Although sustainability is at the top of the agenda for many global countries, initiatives promoting sustainable practices and technologies are not always favoured by institutional investors. Whether they lack clear statistical justification of the innovation utility or lack impact scale, reasons for the lack of funding might be different but the outcome is the same – sustainability-focused startups often need to look for alternative financing avenues. Crowdfunding platforms are one of those accessible and yet powerful vehicles which help sustainable projects attract investor attention and money.
Gaps in Sustainable Development Financing
UN Trade and Development (UNCTAD) has recently revealed alarming figures regarding financing gaps for sustainable development. By UNCTAD estimations, developing countries lack about $4 trillion investment annually to properly fund their SDGs and climate action initiatives. Furthermore, while CO2 emissions are mainly generated by developed and middle-income developing countries, poorer economies are those who bear the main burden of negative impact brought about by climate change, such as rising temperatures, natural disasters, droughts, floodings, loss of biodiversity, etc.
Why SDG Needs Greatly Surpass Available Funding
The financing gap does not only concern large national programs or public sector initiatives. Private enterprises that endeavour to change the world for a better and greener future significantly lack accessible and affordable funds as well as mentor support. Besides, all the other SMEs face challenges in their transition to net-zero operations.
In a 2023 survey, 48% of small businesses recognised insufficient funding as a major barrier to climate initiatives. Almost 70% of respondents indicated that securing additional financial resources is essential for initiating or speeding up their efforts to reduce emissions.
Another report shows even greater dependence on financing, where about 70% of respondents from the companies in North America, Europe, and Asia, state the required hefty investment is either a very significant or somewhat significant hurdle in adopting their sustainability strategies.
At the same time, the vast majority (80%) of financial institutions cite limited access to data on SME clients’ sustainability performance as a critical constraint in providing adequate funding for their net-zero initiatives.
Crowdfunding Is Essential for Sustainable Finance
Crowdfunding is often the simplest and most accessible way for a sustainable project to raise necessary capital. Angel investors do not have all those regulatory or risk management restraints in distributing their funds. Besides, crowdfunding platforms may unite communities with similar values (such as sustainability). Its members may become not only investors but also prospective customers for an emerging company. When startups connect directly with eco-conscious supporters who are passionate about what they do, green projects have better chances to build a loyal customer base from scratch.
Moreover, crowdfunding campaigns are not only about the money. They help create awareness about the startup’s mission and values, drawing attention to its commitment to sustainability. When they turn out to be successful, it’s a strong signal of a healthy demand for the startup’s sustainable products or services. This validation can be valuable in further growth stages when approaching other investors or partners.
Finally, while traditional financial institutions may find an innovative eco-startup too risky an investment, individual backers who share the financial risks and invest smaller sums might find the project worthwhile without as many hesitations. Moreover, individuals often seek trusted ways to make the world greener beside their personal consumption habits. Many angel investors even prioritise impact investing rather than profitability. Crowdfunding gives them an opportunity to make a change. Some analyses of major crowdfunding platforms indicate that sustainability or green initiatives make up roughly 5–15% of all campaigns, which translates to thousands of eco projects each year.
How to Choose the Best Platform for Sustainability Initiatives
Some of the crowdfunding platforms have a clear focus on social impact or environmental sustainability. They might seem like the best choice for sustainable startups. However, it doesn’t mean that platforms of general purpose are to be ignored. When choosing the best crowdfunding platform for sustainability initiatives, startups should carefully evaluate several key factors to ensure that the platform aligns with their mission, target audience, and funding goals. Some of the essentials to pay attention to are:
- Platform target audience and niche segments. Platforms that have a proven track record in supporting environmental, green, or social impact projects can provide a more engaged and supportive community likely to resonate with your project. Also consider platforms with a geographical proximity. Investors are often fond of funding projects that revolutionise local communities rather than far-away countries.
- Funding model. Crowdfunding campaigns can be donation-based, reward-based, equity-based, or debt-based. Each model has its own benefits and implications for control, ownership, and investor expectations. Consider which one best suits the needs of your particular project. Besides, the platforms may host both all-or-nothing campaigns when you get money only on condition that you reach the target and flexible fundraisers which allow you to keep what you raise even if the goal isn’t met.
- Campaign cost. Compare the platform fee structures, focusing on your startup needs. Lower fees can mean more capital for your project, but higher costs can be linked to some essential added-value services, promotional support, marketing guidance, campaign management and community engagement tools, or expert advice tailored to sustainability projects.
