Chapter 5: New Frontiers in Green Project Financing: Leveraging on the Crowd

Crowdfunding has become a viable alternative for the financing of sustainability-oriented projects; it allows initiators to collect funds for “green” initiatives and small investors to contribute to the reduction of carbon emissions by accessing investments that are normally open to large investors only. The role of alternative finance is crucial for the continued development of renewable energy projects, given the long-time horizon of such projects, their technological uncertainty and the strong dependence of cleantech investments on political or macroeconomic factors.

We study the determinants of the success of 423 “green” projects published on 27 European crowdfunding platforms specialized in renewable energy with the aim to find the determinants of fundraising success in a business that exhibits such peculiar features.

We find that, consistently with the hypothesis that pledgers are moved by both financial and intrinsic objectives, projects delivering some monetary or tangible benefit to the local community are more likely to reach their funding target. Moreover, we find that investors assign a significant value to being shareholders of “green” projects. On the contrary, we do not find a significant impact of local institutional and environmental factors.