The Conversation (0)
Netherlands-based Symbid is seeing a growing number of players in the oil, gas, and solar sectors tapping crowdfunding for equity investment as the price of oil surges. At least five companies in the space are looking for crowdfunding, a method Symbid says also holds potential for junior miners looking to raise cash.
By Karan Kumar — Exclusive to Resource Investing News
“In the case of start-ups and SMEs, they are not getting sufficient funding,” Zandvliet said. “There is an equity gap for small investors. The Symbid way of directly investing in equity is unique.”
Crowdfunding platforms in North Amercia, such as Kickstarter, do not offer true equity for investors. Others, such as MicroVentures, offer equity for investors, but one has to be an angel investor. Currently, the US Securities and Exchange Commission (SEC) hinders equity-based crowdfunding by limiting private-equity investments to accredited investors whose net worth is more than $1 million, the Wall Street Journal reported this month. Only 35 non-accredited investors are allowed to buy private equity in a company’s offering.
Regulatory rules outside the US are less stringent, Zandvliet said, adding that Hong Kong-based Grow Venture Community (Grow VC) and UK-based Crowdcube are probably the only two other crowdfunding platforms based on the equity model.
Public mode or private mode
Founded in 2011, Symbid is currently helping 80 companies raise money in public mode, where companies disclose their names and business strategies. In its closed mode, it is helping 540 firms raise money. In closed or private mode, entrepreneurs decide with whom they want to share their business plan, Zandvliet said.
Of the 540 private-mode firms, about five are raising money in the oil and gas space, he said. He did not disclose names, but said that one Dutch firm, which aims to find oil by mapping, wants to raise 100,000 euros. Another Dutch company, which seeks to convert waste into oil, is seeking 250,000 euros on Symbid. Three others are finalizing business plans.
In the solar space, Antecy is trying to raise 100,000 euros through Symbid to produce liquid fuels with the use of solar energy. It has raised 5,380 euros so far.
Rising crude to attract oil, gas entrepreneurs
Zandvliet said that with the price of oil surging, there are bound to be more investors and entrepreneurs entering the space in the coming months. Crude for April delivery rose $1.95 to $107.06 a barrel on the New York Mercantile Exchange on March 16, the biggest gain since February 21, Bloomberg reported. Also on March 16, Brent oil for May settlement increased $3.21, or 2.6 percent, to end at $125.81 a barrel on the London-based ICE Futures Europe exchange.
Investors who want to buy into companies looking for funds through Symbid need a minimum investment of 20 euros, Zandvliet said. Start-ups can raise a maximum of 2.5 million euros. A company wishing to raise money via Symbid must be registered in the Netherlands. While Zandvliet hopes that Symbid can be rolled out internationally in the future, he added, “the SEC is not very attracted to the idea of crowdfunding. The US is off limits for us right now.”
According to Gartner Research, about $1.6 billion was generated through crowdfunding in 2009, and the number is expected to grow to $6.2 billion by 2013.
As small businesses seek funding in a tight environment, Zandvliet said he is seeing an increase in the number of people using Symbid. “We are seeing the number of users rising between 25 percent and 30 percent per month. The average investments that take place are in the 20,000-euro range. We serve over 7,500 different entrepreneurs and investors on our system. We see a lot of clean technology and internet concepts.”
Securities Disclosure: I, Karan Kumar, hold no direct investment interest in any company mentioned in this article.