- Compliance and Reputation. As with every other financial service, look for well-established platforms with transparent policies, proven track record, and strong public trust. The crowdfunding tool should comply with the relevant legal and regulatory requirements and be able to safeguard your data, money and intellectual property. Certain platforms partner with environmental organisations or sustainability networks, thereby boosting their exposure and credibility.
Top Crowdfunding Platforms to Fuel Your Sustainable Project
Once you’ve figured out which platform aspects are the most important for your startup, choose the most suitable option from the available variants. To make it easier for you, we compiled a list of crowdfunding resources to every taste and needs.
Indiegogo
The platform is suitable for innovative and green-tech projects. It offers both flexible and all-or-nothing funding options, as well as access to the global angel investor pool. The campaign deadline here is up to 60 days. Startups can create perks to reward and encourage prospective backers. Indiegogo charges a 5% platform fee on the funds you raise plus a variable processing fee. It also connects startups with experts in creative services, fulfillment, prototyping, distribution, and more to propel their businesses forward.
StartSomeGood
The platform specialises in supporting social impact projects, enterprises, and founders. It fosters a community of like-minded individuals committed to social good and environmental causes. Basic StartSomeGood services are free, but consulting and coaching offerings come at additional costs ranging between $50 AUD and $5000 AUD. The platform offers fundraising opportunities for both early stage startups (crowdfunding) and growth-ready impact enterprises (impact lending).
Kickstarter
Kickstarter is one of the largest and most reputable crowdfunding platforms out there. It has a massive global audience and offers high visibility for campaign creators. It isn’t focused on sustainability or social causes, but on creative and innovative projects, which can of course be green tech as well. The platform has robust support infrastructure and useful marketing tools. Its funding model is all-or-nothing so you won’t receive any funds unless a project meets its goal. If a project completes successfully, Kickstarter collects a 5% fee from the funds raised. Another 3-5% is charged by its payments processor, Stripe.
Trine
Trine offers individual backers investment opportunities in solar energy projects in growing markets like Nigeria, India, Vietnam, Chile and more. These are impact loans rather than traditional crowdfunding. The investment platform is regulated by the Swedish Financial Services Authority and is trustworthy. Its fee structure is complex. The platform charges around 3-4% in management fees, 2-4% of the total loan amount in arranger fee, as well as some late and administrative fees when some loan conditions are not met. The interest rate (or profit share ratio for profit share loans) is negotiated and fixed when a borrower is applying for a loan.
WhyDonate
The Netherlands-based platform offers personal as well as organisational fundraising options in over 100 countries of the world. It is well suitable for charities and nonprofits. WhyDonate supports multiple currencies, languages and payment methods. It does not charge a percentage of the donated amount, only the transaction processing cost of €0,25 + 1.9% per donation. Its funding model is flexible, so you can receive the investment even if the target amount is not reached. The donations are paid out weekly, monthly or directly on demand to your bank account. You can also receive recurring (monthly and annual) donations on a donor subscription basis.
Chuffed
Chuffed is a dedicated platform for social impact and sustainability causes fundraising campaigns. Related projects can be presented by individuals, not-for-profits, social enterprises and community groups. The platform offers fully-featured customisable donation forms, team fundraising, and integration with Google Analytics and Facebook Pixel tools to track the campaign reach. The platform charges no fees, if the investor chooses this option. In this case, the only applicable costs are processing fees paid by donors. However, if a donor selects the flat fee structure, a variable payment processing fee will be taken out of the donation, plus a platform fee of 4.9% will apply.
EcoCrowd
The platform is fully committed to sustainability. Projects seeking funding on EcoCrowd are evaluated by the German Environmental Foundation using a set of specially designed criteria and receive personalised guidance. The platform offers a unique funding model where sustainability supporters join the funding community and donate at least one euro every month to the joint funding pot. Every month, EcoCrowd presents three select projects and donors vote to choose the best one which will receive the amount collected.
Bottom Line
Crowdfunding plays a crucial role in bridging the financing gap for sustainable initiatives, offering startups and impact-driven enterprises an alternative way to secure funding while engaging with like-minded supporters. By carefully selecting the right platform, sustainability-focused projects can maximise their chances of success, gaining not only financial backing but also increased visibility and community support. As the demand for green solutions continues to rise, crowdfunding remains a powerful tool to drive meaningful change and accelerate the transition toward a more sustainable future.
