Living with unreliable or no power is still a reality for more than 1.8 billion people. Estimates say that nearly half a trillion dollars are needed to ensure access for all. Charm Impact has set out to help close this investment gap, catching the momentum of a growing number of people seeking sustainable investment opportunities.
Within 24 hours after launching its crowdfunding round, investors pushed Charm Impact beyond its £100,000 target, valuing the company at £2.7 million and enabling them to expand their team, develop the platform, and become regulated by the FCA.
By providing peer-to-peer lending opportunities, the startup connects impact investors with entrepreneurs in developing economies who sell clean energy solutions. Loan terms range between six and twenty-four months and carry 8% annual interest.
“How you spend your money has an extraordinary impact on both people and planet,” says Gavriel Landau, one of Charm’s co-founders.
He explains how Charm reduces risks for investors. “For each loan we incorporate a portion of concessionary philantrophic capital. This de-risks the loan for investors but also allows us to offer lower interest rater for our borrowers.”
In short, the company receives funds from non-profit organizations, which are allocated across its project portfolio and are the first to take a loss in case a borrower defaults on a loan. The associated risk reduction makes the portfolio more attractive for private investors, while it allows non-profits to reinvest any repaid grants into future projects.
To date, Charm’s peer-to-peer loans have resulted in clean energy for nearly two-thousand individuals and dozens of businesses, without any defaults.
The loans have enabled entrepreneurs to provide solar energy for powering sewing machines, lights and refrigerators. Besides that, they have facilitated the electrification of health clinics in India, as well as better access to affordable, reliable electricity in Nigeria.
“Transparency is central to our process,” tells Bethany Larsen, the company’s co-founder. “You, the investor, see exactly where your money is going and the impact in generates.”
The company’s aim is to scale up, facilitate £10 million worth of impact investments in the coming years, and positively impact the lives of more than one hundred thousand people.