Climate Fintech: Pushing Forward a Greener, Cleaner & More Equitable Economy
Fintech is helping retail investors participate in a greener economy. Private capital is being redirected into sustainability projects and sustainable infrastructure in new ways. The past few years I have watched technology transform the way the world can participate in a greener, cleaner, and more equitable economy. Infrastructure and construction projects are subsectors of the finance industry traditionally reserved for very high net worth individuals and institutional investors. However, as fintech solutions continue to take off around the world, retail investors are gaining access to these markets. As a climatetech investor I am excited to combine my values, my venture dollars, and my skill set as a natural resources and sustainable development professional to help push forward this exciting movement.
Fintech & Climatetech = Diversified Portfolios + Attractive Returns
The intersection of fintech and climatetech offers retail investors access to alternative assets with interest payouts or dividends at an attractive return. Climate Impact Notes are one example of green investments that I have been adding to my portfolio over the last year. I have been using the Raise Green platform to facilitate these transactions.
Raise Green is an investor marketplace “[for] investors who want fractional ownership in clean energy and climate solution projects, and are looking to invest for local impact. [It] is licensed with the SEC and FINRA to sell private securities.” Raise Green’s platform is valuable because it facilitates the transaction between retail investors looking to invest in sustainable projects and institutions building a greener economy.
Last fall I connected with Matt, the founder of Raise Green, because his platform was synergistic to an angel investment I was making in Spain. I was closing a deal with Fundeen, a crowdfunding platform for renewable energy projects, and I was excited to see more options like this coming online. Raise Green offers retail investors a way to invest in the green economy, make some cash flow, and provide far better returns than keeping cash in a low yield savings account. I decided to invest a couple thousand dollars in two Climate Impact Notes available on the site to test out its usability and track the returns.
Climate Impact Notes
A note is a form of debt in which an investor loans a borrower money, that borrower agrees to pay back the principal amount after an agreed amount of time, and the borrower pays interest on the borrowed amount throughout the legal contractual agreement.
Note: these investments are unsecured and therefore come with some level of risk and their maturity limitations make them an illiquid asset
In September 2020, I made my first investment on Raise Green’s platform by investing $2,000 in NEIF’s Climate Action Investment Note. NEIF is a lender specializing in energy efficiency and resiliency projects. As explained on Raise Green’s site, NEIF’s four strategic areas include:
“Climate — NEIF finances energy efficiency improvements that reduce energy usage and the carbon footprint.
Affordability — NEIF financing makes energy and resilience more affordable for homeowners and businesses of all sizes and income levels with additional focus on low and moderate income borrowers.
Resilience — NEIF provides specialty financing and insurance programs for buildings in high impact weather regions.
Business and Job Development — NEIF accelerates contractor growth and employee development with training, products and programs.”
In April 2021, I made my second investment on the platform by investing $2,500 in the BlocPower Climate Investment Note. “BlocPower is a Brooklyn-based climate technology startup that is making American cities greener, smarter, and healthier…[it] uses proprietary software for analysis, leasing, project management, and monitoring of clean energy projects that save customers between 20-70 percent on annual energy costs.” I first learned about BlocPower in 2020 while conducting due diligence for Next Wave Impact’s 2020 Founders of Color Showcase. Though I had passed as an equity investor in the company that year, I was excited to still participate in the company’s mission to retrofit buildings in disadvantaged communities.
How Climate Impact Notes Work & How I Get Paid
NEIF Climate Action Investment Note
Coupon Rate: 5.00% per year, interest paid quarterly
Maturity Length: 5 years (9/17/2025)
In September 2020 I purchased a $2,000 NEIF Climate Action Investment Note. Over the next 5 years, NEIF will pay me 5% interest on that $2,000 principal, paying me out quarterly. Every quarter this transition will occur until 9/17/25, the note’s “maturity date”, in which NEIF will deposit the principal back into my bank account. Happy Birthday to me!
BlocPower Climate Impact Note
A fixed interest rate of 5.50% per year paid annually for the 12 year term of the Note.
In addition to interest, the Investor will receive annually a repayment of their invested principal. So for each of the 12 annual payments, Investors will receive a flat payment that includes interest due plus repayment of a portion of their principal.
12 Year final maturity (May 16, 2033)
In April 2021 I purchased a $2,500 BlocPower Climate Impact Note. While it is similar to the NEIF note, its structure is slightly different. First, I will receive my interest payment once a year instead of quarterly. Second, the length of BlocPower Note is 12 years instead of 5 years. Last, the BlocPower note starts paying back the principal over time versus the NEIF note that pays the principal back fully at the end of the 5 year contract.
Climate Impact Notes are a great way to diversify one’s portfolio and participate in a greener economy. However, there are other exciting financial products out there or coming soon. Some additional fintech climate related products that I am excited about include:
Atmos: Banking for a climate positive future
“AtmosACTION gets its high-performance savings rate from clean energy investments. Atmos deposits will fund innovative technologies and infrastructure that combat the global climate crisis.”
Finite: A platform enabling widespread sustainable infrastructure investment
I am SUPER excited about this and will write about it once the product is available and I have made an investment
Fundeen: crowdfunding platform to invest in renewable energy projects
Average Annual Return 7%
“When you invest in renewables through Fundeen, you acquire a number of shares in a company that will produce clean energy (equity). The profits generated from the sale of that energy will then be shared among shareholders in the form of dividends. Normally, the first dividend is received 6 months after the installation's network connection has been made.”