Triodos investment crowdfunding – demystified

I prefer straightforward investing without the camouflage of crowdfunding/It’s not clear to me how Triodos interprets crowdfunding

Crowdfunding can mean different things to different people, but it was the best term we found to describe what our investments platform does: it connects potential investors with impactful organisations looking for investment capital.

We think this type of direct investing is straightforward as you can decide what investment is right for you, both in terms of potential financial return and risk, but also in terms of impact. Do you want to help finance renewable energy or house people with a learning disability or both? Can you afford to lock away your money for 15 years or do you prefer a six-year time horizon instead?

Triodos crowdfunding is about enabling you to make direct investments in impactful organisations that we’ve worked with to ensure they have a sound business model, are creating real impact and are led by a credible senior management team.

The investments have been far too long for my financial situation

Some investments offered on the crowdfunding platform are for 10 - 18 years. This is a long time to tie up your money and we appreciate this won’t be appropriate for all. These long-term investments are usually for renewable energy companies and the length of the investment matches the time that the company is forecast to generate sufficient cash to repay the bond in full.

Other intermediaries structure these investments for a shorter term. This means that investors are taking ‘refinancing risk’, which means that the company will need to be able to borrow money from another lender in order to repay the bond. For renewable energy companies we prefer to try to match the term of the loan with the length of time required to repay all of the capital.

We aim to offer a variety of investment terms. In 2020, we had five investment offers available on the platform: three of which were six years in duration, one was 10 years and one 14.5 years.

Share offers and bond offers contain different and specific risk factors, which you should consider in full by reading the offer document for that particular investment. These risks relate specifically to the type of investment product and the individual company you are investing in.

I have hardly seen any investments/There is very little available

We know it is disappointing that sometimes several months go by without a new offer on the platform. We aim to make available around five to 10 investment opportunities each year but unfortunately, they don’t come at even intervals throughout the year.

At any one time, our corporate finance team is working with a dozen organisations to support them in getting ready for their capital raise. There are often many factors at play when getting ready to raise finance which might include looking for properties to acquire or to lease, getting in place other capital that is required such as a bank loan or capital grants and of course running their business day to day.

Where possible, we give advance notice of offers that might be coming by publishing the details as ‘coming soon’ on the platform. We usually do this when an offer is two to four weeks away from launching.

Email us at crowdfunding@triodos.co.uk and let us know if you found the above helpful or if you have any other queries and we will draft a future article addressing your questions and comments.