What kind of projects does bettervest finance?
bettervest is the world’s first crowdinvesting platform for energy efficiency and renewable energy projects. Under certain conditions, the platform also finances sustainable innovations that conserve natural resources and protect the climate.
Is there a project size limit?
Projects can be sized between 50,000-2,000,000€ (the upper limit is imposed by the German Retail Investor Protection Act). In exceptional cases, smaller funding sums are also permitted, in order to finance, for example, particularly innovative or socially impactful projects. A very high investment sum only makes sense if it is possible to find enough investors during the funding stage. Our investors can invest amounts starting at €50, up to €10,000.
What kind of credit does bettervest supply?
The financial product offered by bettervest is a so-called “energy transition loan.” In legal terms, this is referred to as a “subordinate loan” or as “subordinated debt”. Banks tend to classify such loans as equity, because in the event of insolvency, they have a lower priority in relation to other bonds held by the borrower. When co-financed through bank credits, additional subsidies or equity capital, the projects can exceed our 2.5 million € limit. Do not hesitate to contact us if you have higher capital requirements.
What kind of collateral is required?
In the case of subordinated loans, like those offered by bettervest, neither collateral is needed nor do operating assets need to be sacrificed. On your balance sheet, the installed technology will count towards your operational assets. Existing credit lines will not be burdened.
What are the requirements for initiating a project with bettervest?
The most important prerequisite is being able to present a well-defined, self-contained, sustainable energy project. The proposed project should be classifiable under one or more of the following categories: energy efficiency, resource efficiency and renewable energy. Financially, it must range between 50,000-2,000,000€ and all costs, interest rates and fees must amortise within 10 years. In other words, the cost savings and earnings achieved by the intended measure must be large enough so as to cover all expenses over a maximum of 10 years. In order to calculate these figures an economic assessment is essential. The latter should encompass costs of implementation as well as energy consumption data before and after the planned measure. In order to maintain credibility with respect to the crowd, an independent third party will always be consulted. This can either be an engineering firm or qualified energy consultant of your choosing, or a certified consultant recommended by bettervest. The cost of this energy report can be included in the total funding sum. If, after an initial assessment, it appears the amortisation period exceeds 10 years, part of the funding sum can be covered by the borrower’s equity, so that only the portion financed by bettervest has a payback period of 10 years. We will support you in determining the optimal duration of the repayment and the interest rate.
Are there any geographical limitations consider?
Currently, we are only able to finance projects for borrowers registered in Germany, Austria, Bulgaria, Singapore and Nigeria. However, we are working on expanding into new markets. Therefore, please do not hesitate to send your inquiry if you match all other criteria but are located outside Germany. bettervest only finances ethically sound projects that benefit humans, animals and the environment.
Aside from energy efficiency and renewable energy projects, what measures does bettervest finance?
Under certain conditions, we finance projects or companies which do not strictly speaking achieve energy efficiency but conserve resources, produce sustainable goods or deliver a sustainable service. The minimum requirements are as follows:
- The company should be no younger then 3 years old.
- At least one annual balance sheet should be presented.
- The technology is simple and easy to comprehend.
- A complete business plan should be presented.
- Financial as well as liquidity plans should be presented.
- The project should be socially impactful i.e. provide positive externalities.
What information is needed to assess the energy efficiency of a measure?
Even if you are unsure as to how you can reduce your energy consumption, we are willing to support you. Simply send us an email via firstname.lastname@example.org with essential information regarding: your company (the borrower), what you want to improve, your current energy costs (electricity, heat, mobility, etc.). If you have already begun planning your projects we need the following:
- A description of the planned project
- A current credit report of the company to be financed. These are available free of charge at https://www.creditreform.de/mitgliedschaft/online-services/eigenauskunft.html
An economic analysis of the project. If such a document does not exist, please send us:
- Your annual energy costs for electricity, heating and mobility
- Details regarding your heating system, such as age and make.
