This report is a knowledge sharing report published in the course of DC Power’s project to build a solar-focused, customer-owned electricity retailer. The report provides an overview of the project, details of the crowd-source funding campaign and lessons learnt from the campaign.
The equity crowd-source funding (CSF) conducted by DC Power Company Limited Trading as DC Power Co. during March/April 2018 received bids of $2.5m from more than 17,000 investors, making it’s the world’s most popular initial equity crowdfunding offer by a clear margin.
DC Power Co. achieved funding well above its minimum requirement of $1.75m. On a global scale, it smashed the previous record for initial equity CSF participation, despite lacking any established brand or product in the market, and while proposing to develop a new business model for which there were no immediate comparisons. Considered in this context, DC Power Co.’s equity CSF appears to have been a highly successful and innovative means of capital raising for a start-up company looking to disrupt an identified sector.
However, measured by DC Power Co.’s own priority of objectives (ambitious though they were), the equity CSF fell short in many respects. The roughly 15,000 funded bids that are expected flow from the 17,000+ bids that were made during the campaign, while more than twice the level of participation for the next most popular equity CSF worldwide, was well below the 35,000-minimum target set by DC Power Co. This target was set to maximise participation by prospective customers who would form the basis of its new retailer/energy services business. While the equity CSF campaign was unexpectedly successful among older and traditional-media customer segments, it struggled to gain traction among the younger digital savvy segments it had been designed to reach. Fundamentally, the campaign also struggled to manage the tension between the imperative of attracting investment funds on the one hand, thereby maximising the contribution of individual investors, and the objective of maximising participation by prospective customers on the other hand, which would necessarily limit individual investor contribution to keep aggregate funds raised within legal restrictions on equity CSF.
While there is much for DC Power Co. to reflect on as it develops its retailer/energy services business and prepares for any future equity CSF campaign, these considerations cannot detract from its achievement. DC Power Co. has clearly illustrated the potential for equity CSF to harness the enthusiasm of prospective investors and customers seeking innovative products and business models in the energy sector. This report sets out DC Power Co.’s key learnings from its first equity CSF process. This review should be considered by energy sector start-ups considering innovative ways of raising capital while building a customer base and brand awareness.