We all know that the positive use of money can help change
in the world, and we launched the Triodos investment crowdfunding platform in
2018 to give people the opportunity to do just that. After all, it’s your
money, why not take control of it, make a positive decision, and consider
investing directly in some great organisations that deliver positive change?
Crowdfunding has become
big news over the last five years, as it provides an important alternative
source of finance for smaller businesses, but many prospective investors wonder
how risky it is.
At Triodos, we’ve been crowdfunding
for over 10 years – well before the term was even coined. So, as we celebrate
the first anniversary of our platform, we’re more than happy to be transparent
about our track record and tell you more about the impact the investments have
In January 2018 we were proud to be the first UK
bank to launch an online crowdfunding platform and offer an Innovative Finance
ISA (IFISA). This meant we could continue offering investors a range of direct
investment opportunities in impactful businesses – but in a tax efficient
manner through this new, third ISA.
In our first year we’ve
raised over £20 million from our platform users for eight fantastic social and
environmental organisations – all of which achieved their capital raising
objectives. The investment opportunities have been diverse – including shares
with EIS tax relief, and a range of bonds eligible to be held in the IFISA from
6-year charity bonds to longer term inflation linked renewable asset investments.
The number of investors using the website is growing nicely, and this year, we’re
hoping to offer an even wider range of ethical investment opportunities to
attract more investors.
Image: Coigach Community CIC
One of the first
investment opportunities to be offered was a £1.8m bond for Coigach Community Energy
– a wind power project which is supporting a community in the Highlands of
Scotland. Since receiving the investment in July 2018, the business has already
generated profits to support new community initiatives including new playground
equipment for the local primary school and signage to encourage more people to
explore the amazing geology of the North West Highlands Geopark. They also have
great plans to develop more community and ecotourism facilities in 2019/20.
The £640,000 of equity capital raised so far for
Devon-based marine technology company Fishtek Marine has been vital in helping
this pioneering business achieve a doubling of sales of bycatch mitigation
products. All the company’s products are truly ground-breaking and are designed
to protect marine wildlife in the UK and throughout the world from entanglement
in commercial fishing nets.
As we’re looking ahead
to an exciting future in 2019 and beyond, we think it is important to be equally
as transparent in our crowdfunding activities as we are in our banking
operations. We think this is important for the whole of the crowdfunding sector
and are happy to take the lead.
Image: Pete Kibel and Rob Enever of Fishtek Marine
So here are the hard
stats - in the last 15 years we have completed:
63 transactions raising £153m of risk capital for 40
The source of the
from individual investors
from institutional investors including charitable trusts, foundations and
ethical bond funds
The investments were raised
for different types of business:
for charities and community businesses
for limited companies
across a variety of
positive impact sectors
for renewable energy projects
for social impact and charities
for food, farming and other environmental businesses
The overall investor return (after any losses and
before tax relief) across all these transactions is currently 5.4% per year.
We are proud of this performance, because our
track record shows that ethical investment is working. Of course, in addition
to a decent financial return, our community of investors know that their positive
investments have helped to combat climate change, improve social inclusion and
benefit the planet.
Some might suggest that
a 15-year average financial return of 5.4% per year is solid but perhaps unexciting
compared to returns targeted by (say) a venture capital fund. Well, we make no
apology for this for a very good reason. We see our job to structure and
promote investments which are fair and work for both the organisation raising
the finance and the investors. Most of our charity bonds and community
renewable energy bonds are offered at an affordable 4 – 6% per year, so the
average 5.4% per year return across the 63 transactions is broadly on target.
It’s important to
recognise that investment in unlisted shares and bonds issued by small to
medium sized enterprises carries risk and it is possible that not all
investments achieve their objectives. When we reviewed the 63 transactions, we noted
that four have failed and two of the share issues have almost certainly reduced
in value. Overall however, we are satisfied with a relatively low capital loss
ratio of 2.4% of total funds raised. This strong performance is testament to
our rigorous client selection process and the thorough due diligence carried
out on all Triodos investment offers by our experienced corporate finance team.
Image: Bristol Wood Recycling Project
We hope to report back mid-year on further
successes from our crowdfunding investments. In the meantime more information
on crowdfunding through Triodos and a range of investments, such as Bristol
Wood Recycling Project which offers our lowest ever minimum investment of £50,
can be found on our website.
Please note, your
capital is at risk through these investments. The investments may be long term
and are not readily realisable. Learn more about the risks.