- Information regarding your roof: is your roof able to physically support solar panels? If yes, what is the surface area(m2) of the roof?
- Any other relevant data
After the initial assessment is successful, what are the next steps?
- According to the information you have submitted, bettervest will draw up a concrete financing offer including the financing volume, the sum, the investment period and the interest rate.
- If you were unable to send us a profitability/economic analysis, we would first consult you on which products or technologies are best suited for your business.
- Taking into account the possible energy saving potential, the risk assessment and the estimated return on investment, we let you determine the interest rate and the terms of the loan. On this basis we will draw up a declaration of intent (LOI). If necessary, you will send us any additional documents.
- Subsequently, the external energy consultant will assess the project.
- After commissioning the crowd-investing campaign, we list the project on our platform and advertise it extensively to relevant target audiences.
- After approximately 2-4 months the funding sum will have been collected through our platform and the loan will be distributed to the borrower.
How do I submit a project proposal?
In order to submit a project proposal for assessment, simply follow this link and describe your project in approximately 1000 characters. The description must include the following:
- Address of the project
- Contact person
- Estimated schedule of the project
- The measure you plan to undertake
- The technology that will be implemented for this purpose
- Energy usage before and after implementation
- Energy costs before and after implementation
- Other relevant data needed for the profitability assessment
- Estimated funding volume required
Why should I choose bettervest instead of a bank?
- Complementary offer: Firstly, we are not in competition with traditional bank financing. bettervest is a complementary resource which can be used in combination with other financing methods.
- Marketing potential: unlike a bank, bettervest not only funds your project but leverages it to become a valuable marketing asset. Through individual marketing strategies, you as a project owner can use the crowdfunding campaign to engage your employees, customers and local community and to communicate your corporate social responsibility.
- Cost-effectiveness test: when financing a project via bettervest, you achieve a high degree of certainty regarding the profitability of your project. Using our financial and technical know-how we are able to ensure due diligence. Moreover, we present your project in an accessible manner so that potential crowd investors can easily understand its purpose.
- 100 percent of all costs incurred are covered by the funding, including fees, energy consultants, marketing measures, funding, implementation, and so on.
- You do not need to resort to equity.
- The subordinated loans issued represent so-called “mezzanine capital”.
- Since the crowd-invested volume is not classified as borrowed capital, existing bank credit lines are left open and can be used for important daily operations.
- Crowd-investing can be used as equity in order to acquire additional bank loans.
What marketing services does bettervest provide?
On the basis of the information you have provided, we present a detailed and high-quality description of your project on our platform. As part of our service we create professional videos, images and texts. We publish your campaign with a special emphasis on CO2 reductions, sustainability and environmental protection and distribute the campaign via our social media channels as well as press releases:
- More than 4.000 registered users
- More than 19.000 Facebook followers
- We can reach target groups defined by you through newspapers, TV, radio, etc., as well as through social media in order to attract new customers and employees
What about taxes?
On the portion of the loan granted to you, you will not have to pay any taxes. Only the bettervest fees are taxed according to the statutory value added tax (VAT). You should also take into account that when offering (additional) rewards, these are subject to VAT. However, please note that bettervest is not a tax consultant. If you have any further questions regarding taxes, we are happy to put you in contact with the appropriate tax experts.
How long does it take from the first inquiry until the implementation?
This depends to an extent on how far along the planning process you are. If the energy consultant report, cost estimates and profitability calculation are already available, the campaign can go online relatively quickly. We will need to do a quality check, create the online project profile and launch a marketing campaign, which can take between 1-2 weeks.
If the necessary data is not yet available, the processing time depends on the complexity of the measures involved and the availability of the respective service provides (energy consultants, etc.). Raising the funds can take anywhere between 0-90 days, depending on the project size and the perceived attractiveness for crowd investors. We recommend commissioning the implementation of the measure, once the 14-day withdrawal period has expired as the financing is then contractually secured. You are of course, free to initiate the implementation at your own risk as long as you comply with the contractual agreements.
