The New Wave of Energy Crowdfunding
Crowdfunding projects seem to know no bounds. With platforms like Kickstarter, IndieGoGo and RocketHub springing up all over the Internet, the power of the group has taken many movies, games, toys, and even bioluminescent plants into solid reality.
Now, oil and gas startups are getting into the mix, with hopes of shaking up “the big six”.
For new entrepreneurs lacking deep pockets, crowd funding offers the opportunity to compete with existing oil and gas companies. Plus, since they’re starting from scratch, there’s nothing to stop them from exploring alternative energy sources and making them financially viable.
The market is there, and is already powerful. Crowdfunders raised $2.7 billion worldwide in 2012 for more than a million individual projects.
Governments are also eager for the success of crowd funding. The United Kingdom government, for example, has hopes of attracting 75 billion pounds in low-carbon fuel sources by 2020. Crowdfunders could cover up to 50% of that goal.
In Germany, citizen-owned renewables, in particular wind farms, already make up a significant market share. With 25% of their energy coming from renewables and nearly half of those sources owned by the public, German citizens invested 137 billion in renewables over the last 8 years.
Stateside, the country’s largest solar power provider predicts heavy crowd funding involvement in rooftop solar panelling, with a projected $5 billion investment in the next five years.
Oil and gas companies have good reason to get into the mix as well. New companies can diversify their interests more easily using crowd funding, and by bringing the public into investing, companies add a new level of transparency to their business. Trust built by transparency would benefit reputable operators and their businesses.
New companies aren’t the only potential beneficiaries either as big oil and gas companies could modify existing contracts to accommodate crowd funding. Either way, investors win. By providing a low-cost buy in with potentially high returns, new drilling efforts offer investors the chance to diversity and protect themselves from losses, just as any oil and gas company might.
Small Players, Big Goals
The new crowdfunding energy market has several small players, all hoping to shake up energy as we know it. Here are a few of the start-ups trying their hands at crowd funding:
- EnergyFunders.com – EnergyFunders is a site devoted to raising money exclusively for energy projects. They allow investors to browse through projects, and offer a documented investment process.
- Symbid – Symbid is a Dutch firm that offers crowdfunding for junior mining companies and oil and gas exploration companies where the traditional investment banks won’t go. They are offering direct equity funding which is normally not allowed for smaller investors within North America.
- EAFunds – Energy Access Funds is a startup firm that has created an online marketplace for the oil and gas industry in the US and Canada. As investments into the energy sectors are mostly limited to pension funds or even endowments, EAFunds allows individuals to be able to invest in oil and gas industry opportunities.
- Crudefunders.com – Crudefunders was created to allow any size investors to invest in new explorations and drillings. They are more active in only including opportunities that meet their minimum criteria for investment.