to sustain an intiative from a large pool of backers - i.e. a crowd. And Abundance Generation use that model to fund renewable energy projects using their online platform as a brokerage site.
Individuals can pay any amount over £5 and get a regular return of 6-9 per cent IRR (April 2014). Once they invest in a company, they become shareholders and so are able to impact upon the companies decisions as well as benefit accordingly from any profits. The model is designed as a long-term investment - for example, as a pension - but people can get a quick return by selling their stake in the project at any point.
Abundance Generation describe their investment process as, The Abundance Positive Circle:
1. People like us, who have a positive reason to support...
2. ...Renewable energy companies, who build more...
3. ...Renewable energy projects, that earn more money for...
1. ...People like us...
However, rather than bonds or stocks, Abundance Generation offer investments in the form of Debentures - a type of certificate or contract that represents a loan made to a company. A Debenture is similar to a bond but pays a proportion of your capital back every 6 months, rather than all at the end. Unlike most bonds which pay a fixed 'coupon' or amount of interest each year, Debenture returns can take different forms as outlined above. And, because Debentures are not listed on a stock exchange, their value does not fluctuate with the financial markets, minimising the risk in the investment.
At the moment (April 2014), Abundance Generation is managing the crowd-funding for three projects, including ones that will provide solar energy and wind power. They also have five projects that are already funded and operational and ten pledge projects - these are projects currently under development that require pledges of support to build momentum.
- Currently (April 2014), over £5.5 million has been invested into renewable energy and ethical companies through Abundance Generation by over 1,000 investors. Meanwhile, the amount of money per-project raised ranges from just over £200,000 to around £1.5 million.
- Market Coverage is set to increase next year (2015) when the platform should be elegible for ISA status.
Abundance Generation was founded in 2011 to link up communities with sustainable energy projects, change the way people invest in their long-term future and make the financial system democratic.
Abundance Generation is supported by several investors and shareholders - the primary ones being the charities Nesta and Panahpur Foundation, as well as people from the financial services and renewable energy sectors. In addition, they also generate income from investments - it is not clear how much.
Abundance Generation is a crowd-funding platform - a finance model that is increasingly being used as an alternative way to finance projects with a degree of independence that is not usually seen with bank financing or investment by a large corporation.