Social inequality, climate change, and the energy transition– we are facing complex challenges that demand long-term, resource-conscious solutions. Real estate, as one of the largest single asset classes, and largest source of CO2 emissions plays a central role in this context. Real estate is where the largest impact on energy consumption, social inclusiveness, and sustainable economic practices can be found. Real estate shapes how we live, work, and stands for a majority of the energy we consume and CO2 emissions we have. 

For this reason, we at Reliance have taken the strategic decision to increasingly offer investment opportunities in real estate. These real estate investment opportunities align with our mission to offer both financial and sustainable returns. The vast majority of these investments are closely aligned with at least one of the United Nations’ Sustainable Development Goals (SDGs).   
 
What does sustainable real estate mean? Why does renewable energy sources play such a key role? In this article we will explores these topics and how you as an investor can earn both a financial and sustainable return through invesdor.  

Real estate, renewable energy, and sustainability: Why is Reliance expanding its range of investment opportunities into real estate ? 

Reliance follows a clear strategy: sustainability and financial returns are at the core of the investment opportunities we offer. Through the investment opportunities in corporate debt, equity investments and renewable energy we have been able to offer attractive financial returns together with environmental sustainability. This has allowed our investors to diversify among three asset classes, ultimately reducing risk while maintaining attractive expected returns. We have however identified that social sustainability is an underserved topic in the financial markets. 

By offering our investors with real estate investment opportunities we believe that we can not only allow our investors to have an even larger environmentally sustainable impact but also tap into social sustainability and diversify further through adding a fourth asset class. This is why we have taken the strategic decision to increasingly offer investment opportunities within real estate. 

Our decision to increasingly offer investment opportunities within real estate is a direct reflection of our commitment to the United Nations Sustainable Development Goals (SDGs, https://sdgs.un.org/goals). We emphasize environmental aspects as well as social and economic criteria. Every investment opportunity is assessed in advance using a proprietary checklist. Our minimum requirement is ESG – Environmental, Social and Governance – compliance while we strive for having at least 80% of the investment opportunities SDG.  Key SDGs we focus on include the following:  

• Good Health and Well-Being (SDG 3): Sustainable real estate promotes healthier living and working environments through improved air quality, the use of natural building materials, and modern ventilation systems—contributing to greater well-being for occupants. 

• Affordable and Clean Energy (SDG 7): Buildings that rely on renewable energy sources such as solar power, geothermal energy, and battery storage help reduce CO₂ emissions—and ongoing operating costs.  Reliance investment projects are examined to determine the extent to which they cover their energy requirement from renewable sources. 

• Reduced Inequalities (SDG 10): Inclusive and socially responsible real estate offers fair access to affordable housing, especially for students, seniors, and low-income households. In the investment opportunities offered at Reliance this can mean for example socially supported real estate.  

• Sustainable Cities and Communities (SDG 11): Sustainable real estate can for example contribute to the resilience and livability of urban areas through the renovation and repurposing of existing buildings and smart neighborhood solutions. Ultimately having an impact not only on the livability of the community but also on the environment. When evaluating investment opportunities within real estate we consider multiple factors including local context , support mixed-use development, and help shape future-proof urban structures.   

• Responsible Consumption and Production (SDG 12): Sustainable real estate construction relies on resource-efficient construction methods. Such real estate prioritizes the refurbishment of existing buildings and the use of eco-friendly materials. Our assessment criteria for sustainable real estate construction and refurbishment include, for example,  material circularity and long-term maintainability.

Through our strict evaluation criterion including the above-mentioned SDG’s we at Reliance want to enable our investors to invest in real estate offering attractive financial- and sustainable returns and the opportunity to diversify into a new asset class. 

INFO: What are sustainable buildings?   
Sustainable real estate refers to buildings or neighborhoods that are planned from the outset- or transformed according to environmental, economic, and social criteria. Such buildings can be characterized by resource-efficient construction methods (such as recycled materials and low CO₂ emissions), high energy efficiency (including renewable energy and smart building technology), and socially inclusive usage concepts (such as affordable housing and flexible space layouts). 

Sustainable real estate investments: challenges and opportunities      

The real estate market is undergoing noticeable change: rising energy costs, stricter climate regulations, and the growing demand for sustainable investments are driving the need for new, creative solutions. This affects not only new construction—where sustainable options can be considered in terms of land use, materials, and energy—but also existing buildings, which are renovated and brought up to modern energy standards. 

• Renovation Needs and Energy Efficiency: 
  Many existing buildings no longer meet current energy efficiency standards. Energy renovations can reduce energy consumption by up to 50%, though they require higher upfront investment. Reliance offers an attractive solution here: private investors can invest comparatively small amounts in the construction- or renovation of sustainable buildings allowing the investors to gain a financial return while also having a positive environmental impact. 

• Stricter Climate Regulations and Compliance: 
  The EU Taxonomy and local national regulation, such as Germany’s Building Energy Act (GEG), require that properties meet specific environmental criteria. This regulation is ultimately expected to lead to an increasing investment need in the real estate sector, allowing investors to earn a financial return while being part of the transition and also earning a environmental return. 

• Growing Demand for Green Properties: 
  Studies show that tenants and buyers increasingly value sustainability features—such as lower CO₂ emissions, access to public transportation, and high energy efficiency. The European Property Market Report highlights that occupancy rates for green buildings in major cities are up to ten percentage points higher than for conventional properties. 
  (Sources: https://www.cbre.com/insights/books/european-real-estate-market-outlook-2024/sustainability, https://www.realestate.bnpparibas.de/sites/default/files/document/2024-03/green-building-investmentmarket-germany-2024.pdf)

• Financial Opportunities and Risks: 
  While sustainable buildings tend to have higher construction costs, they tend to offer long-term savings through lower energy and maintenance expenses. This can reduce the risk of rental vacancies and increases asset stability. At the same time, transaction volume and investor interest in the “Alternative Investments – Sustainable Real Estate” segment rose by 15% in 2024. This reflects a growing desire among investors to diversify beyond traditional equity and bond markets. 
  (Sources: https://www.unepfi.org/wordpress/wp-content/uploads/2024/04/PRB_Banking-on-Green-Buildings_final.pdf, https://www.realestate.bnpparibas.de/sites/default/files/document/2024-03/green-building-investmentmarket-germany-2024.pdf) 

• Reliance as your partner in real estate investing: 
  Through Reliance private investors can invest in curated investment opportunities with relatively small amounts. Our investment tickets start as low as 250 Euro. This lowers the barrier of entry and allows for efficient diversification with a relatively small portfolio. 

By expanding into real estate financing, we at Reliance believe we can offer our investors the opportunity to earn dual returns. On the one hand, investors have the opportunity to earn a financial return. On the other, investors have the opportunity to earn a sustainable return stemming from both social and environmental sustainabilit

A Forward-Looking Example from Helsinki, Finland: The VALO Hotel & Work 

The VALO Hotel & Work   in Helsinki, Finland is considered a forward-looking example of sustainable real estate development in the city. The facility demonstrates how urban spaces can be used more efficiently and sustainably through intelligent usage concepts.

