It's time for community investing to go mainstream

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David Barton-Grimley Global Strategy Director, Embedded Financial Services, 11:FS
3min read

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If I’d told you six months ago that you could guarantee an affordable electricity supply for your home, you wouldn’t have cared.

If I’d then told you that the electricity supply was sustainable, you’d shrug. ‘Old news’, you’d say.

If I’d then said: ‘but wait, there’s more, you could actually own a share of the wind farm generating the electricity’, I’d have seen a raised eyebrow or two.

Having this conversation in late 2022? You’d have downed your coffee and pegged it to the website. Unsurprisingly, they’re over-subscribed.

Sustainable investing for individual investors belongs to a niche audience, limited to activist investors on crowdfunding platforms like Seedr or Crowdcube. But Ripple’s CEO, Sarah Merrick, has hit on a beautifully simple insight. Surely by investing in a wind farm, what I really want is the energy that comes from it?

Sustainable investing for individual investors belongs to a niche audience, limited to activist investors on crowdfunding platforms like Seedr or Crowdcube.

Ripple Energy’s business model is one of those facepalm moments where I groan and wonder why I didn’t think of something so wonderfully simple in the shower.

Post-pandemic, we increasingly crave and demand a deeper, more tangible connection to our planet and yet as we sit in our big metropolises, our strong positive attitudes toward sustainability rarely translate into affirmative action. Our trust is also low. We resolve to recycle but we know full well that in the UK, for example, most of it ends up in the landfill of another country.

Ripple does something that few have attempted, and that’s to turn something as ephemeral as electricity into a deep personal connection while also providing an exponential benefit to me: affordable, reliable energy.

The other to do this is Patagonia. It’s as if Yvon Chouinard knew I needed another example for this article, as he chose to put Patagonia’s ownership into a trust on 14th September 2022, with all profits going to causes for the planet. Of course, Patagonia isn’t the first non-profit around, but as a for-profit trusted mass-market brand, it may well be the first to provide you with a direct link between your wardrobe and saving the planet.

How Ripple delivers on its promise is equally innovative. Instead of creating complex investment and fee structures, each wind farm is owned as a co-operative among you, the shareholders. In their own words:

You will become a member of the Co-Operative Society which owns, or co-owns, the wind farm. The co-operative is democratic, each member gets one vote, regardless of how many shares they own. Ripple doesn't own any part of the wind farm, it manages the ownership on behalf of the co-operative.

For all the talk about blockchain DAOs (decentralised autonomous organisations), the humble co-operative has been here all along. Both have the potential to upend corporate structures and bring power to the people, and may or may not hit the mainstream. Co-ops are the quiet heroes of more democratised fair representation and ownership, and although some 10% of the world’s population work within a co-op structure, co-op investing has remained super niche.

In the UK, the community shares model has been around since at least the 2010s. In that time, some positive growth has been reported, with roughly 100,000 people investing £155m in UK co-operatives, but this is a tiny drop in the investment ocean and co-op business models have historically struggled to scale.

Businesses like Ripple have the potential to bring community investing into the mainstream by acting as the intelligent service which sits on top of a co-op, resulting in a slick product, both easy to purchase and understand. Another business that does this well? Tesla. I’ve always believed that the simple genius behind Tesla was to build a staggeringly good car that people want to buy first and foremost. The battery pack lasting at least as long as a tank of gas simply takes away the cognitive load of buying an electric car - people buy Teslas because they’re awesome cars.

Businesses like Ripple have the potential to bring community investing into the mainstream...

My unfiltered opinion

Like with Tesla, the road to scale may have some bumps along the way but if Ripple can negotiate the demands of this tricky sector at this acutely tricky time, I back them to revolutionise how we understand and access our energy. And once that happens, financial services would do well to follow suit. One thing’s for sure - community investing would put our industry’s pervasive trust issues well and truly to bed.