Interview with Giorgio Mottironi, Chief Strategy Officer at sustainable crowdfunding platform Ener2Crowd.
Despite crowdfunding platforms acting as an intermediary between investors and fundraisers, their role is crucial in understanding project risk levels, especially when it comes to complex industries like renewable energy. Let’s look into sustainable crowdfunding.
Today our guest is Giorgio Mottironi, Chief Strategy Officer at Ener2Crowd. Ener2Crowd.
Giorgio, thank you for joining us today! Could you please tell us a little bit about your platform?
The idea of Ener2Crowd was born in 2018 and became an operative platform at the beginning of 2020. We have been the first Italian lending crowdfunding platform fully dedicated to green projects whose goal is CO2 (or GHG) emissions reduction. Today we are the largest sustainable and ethical investing community, made of circa 6.000 subscribed people and more than 1.000 who have already become beneficiaries of a green yield.
We want to become the largest diffused and inclusive green investing fund: we know and believe that the only way to create a sustainable future is to do it with people and for the people. This is why every day we work with professional operators to share the huge economic and societal value that is locked in the “fossil-as-usual model” – where scarcity, competition, predation, colonization, and centralization are the main business drivers -, giving people the possibility to finance and support projects related with renewables’ energy generation, energy efficiency, circular economy, and sustainable practices – improving a model where abundance, collaboration, inclusion, distribution inspire and drive collective progress.
Ener2Crowd offers two types of scoring internal and external could you please explain what is the differences and how they work?
Ener2Crowd offers a unique scoring system whose goal is to give an outlook of the opportunity value: it is called EnerSCORE and is directly related to the investment interest rate.
We wanted to create a coherent indicator that could help investors assess the opportunity risk and align it with their “appetite”. It comes in the form of a “letter” (A, B+, B, B-) but matches with a number calculated with a proprietary balancing algorithm. The higher is the scoring, the lower is the interest rate. But still, there are some cases in which companies with a good rating want to give very high interest rates to our community, in order to engage and share as much as possible (testifying that what we do is not just about interest rates or financial yields).
The EnerSCORE is the “external” summarized scoring, that we also provide, within the overall package of investment information, an internal, very detailed financial scoring, elaborated by a third independent party.
What are the key parameters that you analyze during internal/ external scoring?
The EnerSCORE is the result of a three-phase analysis, whose outcomes are included in a matrix of data that produces a final score, calculated through a proprietary algorithm.
Every phase of the analysis has a different contributing weight: the first one, and most importantly executed by a third independent party, is the financial one. We go deeply into key economic indexes, shareholders’ structure, and history, to verify the capability of the proponent to contract the loan and repay the investors as promised. The second one is executed by our internal team and is focused on the technical and economic elements of the project: we verify the TRL (technology readiness level) and market maturity of the hardware, and we verify if the economics are correct (upfront costs, operative costs, estimated revenues), and we confirm the amount of produced environmental benefits along with both the life of the financing and of the project. Then we conduct an analysis of the company’s capabilities (track record and skills) in the field they’re proposing the project.
As written above every phase has a different weight: the first one is 60%, the second one is 30%, and the last one is 10%.
Our algorithm will crunch all those data through simplified indexes and produce the EnerSCORE.
What data set has to be presented to the investor so he can make well-informed investment decisions?
As we promote responsible and informed (conscious) participation, we provide all the documents and information both a professional and ethical investor would like to have access to technical data, corporate documents, the full financial analysis, a summary of the environmental benefits, contracts and structure of the loan.
We also provide a written summary of all the documents in each project sheet they can find on the platform.
In your opinion, based on which criteria investors should choose a sustainable crowdfunding platform?
That is a big issue that does not just involve a crowdfunding platform: the primary criteria is full disclosure on the number of environmental benefits the project will create, and full disclosure on who you are giving your money to, precisely visualizing the full value chain.
So transparency about the goals produced and operators involved. That is a long-time debated problem in the sustainable crowdfunding world where every opportunity is sold as the best one, while values and effective results are moved in the background.
This is why, in addition to all the documents we provide defined a proprietary index called “ISI” (Investment Sustainable Intensity or Investment Sustainability Index) that precisely indicates the amount of CO2 emissions that every euro you in invest in a project will abate each year.
We provide it for every project, and we track it globally for our platform portfolio. Currently, every euro invested through Ener2Crowd is reducing about 0,5kgCO2 per year. Compared to the carbon intensity of our economy (we emit/consume 0,256kgCO2 for each euro of the GDP) is quite a good inversion of the perspective toward our net-zero goal, and strong evidence of a new good emerging finance.
How would you describe an “ideal” sustainable crowdfunding platform?
Focused on increasing the impacts investors can contribute to, directly or indirectly. Spreading education about the climate crisis. Ready to debate with the internal and external community to improve processes and communication. Involved in political and climate activism to promote a fairer economic system.
And this is all we are struggling with since the first day we started working on Ener2Crowd. We want everyone on board and committed.
What are the 3 rules for making a successful sustainable crowdfunding investment?
Do not stitch only on short-time high-interest investments, and verify the risk grade. Invest a small amount each time (a month for instance) and apply the “compound yield” method from Warren Buffet (possibly reinvesting principle and interests, it would boost the value multiplication within 5-10 years).
Look at how it is day-by-day going to impact the perception of your role as a game-changer in the world.
Giorgio, thank you very much for the interview I believe it will help investors to better understand how to invest in sustainable crowdfunding and will motivate platforms to become “ideal” platforms.