In traditional hotels many spaces remain unused during the day. In traditional offices many spaces remain unused during the night. VALO takes an entirely new approach: The same space can be used as a hotel and an office flexibly depending on the time of day. In the day the rooms can be used as fully equipped offices. In the evening the same rooms become comfortable hotel rooms. The transformation happens in minutes while the guest is having breakfast or dinner. This principle of double use applies throughout the entire building, significantly optimizing its usage, and ultimately lowering not only scope one and two emissions but also scope three emissions.  

Flexible Use and Digital Management for Greater Efficiency   

The rooms are designed so that the switch from working space to a hotel room can be done within minutes. Ergonomic desks, digital infrastructure, and ample storage ensure a productive work environment during the day. In the evening, the room becomes a cozy retreat. Booking is handled digitally, allowing visitors to decide spontaneously whether they want to use the space for work, for an overnight stay or both. 

Sustainable Real Estate Investment with High Impact   

Reliance alumni VALO demonstrates how sustainable real estate can be both environmentally and economically profitable. Dual usage cuts operational costs and allows for energy and resource consumption optimization as less space is needed per person. 

This presents an attractive opportunity for investors: VALO proves that real estate projects can combine financial success with social and environmental responsibility. It serves as an example of sustainable real estate investments that are viable in the long term and address today’s challenges in the housing and labor markets. 

Future-Proof Cities Through Innovative Real Estate Concept 

VALO’s concept of dual use allows for shaping the future of urban development through real estate. VALO Hotel & Work connects hotel and working environments, reduces environmental impact, and creates flexible solutions for modern lifestyles. Concepts like VALO Hotel & Work are leading the change in making urban spaces more livable, adaptable, and sustainable – and show the potential of responsible investment in the field of real estate. 

Future-Oriented Logistics in Wiesau: The DFI Future Park Northern Bavaria 

Flexible use in the logistics center: adaptable spaces 

This logistics park in Northern Bavaria offers approximately 32,000 square meters of rental space, including production halls, storage units, and flexibly designed mezzanine levels. The logistics park is strategically locatied near the A93 highway, proxime to a freight transport hub, and within short distance of the Czech border. These aspects provide ideal conditions for efficient logistics operations. 

Investment security: targeted sales and leasing strategy 

A reputable institutional investor has already signed the purchase agreement for the logistics park. The leasing process has been outsourced to an experienced broker network. With construction still ongoing the project team is tailoring the spaces to meet the specific needs of future tenants. Completion is scheduled for 2026.  

Sustainable investment in the real estate sector: forward-looking logistics 

The DFI Zukunftspark  in upper Bavaria demonstrates how sustainable logistics properties combine financial- and environmental returns. As such this investment opportunity offers an attractive expected return for investors. 

Energy efficiency through digital retrofitting: metr in Berlin 

Berlin-based PropTech company metr provides a forward-looking example of sustainability in existing buildings. The company has developed an IoT platform that makes existing heating systems smarter and more efficient. In doing so, metr demonstrates how digital retrofitting can be a cost-effective alternative to comprehensive renovations – with a noticeable effect on energy consumption and emissions. 

Smart technology instead of expensive renovations 

Many heating systems in residential buildings still run on factory settings and are not optimally adapted to the needs of the residents. This is where metr comes in with its technology: the systems are equipped with sensors and a digital control system that automatically optimises operation. This means that energy is only used when it is really needed. 

Savings without compromising on comfort 

In several thousand buildings, metr has already proven that energy consumption can be reduced by up to 35 % . For residents, this means consistent comfort while reducing heating costs. For the real estate industry, this results in significant operating cost advantages – and a direct contribution to the decarbonisation of the building sector. 

Sustainable investment in digital solutions 

metr offers real estate companies a scalable way to make their portfolios more climate-friendly without having to invest in costly construction projects right away. For investors, the company provides an example of how technological innovation in the real estate sector can combine economic success with environmental impact. 

Sustainable real estate investments – a return for both the environment and investors 

Sustainable real estate investment opportunities can refer to both environmental and social returns while offering an attractive financial return to the investors. Ultimately allowing investors to actively contribute to sustainable development while earning financial returns. Real estate also provides investors the opportunity to diversify their portfolio into a new asset class with expected low correlation with other asset classes. 

Reliance offers investment opportunities in real estate including: 

• newly developed and integrate state-of-the-art, resource-efficient technologies from the outset, 
• renovation of real estate to upgrade existing structures  in an efficient and sustainable way, 
• expansion of real estate to make better use of existing infrastructure in a more sustainable and efficient manner. 

Such investment opportunities meet a clear return criteria both from a financial and sustainable point of view.  

Real estate is regarded an attractive asset class as it is regarded comparatively stable with low correlation to other asset classes, such as stocks and bonds, allowing for diversification.  

Like with all (financial) assets also real estate is associated with risk. The risk is strongly dependent on the investment vehicle used for investing in real estate. In real estate backed debt the main risk to consider is the inability to serve the debt and the collateral pledged against this debt. The risk is that the (real estate) operator is unable to service (repay) the debt. They have a known return and risk. 

Info: How Reliance evaluates investment opportunities 

We evaluate each investment opportunity through a clearly defined process to ensure an attractive risk-return relationship. Each investment opportunity evaluated in several stages: 

1. Initial Screening and Scoring: 
   A preliminary selection based on financial metrics, creditworthiness, and business model. 

2. In-Depth Analysis: 
   A detailed assessment of the legal framework and technical factors.  

3. ESG Evaluation: 
   A review to ensure both financial return potential and sustainable return potential is met (e.g., CO₂ footprint, social impact). 

4. Investment Committee: 
   The final decision is made by a panel of experts that consolidates all assessment results. 

Only about 5% of screened investment opportunities make it onto the Reliance platform. 
 
You can find more details about the evaluation process for investment opportunities here.: Investment Evaluation Process.   

Invest Sustainably Now: Your Chance to Shape the Future!  

Investment opportunities in sustainable real estate can offer attractive financial returns while enabling investors to play an active role in addressing global challenges. Join the sustainable investment community on Reliance today and discover attractive investment opportunities that combine financial- and sustainable return.  

Start today and invest in a future worth living! 
  
Here you can find our current investment opportunities.    

FAQ: Frequently Asked Questions from Potential Investors in Sustainable Real Estate  

The post Sustainable real estate investments: real estate as a key to a livable future  first appeared on Reliance - Blog.

1. What forms of securities are there and how reliable are they? 

Typical forms are guarantees and collateral such as 

• mortgages on land or pledges of machinery, 
• assignments of receivables or 
• floating charges.   

The importance of security arrangements depends on the investment model: in non-subordinated projects, they play a more important role than in subordinated projects, where security arrangements are usually not possible. 

In addition, we usually cannot check the value of the collateral or the economic capacity of the guarantor and the value of the collateral or the guarantee can fluctuate. As a result, there is a risk that, in the worst case, investors will not receive any repayments despite the ordering and realisation of collateral or guarantees in the event of the failure of the project. 

We therefore recommend: Read the key investment information sheet carefully for each project. It contains information on whether security arrangements are provided in the project.

