Fintech started with digital payment solutions and blockchain technologies enabling disintermediation from banks to companies. As the scope evolved, the spectrum of financial technology now ranges from e-commerce, crowd lending and aggregation platforms, equity crowd funding, international money transfer, simplified internet-based services in the insurance industry, to roboadvisors and gamification in the investment space.
Fintech strengthens Cleantech: New Business Models in the Green Economy
Financial innovation is critical for Cleantech companies and the development of a sustainable economy, as data-driven business models are becoming central to the green economy.
Starting early with arbitrage business models such as SolarCity, to financial metasearch engines for solar lead generation such as GeoStellar, financial technologies are becoming integrated in CleanTech solutions. In the investment space, new innovations such as solar asset-backed securities, green bonds, yieldco’s, green derivatives, and the like have facilitated large scale deployment of renewable energy.
More recently, technologies such as blockchain – the decentralized ledger system and smart contracting – are being tested in the CleanTech space. For example, a project called Transactive Grid in Brooklyn is testing both the idea of a clean-energy local microgrid and the use of blockchain technology to enable its transactions. It represents a new way to trade solar energy among neighbors (15 households), consisting of two energy producers and 13 potential buyers. Similarly, a company called Grid Singularity is deploying blockchain technology to authenticate energy transactions between buyers and sellers in developing countries.
Even large corporations are experimenting with blockchain technologies. Fortum, a Finnish energy company recently stated their intent to pilot smart contracting to all of its customers, according to Bloomberg News. By acquiring Info24 AB, a Swedish software developer with a focus on the so-called Internet of Things, the company is looking at blockchain to help with transacting its energy, EV charging and smart homes business.
Fintech impacts Cleantech Investment Strategies
CleanTech clusters were aligned with investment managers of mainly early stage companies, or are becoming integrated with FinTech hubs to scale financing across supply chains.
Financial innovation has been the strategic focus since the launch of the Global Cleantech Cluster Association. It’s mission is the development of a new, scalable financial mechanism to facilitate pension fund investments in CleanTech companies to at appropriate risk and return expectations. Such investments are now in Switzerland and abroad virtually not possible at a scale that would have economic impact.
Multi-Asset Renewal Funds as a FinTech disruptor for Cleantech Investments?
Three pillars are required to build out this vision:
- Financial technology to efficiency source and allocate companies in investment assets
- Access to capital from pension funds to anchor large investment commitments
- Digitalize the fund structures to meet the operational needs of these complex funds
Digitalisation is on the cusp not only of changing business models of startups and large corporations, but has already demonstrated an impact on how investments will be made in new sectors of the economy. Funds-in-a-box, and digital platforms for fund structures such as MARFs will lead the way for disintermediated financing models.
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