Is there a minimum or maximum funding sum?
A project’s minimum funding requirements should be at least €50,000. The maximum amount is €2,500,000. Please note that a very high investment sum only makes sense if it is possible to find enough investors during the funding stage. Investors can invest from as little as €50 up to €10,000.
I do not have an energy consultant or a contractor. What should I do?
bettervest is happy to assist you in finding a suitable energy consultant and contracting company! Thanks to our experience, we have built up a network of consultants and contractors who possess the necessary expertise regarding all types of technologies. Additionally, thanks to our team’s deep-rooted interested in the field, we can offer a wide-ranging overview of innovative energy and efficiency technologies. We will gladly impart our knowledge and experience to you.
What is the success rate of bettervest’s projects?
100%! Up until now, every project has been successfully realised.
Do I have to provide my own crowd?
A key benefit of any crowd funding campaign is that the project owners can involve their own customers, employees and community. To reap these benefits, we urge project owners to provide their own crowd. However, you can of course count on our crowd as well. With more than 19,000 Facebook followers and 4,000 registered users (March 2017) bettervest has a large marketplace at its disposal where projects can be advertised and interest in the project can be generated. Throughout the campaign our marketing efforts will not only help finance your project but will raise significant awareness about your company or cause in general.
What kind of fees are payable for bettervest’s service?
First of all, we want to emphasise that all costs incurred will be covered by your future energy savings. We charge a one-time fee for the extensive marketing and communication services offered, the listing on our platform and for enabling access to crowd investors. This fee totals to a maximum of 10,75% of the funding sum. After the first contract year, we charge an annual handling fee of 1% for the administration of the investments and for processing transactions.
Can I make repayment in the form of products, services, coupons?
Yes, for part of the repayment this is possible and would be advertised as such on the project profile page. This way, you can not only attract potential customers and raise awareness about your products or services but also approach existing customers in a new way. As project owner, you have the added benefit of only bearing production costs and value added tax (VAT) while the repayment value may be higher (but no higher than the non-binding price recommendation) than the product or service offered.
Who do I contact if I have questions?
For technical matters the best point of contact will be either your energy consultant or the company that will install the technology. bettervest will answer your questions about the project as a whole, however, we also have in-house expertise regarding energy technologies. Please write to us using the online contact form.
Does the project owner need to be a listed company, association or equivalent?
Yes, at the moment we only allow projects represented by a legal person or an individual buyer. He or she must be based in Germany. If you do not meet these requirements, please do not hesitate to contact us. If necessary, we can help you find a suitable partner for your project.
How long is the funding phase?
The funding phase is currently confined to a period of 90 days. However, depending on your needs and the size of the project the funding phase can vary in length. On average, our projects reach their funding goal within 30 days. A crowd funding campaign, when already in process, can be extended once by 14 days.
What conditions can the investors expect?
While the maximum contract period is ten years, the ideal project length lies between three to five years. The exact period will be deduced from the energy saving potential and the interest rate. Projects initiated by companies must yield a return of at least 5%. However, we make individual exceptions for social, ecological or non-profit projects as well as projects that hold a special public significance.
Can the crowdfunding exceed the established target goal?
Unlike other crowdfunding platforms, we always set a specific funding limit which is based on the estimated implementation cost of the project. Overfunding is therefore neither necessary nor reasonable. There is, however, a risk of underfunding, in the event that individual investors use their right of withdrawal or do not transfer their pledged amount. There are two ways we can prevent a funding from failing:
- As soon we have reached the funding goal, we accept reservations for investments. The reservations will kick in if someone withdraws.
- You can find an alternate source of finance to make up the difference if your project is underfunded.
Do I have the option of terminating the crowdfunding at any time?
Once the funding period has begun you are unable to cancel the project. Reversing the transactions would incur significant financial as well as reputational costs.