2. Examples of securities from practice 

What collateral has been used in various Reliance campaigns in the past? The following examples from different industries and countries show how different these can look: 

Megin (medical technology): Second rank floating charge on the assets of the project owner.  
(https://www.reliancetrade.org/projekte/c244d249-74e3-4d89-a147-3b479f5cc49d#/)  

Bamboologic (Agriculture): A mortgage on a plot of land in Portugal serves as security.  
(https://www.reliancetrade.org/projekte/b57d633d-ee1c-49ba-8f44-ec75f95f25d9#/) 

The form of security arrangement strongly depends on the individual case. It is worth taking a close look at which values have been specifically deposited and how plausible their usability appears in an emergency

3. From subordinate to securable models 

In the past, Reliance in Germany was mostly limited by law to brokering qualified subordinated loans. In the case of subordinated loans, investors are only served in the event of insolvency after all creditors have received their money – a significantly higher risk. In the case of qualified subordinated loans, investors have even less chance of enforcing their claims in the event of non-payment by the company, even before any insolvency. 

Today, we mainly finance with non-subordinated financial instruments, in which investors hold a stronger legal position. These models allow us, where appropriate and possible, to include collateral/guarantee that can potentially reduce the risk of default (the actual value of a security ultimately depends on the proceeds from the realisation of a security). 

Investors should therefore check carefully with each investment whether and which security arrangement exists and what rank the respective financing has. 

How can I judge the security arrangement of a project myself? 

Read the issue terms, the key investment information sheet and information on the campaign page carefully. Check what kind of securities are mentioned and whether it seems sufficient to you from the investor’s point of view. 

Conclusion: Security arrangements for investments

Security arrangements in crowdfunding are complex and can never be assessed across the board. What we do at invesdor: create transparency, clearly identify risks and always try to achieve the best possible level of security for our investors. Each campaign contains information on possible security arrangements. And we are constantly working to make them it even more understandable. 

 
Find out now about our current investment projects and discover sustainable investments that match your values.

The post How safe is my investment? Overview of security arrangements at invesdor  first appeared on Reliance - Blog.

A wind farm somewhere in Northern Europe. The turbines spin tirelessly in the strong Pentecost wind. A brilliant blue sky stretches above, 25°C, holiday calm. While much of Europe soaks up the sun, wind and solar installations generate more electricity than is consumed — it’s one of the lowest-consumption days of the year. 

The wind continues to blow, but the wind farm is disconnected from the grid. The turbines stand still, despite the strong breeze. The grid is overloaded, no buyer, no suitable power storage. Electricity that was produced CO₂-free is wasted. What sounds like an exception is everyday reality in a transforming energy system. Battery storage is the answer to this gap, technically advanced, politically supported, economically attractive.

Pure solar projects often no longer pay off because the compensation for fed-in electricity keeps decreasing. That’s why many project developers are now focusing on solar parks with battery storage – both at the same location. This allows them to store the electricity and sell it when prices are higher. It increases revenue and makes the investment more attractive

Investing in Battery Storage Means Thinking in Decades — Not Quarters

The battery storage market is booming. The projected market volume for battery storage in Europe is growing rapidly: In 2024 alone, 11.9 GW of storage capacity was installed, bringing the total capacity to 89 GW. The reason: no storage, no stable grid — and no real energy transition. Those who invest in storage projects today are backing a vision for a low-emission energy landscape, strong return potential, and societal relevance. An investment that makes both economic and ecological sense.

Battery Storage: Key Enablers of Tomorrow’s Energy System

Battery storage systems will play a dual role in the energy system of the future: acting as short-term buffers and strategic grid stabilizers. Across Europe, large-scale battery storage is crucial for building flexible, stable power grids. In 2024, for the first time, more front-of-the-meter (FTM) capacity was installed than behind-the-meter (BTM) in Europe, a trend that is expected to continue.
(Source: https://www.infolink-group.com/energy-article/energy-storage-topic-global-energy-storage-market-review-outlook?utm_source=chatgpt.com)  
 
A large-scale battery is essentially a giant power bank. It takes in electricity from renewable sources, stores it temporarily, and releases it back into the grid in a controlled manner. Especially during grid congestion and increased PV and wind input, these systems are indispensable. 

According to Energiezukunft.eu grid operators and industrial firms are showing a growing interest in large-scale storage systems. They offer planning security, resilience, and attractive economic prospects. 

Another driver: battery storage systems can be installed precisely where grid bottlenecks occur. They are a flexible tool for stabilizing the grid—an aspect highlighted in “Der Spiegel” under the term „Batterie-Tsunami“ . The upcoming wave of storage projects has the potential to fundamentally reshape the energy system. 

Local Storage Projects: Opportunities for Communities and Landowners

As the expansion of renewable energy progresses, so too does the need for high-performance, scalable battery systems. These are of interest not only to utilities and grid operators, but also to industrial firms, project developers, municipalities, and private landowners. Those who provide suitable land can benefit economically through lease models or profit-sharing, while actively supporting the local energy transition. 

This is where sustainable investment projects come in—financing the construction and operation of such storage systems. 

Installed and expected total capacity of large-scale battery storage systems in Europe. Initial value at the end of 2023: 35.9 GWh; forecasts according to the European Market Outlook for Battery Storage 2024-2028 (SolarPower Europe, medium scenario) show an increase to around 260 GWh by the end of 2028. Data status: April 2025. 

(Source: SolarPower Europe, European Market Outlook for Battery Storage 2024-2028 & Pressemitteilung vom 11.06.2024 (Medium-Szenario).

Infobox: What Do European Studies Say About Battery Storage?

European studies like the European Market Monitor on Energy Storage (EMMES 9.0) by EASE and LCP Delta and the ACER Monitoring Report on Electricity Infrastructure analyze the political and structural framework for meaningful battery storage expansion in Europe. (Source: Energy-Storage.News)  

According to EMMES 9.0, 11.9 GW of new storage capacity was installed in Europe in 2024, bringing the total to 89 GW. The report forecasts continued strong growth through 2030, driven by technological progress, policy support, and other key factors.
(Source: EASE Storage) 

Key Takeaways: 

• Battery storage is essential for flexible use of renewable electricity and grid relief — especially during weather-driven fluctuations. 
  
• Grid-supportive operation is key: storage helps only when it charges or discharges during grid bottlenecks — not all storage activity is automatically helpful. 
  
• Today’s market is not enough: purely market-driven expansion does not align with specific regional grid needs. 
   
• New EU regulation brings momentum: Regulation 2024/1747 obliges member states to set binding flexibility targets—including storage strategies—alongside renewable energy targets. 
  
•   European market analyses recommend clear targets for storage: to reduce grid bottlenecks long-term, legally binding expansion targets should be set for power storage, similar to renewables. 

(Studies:  European Market Monitor on Energy Storage (EMMES 9.0), EASE & LCP Delta, März 2025, ACER Monitoringbericht zur Strominfrastruktur, Dezember 2024) 

How Sustainable Are Battery Storage Systems Really?

