ABN AMRO Sustainable Impact Fund, INCO Ventures and NGO ACTED have participated in the latest fundraising round for crowdfunding platform Lendahand which backs entrepreneurs in emerging countries
In brief
- Crowdfunding platform Lendahand offers retail investors the opportunity to help fight poverty by investing in projects that provide loans to SMEs in emerging markets
- Most of the projects on the platform focus on renewable energy access and agriculture
- The platform has raised €5.5m from ABN AMRO Sustainable Impact Fund, INCO Ventures and NGO ACTED
Dutch crowdfunding platform Lendahand has raised €5.5m from the ABN AMRO Sustainable Impact Fund, French impact investor INCO Ventures and French humanitarian NGO ACTED to help close the funding gap for SMEs in emerging markets.
Launched in 2013, the crowdfunding platform offers retail investors in Europe the opportunity to help fight poverty by investing in projects that provide loans to SMEs and entrepreneurs in emerging markets.
According to the World Bank, there is currently a $5.2tn (€4.9tn) annual funding gap between emerging markets entrepreneurs and SMEs seeking funding and available capital from traditional financial institutions.
Speaking to Impact Investor, Lendahand CEO Koen The, said: “If you want to tackle global issues, you have to start a movement. We all need to work on this. Lendahand can be one of the tools that people use to drive access to renewable energy, alleviate hunger and improve people’s health and livelihoods. Everyone should be able to contribute to achieving the SDGs.”
Investors can choose from a number of projects on the platform and invest from as little as €50 with the potential to earn up to 7% annual interest.
The said that alleviating poverty was the central motivation for all projects, which focused mainly on renewable energy access and agriculture. The platform also works with SME lenders and microfinance institutions in emerging markets.
SDG-focused
The explained: “Our ultimate goal is to fight poverty and that has many faces. It can mean you don’t have a job, or even if you do, you may only have the means to cook and light your home with kerosene, which is dangerous and causes terrible health problems.”
He added: “We are also focusing increasingly on SDG 13, to fight climate change, by improving access to clean energy and SDG 5, which is about driving greater gender equality, by developing a screening and investment tool that will allow us to channel 55% of investments to women-led projects for the next three years.”
The says his team employs strict due diligence on all the projects and that on average, it takes six to nine months to onboard a project on the platform.
To date, Lendahand has invested €130m in 2,925 projects and says it has improved the lives of almost 1.2m people. It has also created 9,699 jobs, installed 104,544 home solar panel systems, 7,700 biogas digesters and saved 370,716 tonnes in CO2 emissions.
European expansion
The says the company will use the money raised in the latest funding round to extend the platform’s presence to other European countries and streamline access for investors.
The platform has also applied for the European Crowdfunding Service Providers License, which came into force in November last year and allows crowdfunding platforms to operate from within any EU country.
“With this money and the new license, we want to expand to France, Spain, Germany and the Nordics, with the aim of reaching half a dozen countries in the next few years,” he said. “The bottleneck for us is the investee side. It’s really hard to source good investments for our platform. So, we want to use the money to get more quality investees, work with other asset managers and improve our financial technology and machine learning tech to streamline the investment process.”
The adds that the support of INCO Ventures and ACTED goes beyond the financial benefit and would help Lendahand gain a foothold in the French market.
“It’s easy to say that as an online platform you can expand easily, but every country is different. You can’t just copy and paste what you have. It doesn’t work like that. We hope that our partnership with INCO Ventures and ACTED will help open doors for us in France and allow us to establish a team and physical presence in the near future,” he added.
Lendahand expects the retail market in impact investing to grow and the loans supplied to emerging markets through its platform to reach €1bn by 2026.
“Retail investors are becoming more vocal. When we started in 2013 we couldn’t imagine it would become such a big thing, so fast!” he said.
The Lendahand team has a parallel project in the UK called Energise Africa, which allows retail investors to invest in clean energy projects supporting SMEs and entrepreneurs in Africa, using an Innovative Finance Individual Savings Account (ISA), a retail investment structure available to UK residents.
