To accelerate the clean energy transition and achieve the goals of the Paris Agreement it’s necessary to mobilize huge investments in Renewable Energy across the world. As private investors increasingly demand new ways to invest responsibly, and with EU and national targets requiring a larger share of renewable energy in the energy mix, the co-founders of Fundeen saw a need and a market. They established the first crowdfunding platform for Renewable Energy projects in Spain.
I’ve spoken to Adrián Bautista Sánchez, the co-founder of this start-up that wants to help developers of smaller Renewable Energy facilities in Spain capture funding. They also want to make it possible for ordinary people to invest in Renewable Energy projects. Not only because people believe in the product, but because it’s a good investment.
“The crowdfunding platform that democratize Renewable Energy Investments” – Adrián
What problem does Fundeen solve?
Fundeen helps to solve two main problems, Adrián explains.
The first is the difficulties developers of small renewable energy facilities have in capturing funding. One of the upsides with renewable energy is that it can be produced close to where it’s consumed. And smaller plants closer to the end user can help the energy system become more efficient, Adrián explains.
However, developers of smaller renewable energy facilities often have problems capturing finance from institutional investors. As smaller plants have lower returns, they cannot compete with huge power plants that are more profitable due to economies of scale, Adrián explains. To provide some context, he explains that plants smaller than 10MW would typically cost about 7-8 million euro, while huge power plans would normally have a price tag of 50 million euro.
“One challenge is that institutional investors, like banks, are not interested in analysing small renewable energy projects. For them it might take as much time analysing a small facility as it does to analyse a huge one. Investment funds would typically look for projects with an expected return above 10%, while smaller facilities typically have an expected return of 7%.”
The second problem is the difficulties private investors have in investing responsibly. Responsible consumption habits are increasing. This relates to food, clothes but also to investments, Adrián explains.
“Fundeen wants to provide the opportunity for investing in a responsible way and we saw there was a market. For people it matters where they put their money. And there are not a lot of solutions in the market today that help people invest responsibly.”
How does it work in practice?
I ask Adrián to take me through the journey of the crowdfunding platform both from the perspective of the investor and from the perspective of the project developer.
“When a small developer is ready to build the facility and have all the authorizations in place they can register through the platform. We then analyse the Financial, Legal and Technical aspects of the project: Financial: Is it profitable with an expected return of at least 7%; Legal: Definition of the legal structure of the investments; Technical: Quality of the equipment used; Are the necessary authorizations in place?
For the investor the journey is easy, and registration takes 2-3 days. They need to register through the platform, and we verify their documentation. They can then associate their bank account (or pay with a credit card for a fee). Once the investor has registered, the platform allows the investors to browse through different projects and detect investment opportunities. When a private or institutional investor has made an investment, the platform allows them to continuously follow how the project is progressing with detailed information on energy production, weather forecasting or profitability expectations.”
Fundeen’s first project was launched in February 25th, only one week after being officially authorised to operate under the Spanish financial regulator supervision, Adrián explains. The project is a 30kW photovoltaic facility that was funded in less than 24 hours.
The start-up has found a lot of inspiration from similar funding platforms in other countries.
“We are not the first in Europe. In many countries like Germany, the UK and the Netherlands they have been doing this for years. We saw a lot of potential in Spain and wanted to try this here.”
Fundeen was started by two brothers, Nacho Bautista Sánchez and Adrián Bautista Sánchez. They’re both civil engineers, and Adrián explains that Nacho came up with the idea when – while working as an asset manager for renewable energy investments in an investment fund – he discovered other crowdfunding investment platforms and considered to apply that business model to renewable energy assets.
For a long time, they worked on the idea on the side of full-time jobs, Adrián explains. They founded the company in July 2017 and had other jobs until Nov 2017. However, they got to the point where they needed to decide if they wanted to dedicate themselves fully to the project. After winning the Incubator Program of the Banco Santander (the largest bank in Spain) and getting this validation from people within the sector they thought they could do it. The Incubator Program of Banco Santander lasted 6 months and allowed them to test their idea, dig into the market, undertake a feasibility study and study examples from others that have done the same.
When the two brothers came home one day to tell their mother that they were both quitting their jobs, she first got scared, Adrián tells with a smile. However, they both knew they had to take the risk, and they through the timing was good.
“Winning the Banco Santander program – and getting the belief from people in the investment sector was a huge motivation to move forward. We are now 8 people in the team: The two founders, one investor, and 5 employees including web-developers, marketing and CFO.”
Key milestones in your journey so far?
- “A key milestone was getting the CNMV (The National Commission of the Stocks Market of Spain) authorization in November 2018, which is an authorization that is necessary to provide financial services;
- Obtaining a participatory loan from ENISA is another one. ENIAS is a public/private institution that provide high-risk funding to innovative businesses;
- The third was being part of the Climate KIC Spain as one of 15 projects are selected each year- and being a finalist at the South Summit in 2018 selected as one of 100 start-ups from 3800 applications.
- The most important milestone is without any doubt was to fund the first project in less than 24 hours. “It was the best market validation that we could have, better than expected”.
Adrián explains that they are currently in the second stage of the Climate KIC Spain program and in March they will know if they make it to the third phase.
How does Fundeen contribution to the Paris Agreement on Climate Change and the Sustainable Development Goals?
- “We help bring new money into the Renewable Energy Sector
- We encourage people to invest in a better way
- We help increase distributed clean energy production in Spain (Our objective is funding 1% of the distributed Renewable Energy in Spain after 5 years)
- We will help reduce 130 000 tons CO2/year after 5 years”
Where do you see Fundeen in 3 years?
“Fundeen is a long-term start-up and a place that makes your job count. I can definitely continue doing this for a long time. We are now in an early start face where it’s important to gain trust form the market. This will be our main focus in the time to come. We have investments and will have a new round. However, on the longer run interesting markets could be South America (e.g. Chile) and Africa where the potential for renewable energy deployment is huge.”