The seemingly simple logic behind battery storage deserves a closer look. True sustainability is not achieved merely by storing energy. The ecological impact of battery storage depends heavily on how the systems are produced, operated, and recycled. 

• Raw Materials: Most modern systems use lithium-ion technology. The extraction of lithium, cobalt, and nickel raises concerns, but European manufacturers increasingly rely on certified supply chains, European raw material partnerships, circular economy practices, and second-life usage—supported by initiatives like the European Raw Materials Alliance (ERMA). 

• Lifespan: Battery storage systems are more durable than commonly assumed. Depending on the system, they last 10 to 20 years and are often reused as second-life systems afterward. 

• Recycling: Research into sustainable recycling methods is advancing across Europe. Specialized plants in countries like France, Belgium, and Germany can recover up to 90% of materials—using hydrometallurgical processes and automated disassembly. 

A recent study by BayWa r.e. confirms that large-scale battery storage will be key in accelerating the energy transition in Europe. These systems reduce CO₂ emissions and costs, while increasingly stabilizing the grid during volatile power generation—crucial for integrating more renewables reliably into the grid. (Source: BayWa r.e. Studie zu Batteriespeichern)

Investing in Large-Scale Battery Storage: What Do Energy Market Trends Mean for Investors?

Studies and market trends show that battery storage is evolving from a technical component into a strategic asset class. Politically supported, regulatory backed, and increasingly profitable. 

 According to Energiezukunft and European market analyses, storage solutions are increasingly being integrated into scalable business models – for example, in combination with digital control systems and Power Purchase Agreements (PPAs), which are long-term electricity supply contracts between generators and buyers. ( Source: energiezukunft.eu) 

This trend is also supported at the European level: The European Commission plans to relax state aid rules to stimulate investment in clean technologies, including energy storage. (https://www.reuters.com/sustainability/eu-set-loosen-state-aid-rules-spur-green-projects-draft-shows-2025-02-18) Additionally, targeted measures are proposed to strengthen and de-risk Power Purchase Agreements across the EU. (https://www.reuters.com/markets/europe/eu-commission-propose-help-de-risk-power-deals-document-shows-2025-02-18)
Concrete support examples, such as the $1.2 billion Polish aid program for energy storage investments, demonstrate the EU’s active commitment to expanding energy storage solutions. (https://ec.europa.eu/commission/presscorner/detail/it/ip_24_4985)  

For investors, this means: investing in battery storage today offers access to a clearly defined growth market with high impact. This is not about risky startups, but about stable, well-structured business models. Investments are made in real infrastructure — facilities that are built or under construction. Often, there are long-term power purchase agreements, and sometimes energy is sold flexibly via smart algorithms that respond to market signals to maximize returns. 

The study shows that battery storage is gaining importance in both energy policy and the economy. Targeted expansion is technically sensible and economically relevant— enhancing long-term investment conditions and improving predictability and security. 

Investing in battery storage means supporting the energy transition and participating in a rapidly growing and regulation-backed future market. 

Project Financing Explained: How Battery Storage Investment Works

The battery storage projects offered via Reliance are structured as project financing models.  This means you’re not investing in an entire company, but in a dedicated legal entity created specifically to build and operate the storage project. 

Your capital goes directly into constructing the facility—clear, purpose-driven, and transparent. 

• Attractive Market Environment: Market storage systems have the potential—depending on the business model—to generate solid returns. 

• Diversified Business Models Possible: Storage operators may have secured revenue contracts or agreements with optimization firms that sell storage capacity and electricity across different markets for optimized return. 

• Collateral Not Always Needed: Unlike traditional corporate financing, BESS project financing is based on a specific asset, such as a battery storage unit. Future revenues can be more accurately projected than those of a full company. Repayment is made exclusively from the project’s income, with a sufficient buffer to reduce risks from market fluctuations. 

• Term & Yield: Project durations can be short, medium, or long term (1–10 years), offering fixed interest returns with a balanced risk-reward profile. 

This model suits investors looking to diversify their portfolio with fixed-income, sustainable investments that have a direct impact on a specific project.

Sustainable Investment for the Energy Transition

Investing in battery storage means actively supporting the energy transition. But the technology is evolving fast. How reliable are individual projects? Which storage solutions will prevail? And how can investors tell whether a project is truly viable? 

Not all storage projects are equal: differences lie in the technology used, provider structure, contract terms, and risk mitigation. That’s why Reliance emphasizes careful selection. Only projects with proven technology, reliable partners, and clear revenue models are offered for financing. 

Transparency, security, and sustainability are core criteria in the selection process. 

Battery Storage as a stable, sensible Investment

The expansion of renewable energy requires powerful storage. And these storage systems need capital. Investing in a battery storage project combines ecological impact with sound economics. 

Learn more about our current projects and invest in the companies shaping tomorrow’s energy landscape—concretely and sustainably. 

 
 
Check out our investment projects HERE .

The post Large-Scale Battery Storage as a Key Technology of the Energy Transition – And How Sustainable Storage Projects Become Attractive Investments first appeared on Reliance - Blog.

What does diversification mean?

Diversification in investing means spreading risk by making investments in different financial products. A diversified portfolio is created through the combination of various types of assets.

What does optimal diversification look like?

A perfectly diversified portfolio that prepares a professional or private investor for every possible market scenario does not exist. However, distributing assets across different investment classes and applying appropriate risk weighting can significantly improve portfolio stability.

With a specially designed all-weather investment strategy, it is even possible to achieve returns similar to pure stock investments while taking on only one-third of the risk associated with them.

Simply put: Returns and security go hand in hand

Put simply, maximizing returns while ensuring high security in an investment is usually not possible. In other words, those seeking maximum security in their investments should not chase the highest returns but rather be satisfied with lower yet more realistic figures for value development.

Saving and security in investments

Many potential investors never take the step into investing because they want to avoid any risk when managing their savings. As a result, their money often remains in a savings account or is parked in a fixed-term deposit or a flexible daily savings account.

In reality, no one has to completely avoid these forms of investment. On the contrary, experienced financial advisors even recommend keeping at least two to three months’ worth of salary in flexible checking or savings accounts. This ensures there is always enough liquidity available for unexpected expenses, such as car repairs or replacing a broken washing machine. Investments should primarily involve capital that can be set aside or specifically saved for retirement.

How can investors diversify their assets?

First, investors should have a clear understanding of their goals and investment horizon. When it comes to risk diversification, it does not matter whether 100 euros are saved each month over several years or a one-time inheritance of 250,000 euros is invested. In both cases, a well-balanced investment structure should be maintained. A variety of asset classes are available for this purpose:

• Bank deposits, savings accounts, fixed-term deposits, daily savings accounts
• Stocks
• Investment funds, equity funds, bond funds, mixed funds, ETFs (index funds)
• Bonds, pension securities, fixed-income securities
• Commodities, precious metals, gold
• Real estate, real estate funds, REITs
• Private equity, tangible assets
• Crowdfinancing (investments in private loans, corporate loans, real estate)
• Cryptocurrencies

The 3-step rule of thumb for diversification

1. Secure and relatively liquid deposits form the foundation of wealth (savings accounts, fixed-term deposits, daily savings accounts).
2. For medium- to long-term wealth building, capital- and income-generating investments are added (fixed-income securities, investment funds, ETFs, real estate funds, dividend stocks).
3. High-yield and opportunity-rich investments are included to achieve a higher overall return (stocks, commodities, private equity, crowdinvesting, cryptocurrencies).

In all investment forms, assets should be selected strategically from different regions (Europe, USA, emerging markets) and industries (industry, services, technology, real estate).

Avoiding concentration risk in diversification

Concentration risk arises when investment capital is allocated to only one or a few investments. Many people who prefer safe investment options tend to put their money into real estate, also known as “concrete gold.” The housing market has been turbulent in recent years, with rising interest rates and economic fluctuations further emphasizing the importance of diversification.

Owning a home for personal use was traditionally seen as a way to eliminate rent expenses, but changing market conditions mean this is no longer always the case.

However, problems can arise when real estate is purchased solely for rental purposes. Many investors underestimate the effort required for property management, the risk of rental vacancies, and the costs of renovations and maintenance. A better approach is to invest in real estate funds or stocks of real estate companies, as these investments allow investors to exit the market more easily.

“Diversification is protection against ignorance. It makes little sense for those who know what they are doing.” (Warren Buffett)

Other scenarios for concentration risk can arise from investing solely in the stocks of one company, government bonds from a single country, or turning to gold as an overreaction to an economic downturn. For example, shareholders of major energy providers faced difficulties due to the energy transition, while investors holding Volkswagen securities were affected by the emissions scandal. However, this does not mean that owning shares in the automotive industry is inherently bad. Simply spreading investments across multiple car manufacturers would have provided significant diversification.

The same applies to government bonds. Those who buy only highly secure German federal bonds face virtually no risk of default but also earn no interest. Purchasing bonds from emerging markets or stocks from companies based in these regions offers the potential for higher returns but also comes with greater volatility. This is why diversification within a portfolio is always essential.

The guiding principle for investors should be: prioritize bonds from stable countries that at least preserve wealth, while selectively incorporating high-yield bonds from emerging markets to take advantage of return peaks.

Examples of diversification in a portfolio

There are numerous examples of well-balanced portfolios. These can serve as guidelines for private investors but should always be tailored to individual needs, goals, and life circumstances.

For instance, investors who are close to retirement should invest less in stocks or long-term tangible assets. Instead, their wealth should already be shifted toward safer asset classes such as fixed-income securities, savings accounts, or real estate.

• Investors who want to build wealth and are willing to take on controlled risks.
• Investors who primarily seek inflation protection and aim to preserve the value of their assets.

A common recommendation for portfolio diversification is to allocate each asset category in equal parts. This results in a wealth structure composed of 25% stocks, 25% bonds, 25% cash, and 25% gold. Precious metals primarily serve as a safeguard, acting as the “last resort” in case all markets crash and cash holdings lose value due to inflation.

How to stay organized while diversifying

As a complement to an investment portfolio, real estate, commodities, or crowdfinancing investments can be included. Younger investors, in particular, may benefit from a higher proportion of stocks and a lower allocation to precious metals as a safeguard (5-10%).

It is also advisable to combine investments with government or employer-sponsored funding programs, such as occupational retirement plans, which have received mixed reviews. The financial benefits, such as direct subsidies or tax advantages, should not be overlooked. A personally owned property also serves as a secure asset but is not typically considered an investment in a diversified portfolio.

To keep track of different investments and assets, it is essential to consolidate them into an organized overview.

Why diversifying risk in investments makes sense

A well-diversified portfolio reduces overall investment risk. This means that the average risk of the entire portfolio is lower than the average risk of the highest-yielding asset classes. At the same time, a diversified portfolio offers higher overall returns compared to safer investments like bank deposits or fixed-income securities.

At invesdor, investors can efficiently diversify their portfolios through three investment types, each catering to different investment strategies. To learn more about these options, check out our guide: What’s the difference between debt, equity, and convertible bonds?

Additionally, you can explore our open funding rounds for high-yield investment opportunities.

Keep in mind that even if you feel well-informed, you may not be aware of every detail regarding an investment opportunity. Or, as a famous star investor once put it:

“Diversification is protection against ignorance. It makes little sense for those who know what they are doing.” (Warren Buffett)

The post Diversification explained – How to minimize risk and maximize returns in investing first appeared on Reliance - Blog.

Getting started with investing in impact start-ups can feel overwhelming, especially when evaluating risk and return potential. That’s why we at Reliance Group provide investors with a unique opportunity to efficiently diversify into start-ups – an advantage typically reserved for those with large portfolios. As Europe’s leading impact investing platform, we enable investments across various sectors, company stages, and geographies, making start-up investments & equity funding more accessible while maximizing both financial and ethical returns.

1. Think big: Why market potential is key to start-up success

When investing in start-ups, one of the first questions to ask is: How big is the market? And: How fast is it growing?

Market potential is a measure of the total revenue or sales opportunities available for a product or service. It reflects the demand for the solution a start-up offers and provides insight into the scalability and profitability of a business idea. Start-ups operating in large, rapidly expanding markets – such as clean energy or artificial intelligence – are far more likely to scale successfully than those targeting stagnant or niche markets.

What to look for:

• Size of the market: Is the market large enough to support significant growth?
• Growth trends: Is the market expanding, and at what rate?
• Market share potential: Can the start-up capture a meaningful portion of the market?

Reliance pro tip:

For larger investments, take the time to research market reports, study competition, and analyze barriers to entry. If you’re investing smaller amounts, focus on diversifying across different start-ups to reduce risk. invesdor’s project pages provide detailed market overviews, helping you make an informed decision. Before each project goes live, our team of due diligence experts also does an in-depth market analysis. Only a few selected companies pass all criteria and make it on to our platform.

2. Solving real problems: The importance of product-market fit

Does the start-up’s product or service solve a real problem? A clear product-market fit is critical for long-term success. Start-ups and scale-ups that address pressing needs or solve significant problems are more likely to attract customers and grow. A company using artificial intelligence to detect contaminated water has higher growth potential than one offering a less impactful and innovative solution. At invesdor, our experienced team rigorously evaluates product-market fit to select only the most promising opportunities.

What to look for:

• Competitive advantage: Does the start-up offer something unique or significantly better than competitors?
• Customer demand: Is there a proven need for the product or service?
• Scalability: Can the solution be scaled to meet growing demand?

Reliance pro tip:

On each project page, we have a “why invest” section with some of the most important arguments for investing in the company. In the “business model” section, you can find a detailed description of how the company operates and generates revenue. The “market” section gives you an overview of the company’s market environment, barriers to entry, and characteristics of this specific market.

3. The power of people: Why a strong team matters

A start-up’s success largely depends on its team. A strong, experienced team can execute ideas effectively and adapt to challenges as they arise.

What to look for:

• Industry expertise: Do the founders and key team members have relevant experience?
• Track record: Have they successfully navigated challenges in the past?
• Passion and perseverance: Are they genuinely committed to their vision?

Reliance pro tip:

Review the team’s profiles on the company’s project page at Reliance to get insight about the key team members’ experience, expertise, and role at the company. Our team ensures all start-ups presented on our platform meet stringent criteria before being presented on the platform, including a thorough assessment of their team’s expertise and vision.

4. Financials and valuation: Keep an eye on the numbers

A start-up’s financial health and valuation are key indicators of its viability. While start-ups often lack an extensive financial history, understanding their revenue projections, burn rate, and valuation is essential. Start-ups with high burn rates (spending a lot) can be risky, especially if they are far from profitability. Remember that risk should always be offset with a higher expected return! 

In this context, it is crucial to assess the company’s viable exit opportunities, as these determine how investors can recover their capital – ideally with a return on investment. Professional investors place significant emphasis on exit potential when evaluating opportunities. In practice, the most common exit strategies for innovative, high-growth companies include mergers and acquisitions (M&A), initial public offerings (IPOs), and management buyouts (MBOs).

What to look for:

• Burn rate and runway: How quickly is the company spending its funds? And what are future funding needs?
• Revenue projections: Are the forecasts realistic? 
• Valuation: Is the start-up reasonably valued compared to competitors?
• Exit opportunities: Does the company have a clear path to liquidity for investors?

Reliance pro tip:

Revenue and EBITDA are two figures that give you insights about the expected company growth. For software companies, pay close attention to metrics like Annual Recurring Revenue (ARR). invesdor’s project pages provide detailed financial insights to help you make informed decisions.

5. Invest with heart: Aligning your values and interests

Investing in start-ups isn’t just about numbers; it’s also about connecting with companies that align with your values and interests. When you invest in fields you understand, you gain a competitive advantage. 

If you’re passionate about climate protection, consider investing in companies like RiverRecycle, a company that developed a machine to remove garbage from rivers. For MedTech enthusiasts, a company like PIRCHE – who use AI to revolutionize organ transplants – could be a good fit. At invesdor, we follow a strict “no harm”-policy. The companies we present on our platform should have no harmful impact on the environment, society or the economy. We highlight companies that have committed themselves to contributing to the United Nations’ Sustainable Development Goals (SDGs) with our “OnePlanet” label. By doing so, they not only do no harm, but they also actively do good to achieve those goals. Information about the specific SDGs a company is contributing to can be found on the project page. 

What to look for:

• Personal Connection: Does the start-up’s mission resonate with your professional background or personal interests?
• Moral Identification: Does the company align with your values, such as sustainability or social impact?

Reliance pro tip:

Before making your first investment, define your investment goals and identify who you are as an investor. Is financial return your only goal or is it important for you to also make a positive impact with your investment? Are you ready to take risks to maximize returns or would you rather accept smaller returns for a bit more security? 

Conclusion

Finding the right start-up investment involves balancing market analysis, industry knowledge, and a clear understanding of the team, financials, and personal values. At invesdor, our experts analyze hundreds of opportunities each year, offering only the best options to our investors.

Start your journey with Reliance today. Explore curated impact investment opportunities across diverse industries and countries – and invest in growth companies striving for positive change in the world. Together, let’s build a portfolio that aligns with your goals and values.

The post 5 essential criteria for investing in impact starts-ups: A guide for private investors first appeared on Reliance - Blog.

Each instrument has its place, as they serve different purposes within an investor’s portfolio. We encourage our investors to diversify across product types — and across countries.

Let us walk you through our two investment instruments and help you assess which one fits your investment strategy.

Fixed-interest investments

Fixed-interest investments, or bonds, provide regular interest payments and predictable returns. They can add stability and a steady income stream to your investment portfolio.

At invesdor, we specialize in bonds that deliver competitive yields – offering annual interest rates of up to 12%.

Key features of fixed-interest investments

• Predictable returns: Bonds provide regular interest payments, helping you plan your cash flow.
• Defined term and repayment: Your initial capital is repaid in full at the end of the term, along with any outstanding interest.
• Diversification: Fixed-income investments can complement equity investments and balance overall portfolio risk.

Equity investments

Equity investments allow you to share in a company’s long-term growth and success. By investing in equity, you become a co-owner and benefit from the company’s value creation – for example through an IPO or a company sale.

Key features of equity investments

• High return potential: Equity investments provide access to substantial returns when a company grows or hits major milestones.
• Alignment with founders: As an equity investor, you participate in the company’s journey alongside the founders and major stakeholders.
• Profit participation: Equity holders are entitled to a share of the company’s profits, whether paid out through dividends or realized during a company sale.

Which investment instrument is the right one for me?

Consider your investment horizon. Ideally, your portfolio balances short-term investments with long-term opportunities.

Short-term investments aim to generate returns within months or a few years and prioritize liquidity. Long-term investments, on the other hand, are designed to build wealth over several years or decades.

Recap of invesdor’s investment instruments

• Bond investments are ideal for those seeking stable income and clear repayment terms.
• Equity investments suit investors who are prepared to take on more risk to participate in long-term growth and value creation.

Sign up to our newsletter to stay informed about the latest news and open investment opportunities — and help build tomorrow’s success stories.

The post Debt vs. Equity: Choosing the right investment nstrument first appeared on Reliance - Blog.

Why is now the right time to expand into the loan market?

The Finnish loan market is undergoing a transformation. Many companies, particularly small and medium-sized enterprises, have faced challenges in accessing traditional bank financing. This is largely due to stricter banking regulations that have limited companies’ ability to secure the funding they need. At the same time, private investors are looking for new and diversified investment opportunities.

An international perspective on lending

At invesdor, we’ve been active in international markets for a long time. Now, we are addressing a gap in the Finnish market. Finnish loan products have not previously been easily accessible to Finnish private investors.

Megin’s funding round has already generated significant interest from both Finnish and international investors. The round has been open for just one day, and the company has already raised over $500,000.

Since early 2023, Reliance has provided investors with opportunities to diversify their portfolios with European companies. Now, we are enabling Finnish companies to offer bonds not only to domestic investors but also to international ones.

Competitive returns for investors

The weak performance of the Helsinki Stock Exchange has driven investors to look for new ways to grow their portfolios in a challenging economic environment. The loan market can offer attractive alternatives with competitive interest rates. For private investors, the challenges have often been the accessibility of loan investments, high minimum investments, or high fees associated with funds.

Through invesdor, investors can decide for themselves which companies, industries, and countries they want to invest in. We have intentionally kept the minimum investment for funding rounds as low as possible to ensure broad participation. This also enables investors to effectively diversify their portfolios through our platform. You can join Megin Oy’s funding round with as little as $250.

The post Finally, a Finnish Bond Offering! first appeared on Reliance - Blog.

Beets & Roots in a nutshell  

beets&roots is a German fast-casual restaurant chain that offers healthy and environmentally friendly food. Beets & Roots GmbH was founded in 2016 in Berlin by entrepreneur Max Kochen and Michelin star chef Andreas Tuffentsammer to meet the need for healthy lunch options for busy people.  

Today, beets&roots has 16 restaurants across Germany. With Beets & Roots GmbH’s latest successful funding round at invesdor, they plan on opening three more restaurants at the main train stations in Berlin, Cologne and Hamburg. In an interview from 2023 Max Kochen outlines beets&roots growth journey after previous funding rounds with invesdor. 

Opportunity to higher returns on investment 

Beets & Roots GmbH has raised a total of five funding rounds on invesdor’s platform (see chart for more information).  In the latest funding round, beets&roots experienced exponential growth, more than doubling its turnover and attracting over 1.5 million euros from investors across Europe. With each round, investors were not only drawn by the financial opportunities but also by enticing bonuses, including up to 50% discounts on orders, enriching their investment experience. 

For the first time Beets & Roots GmbH’s funding round was offered on all Reliance websites: Germany, Austria, Finland, the Netherlands, and the English website welcoming investors from all over Europe. Previous rounds have only been open to investors in Germany and Austria. 

Beets & Roots GmbH has chosen different financial instruments for their funding rounds throughout the years. This demonstrates well how growth companies and investors benefit from the different financial instruments Reliance has to offer.  

In their last round in January 2024 Beets & Roots GmbH decided to raise equity. Equity investments offer investors a stake in the target company allowing the investors to reap the full potential upside in the company. As Beets & Roots GmbH is aiming for an exit in 2026, the investors have the opportunity to earn a substantial return on their investment in the coming 36 months. 

Make an impact with your choices 

By investing in innovative and sustainable businesses, investors do not have the opportunity for a financial return but also make an impact by helping companies like Beets & Roots GmbH drive sustainability and a better future for Europe. Read more about invesdor’s commitment to impact investing. 

Beets & Roots GmbH is committed to drive sustainability in all parts of their business. In practice, they source most of their ingredients from local suppliers and promote sustainable farming practices by working with Klim.  

As a consumer you can be at the forefront of change for a sustainable future of Europe by choosing a plant-based alternative to meat and opt for reusable takeaway packaging. 

As an investor you can be at the forefront of change for a sustainable future of Europe by investing in companies driving sustainability in their operations. Your choice matters! 

If you want to stay informed about upcoming investment opportunities, sign up for our newsletter and follow us on our social media channels.  

The post Beets & Roots is an investor favorite at invesdor first appeared on Reliance - Blog.

Mistake 1: Never try to predict the future

Do you sometimes wish you had a crystal ball that would show you tomorrow’s stock market prices? If you had one, you would probably have Apple and Google shares in your portfolio and be a multi-millionaire with Bitcoin investments today.

But hand on heart, would you really have invested your money in a computer manufacturer that was about to go bankrupt in 1997? Or invested even a single cent in a strange thing called a search engine, where no one knew how it was supposed to make any money at all? And if you did, wouldn’t you rather have chosen the then leading search engine providers Altavista, Yahoo or Lycos instead of Google?

You have never heard of these companies? That’s not surprising, some of them don’t even exist anymore, the others are only a shadow of their former greatness. And did you really know bitcoin before it cracked the record high of just under $20,000 in December 2017?

Don’t overestimate your skills in timing and market analysis

As an investor, it is best not to even try to predict the development of stock market prices. Don’t overestimate your own analytical skills either. Many things are hard to predict, even for experienced investors who get their information from the press, specialist portals or “unfiltered” internet sources. Just think of the last few years; the enormous impact of the Corona crisis on the economy and society was hardly expected.

Professional investors, with technical and personnel support, can certainly manage to beat the market. But they are few and they do their market monitoring as a full-time job and practically around the clock.

Nevertheless, many investors regularly try to predict price developments – and fail. Every now and then, an investor will succeed in entering or exiting the market with perfect timing. If it works, it is often called skill. If it doesn’t work, then it was certainly not because of one’s own skill.

And for many it didn’t work out and they preferred holding on to Lycos or Yahoo shares rather than those of Apple and Google. 

Mistake 2: Putting all your eggs in one basket and not diversifying

“Never put all your eggs in one basket.” – This age-old truism must be mentioned again and again. If only one thing does not go as planned just once, all eggs are quickly broken.

It is the same with investing. Those who put all their eggs in one basket take far too high a risk. Many investors tend to act emotionally and invest in hype stocks or in “the top investment of the hour”, for example.

Of course, anyone can put the next biotech stock in their portfolio that is “very close” to the successful development of a Covid vaccine – but just as an admixture to take advantage of opportunities or to spread the risk further. Do not let yourself be influenced by the daily flood of news and rather invest according to firm, long-term oriented principles.

Diversification – Spread your money over different investments

Try to create a portfolio that is ready for any market situation. It is best to spread your capital across various asset classes and it is important to invest in different markets and sectors, for example, not only in the German car industry or only in American tech stocks. Don’t just put money into real estate or into a single crowdinvesting project in the hospitality sector.

For investors, it is advisable to have a portfolio that is structured as globally as possible and spread across different asset classes and is also prepared for special situations such as the Covid crisis. This is exactly why the legendary investor Ray Dahlio designed the so-called “all-weather portfolio” about 30 years ago. 

Mistake 3: Accepting to high costs

The more natural ingredients are processed with industrial additives, the higher the price goods can be sold at – and the more unhealthy it usually gets.

The situation is similar with financial products. Many financial investments are basically simple in structure but are “processed” by the financial industry and thus complicated.

And what appears to be complicated and somehow well thought-out is often accompanied by very high costs. Especially complete solutions that are supposedly structured with the customer in mind often contain high fees. Building loan contracts are combined with various life insurance policies. Advertised as “safe” and “sensible”, they are actually just expensive and so complicated and convoluted that no one understands them.

For that reason, don’t get lured by well-meaning advertising promises and always pay attention to the costs of a financial product. After all, the costs have a significant effect on the effective return, even if it is “only” one or two percentage points. The impact of fees on performance can be serious over the years, as our example shows:

Investment fund with + 5.00 % performance p.a.:

Mistake 4: Making conclusions for the future from the past

People like to do it, but it is highly problematic: projecting the historical development of an investment into the future.

Just because a fund has performed well in the past does not mean that it will do so in the future. Inferring the future from the past is usually as fruitless as trying to predict share prices. You simply cannot know what the future will bring.

There are also changes in fund management, a change in investment strategy or social changes that affect the performance of many investment models.

Would you like some examples?

• The shift away from fossil fuels and the politically desired energy turnaround (keyword: nuclear phase-out) has deprived many electricity companies of their lucrative business basis.
• More photos are being taken today than ever before, but the old-established photo and camera manufacturers are not the beneficiaries of this boom. Software companies from Silicon Valley are.
• The growing ecommerce has disrupted numerous business models; but this does not necessarily mean that there will be no more “offline” businesses in the future.

One should also not be blinded by the extremely good performance of some shares or funds. A return of 20 % says little if it is not put in relation to the underlying risk. Many investors focus on absolute rather than risk-adjusted returns. This is because high returns usually go hand in hand with higher risk. The “Sharpe ratio” can be used to make a correct assessment. The Sharpe ratio can help to put returns and risk into perspective.

For example, an equity fund that has achieved a 10 % return but has crashed by 20 % in the meantime would have a lower Sharpe ratio than a fund that has only achieved 8 % but has never been in the red. Many investors would ultimately feel more comfortable with the second fund, even though it had a 2% lower return. 

Mistake 5: Constant buying and selling

“Too much back and forth makes your pockets empty.” This old stock market piece of wisdom is still valid today.

Just like the costs of a financial product, trading costs can also significantly reduce the return. Because every purchase and sale on the stock exchange costs fees. Especially for small amounts, these fees have an extremely negative effect on the return and can even turn it completely negative.

Although investors can get the feeling that they are “taking care” of their portfolio by actively reacting to the current market situation, in the end they are usually harming themselves.

Too much buying and selling can also lead to greater nervousness. It tempts them to keep looking at their portfolio and reacting to supposedly threatening or lucrative situations. Not only does this incur high trading costs, but you may even miss out on important value gains by temporarily exiting the market.

This is why the best advice is to always stay calm, keep a cool head even when bad news arise and follow a (preferably fixed) investment strategy for the long term. There is power in calm, especially when it comes to investing.

The post 5 mistakes investors can avoid first appeared on Reliance - Blog.

In the past, it was unusual for a listed company to be confronted by climate activists at a general meeting.

However, protests against companies’ eco-balance and sustainability criteria have long since ceased to be a rarity – and are no longer perceived as a negligible aberration of overzealous young people. Instead, companies’ interest in the responsible treatment of people and the environment has now reached the centre of the investment community. 

Fund managers now give just as much weight to the sustainability strategies of corporations in their valuations as individual activist shareholders. As a result, they are increasingly demanding a consistent orientation towards sustainability goals from management. 

Get to know the acronyms of impact investing

Acronyms and terms such as ESG criteria and SDG have entered the everyday language of professional investors. Impact investing, in particular, is becoming increasingly popular. But what exactly is it, and what does it mean for investors? 

Let us first look at the abbreviations. ESG stands for Environment, Social and Governance. ESG is a set of assessment measures that can be used by financiers, shareholders, governments and stakeholders to rank companies’ sustainability efforts. Unfortunately, there is no single, internationally recognised set of ESG criteria or benchmarks, so many different ideas exist. 

SDG is the abbreviation for the Sustainable Development Goals, referring to 17 global goals that 193 United Nations states agreed on in 2015 to use as a guideline for using financial resources for social and environmental purposes.

ESG and SDG thus provide the criteria that come into play in impact investing. However, impact investing goes one step further and includes “effective” investing in sustainability. 

Impact investing also means that the positive impact of an investment must be verifiable. For example, how much natural resources and energy have been saved, and how much CO₂ emissions have been reduced?

So it is not just a matter of avoiding investments in environmentally harmful businesses but of making the positive effect of an investment on a sustainable economy and a better environment tangible. The result is what matters. 

Maarten de Jong, the founder of the crowdfunding platform OnePlanetCrowd specialising in sustainability projects and now part of invesdor, puts it in a nutshell: “Use your business as a source for good”. 

Decisive criteria for impact investing

Impact investing has been on the rise for several years. Only investing “sustainably” or “green” has proven to be too vague in the past, mainly since the criteria for such investments are not prescribed. This leads to a supposedly green fund investing in nuclear power plants because they save CO₂. Or that large oil companies are in the fund portfolio because they also promote solar power plants. Or car manufacturers who save energy in production but continue to stick to the combustion engine. 

Criteria for sustainable investments are open to debate, and their positions are sometimes far apart. The decisive question in impact investing is therefore what the investment has brought to the sustainability goal and how significant the contribution is. For many investors, returns are only worth something as long as the company or project positively affects the environment. “We believe that more and more people in Europe are increasingly interested in investments that offer them both a financial return and a sustainability return. We call it a double return,” Maarten de Jong sums it up. “I believe this movement will grow significantly in the coming years.”

The many opportunities for impact investing

The beauty of impact investing is that investors and savers have many different options for making an appropriate investment. 

• Eco-banks offer sustainable current accounts and sustainable overnight and fixed-term deposits. 
• Investment funds committed to impact investing: For example, microfinance funds grant microloans to people in the Third World so they can build up a livelihood. 
• Impact funds are usually equity funds that select stocks according to SDG or ESG criteria and then measure their impact.  
• Green or social bonds are bonds issued by states, countries, municipalities or banks and companies that serve to finance wind or solar park projects, for example. Germany is one of the largest markets for green bonds; there is even a separate trading segment for them on the Frankfurt Stock Exchange. 
• Impact investing also offers the opportunity to invest in sustainably oriented companies. Direct investments in corporate bonds and corporate investments via crowdfunding are particularly suitable for this purpose.

The risks of equity investments are often complex for investors to keep track of. This makes the information provided by the company, the project, the fund provider or the investment platform to investors all the more critical. 

Crowdfunding excellence in impact investing

Crowdfunding has also offered a platform for young companies focusing on sustainability for many years. 

Crowdfunding platforms such as Reliance check the seriousness of business models and figures and analyse the competition, management and affected markets. Then, only investment possibilities meeting the criteria are offered to the “crowd”. 

“In the last five years, crowdfunding has become a professional investment opportunity,” emphasises Niklas Green, Project Manager at Reliance Nordics. “Before, it was something that investors did for fun and to support companies. Now, retail investors invest in companies that have good prospects and high return potential.”

Meanwhile, the “impact” of investments is increasingly receiving additional tailwinds from political decision-makers. OnePlanetCrowd founder Maarten de Jong illustrates this with his home country: “For projects such as solar panel fields or wind turbine parks, the regional authorities in the Netherlands require that a certain percentage of the capital must be investable by local residents so that the local community also benefits from the projects. Together with the project managers, we then organise a funding campaign in the region intending to increase the acceptance of the projects via citizen participation.” 

In this way, crowdfunding with the support of politics, becomes the ideal platform for impact investing.

Maarten de Jong also has an excellent example of an ideal impact investment in Fairphone: “This is an Android smartphone made with metals and minerals from sustainable supply chains that can be repaired and upgraded by the owner to avoid premature replacement. The project has huge sustainability potential.” 

OnePlanetCrowd funded Fairphone with $2.5 million in 2018. 

“Crowdinvestors were among the core investors at the time and have been instrumental in making the company profitable today. Now the crowdinvestors can sell their shares in a new financing round with a good return. This is a nice success story,” Maarten de Jong continues.

Apart from returns and responsibility, there is another good argument for investors in impact investing via a crowdfunding platform like invesdor: They can participate in sustainable projects even with small amounts. 

“In my view, crowdfunding offers private investors the only opportunity to invest in growth companies that were previously only accessible to professional investors,” emphasises Niklas Green. 

With crowdfunding, the minimum investment is usually between 250 and 500 euros. This makes it possible to invest in growth companies with a much smaller portfolio and to diversify one’s portfolio more.

“This makes it easier for investors to spread their commitment, return opportunities, and investment risks across many companies with a sustainability focus. And – as Maarten de Jong puts it – “to use business as a source of good”.

The post Double the return through impact investing first appeared on Reliance - Blog.