If you’re looking to invest your savings into good, you’ve likely come across the same challenge as me. Impact investment options are fairly limited for retail investors (i.e. people with less than $2.5m in savings) and the definition of ESG, a baseline for positive impact that is often conflated with terms like “responsible”, is ridiculously broad. Too often, that ESG-rated index fund will have holdings in Amazon and Facebook because they pass the bare minimum thresholds for avoiding harm.
Bloom is a smartphone-based investment app that’s changing the game. It allows retail investors to invest as little as $500 directly into a diversified portfolio of clean energy infrastructure and cleantech companies to generate a return while shifting the dial on climate action.
Disclaimer: Giant Leap is not an investor in Bloom, this is the author, Charlie MacDonald's, personal perspective.
Creating and capturing value
Bloom is targeting the underserved young retail investor, who currently has very limited ability to invest directly into a diversified portfolio of clean energy projects. Interest in both eco-activism and self-managed investment portfolios is high in this cohort, with Gen Z’s investing the highest proportion of their savings into shares of any generation, a trend likely driven by accessibility of retail investor focussed apps like Raiz and Spaceship (Australia) for passive investments and Robinhood (USA) and Superhero (Australia) for active investments.
The path to market is most likely direct-to-consumer, acquiring customers directly through channels like search social media and search and indirectly through distribution partnerships. While still pre-launch, it's likely Bloom will charge an investment management fee or a subscription fee to the consumer to use the platform.
The inflection point for this market is the looming tidal shift in intergenerational wealth, which will give the investing firepower to younger demographics with different values. The scale is substantial: Australian millennials are set to inherit $3.5 trillion over the next 20 years. To put this into perspective, full decarbonisation of Australia’s economy by 2050 would require an investment of $788b, a touch over 20% of transferred wealth only. Apps like Bloom have the potential to substantially accelerate the transition to a clean economy by increasing investment into renewable projects and reducing the cost of capital for cleantech companies.
Balancing unit economics for smaller investment portfolios - While younger investors have a natural attraction to climate focussed investments, they also have a smaller investment portfolio than your average investor. Gen X and Millennials have around $10k saved on average, compared to $16k for Gen X and $30k for Gen Z. For investment apps focussed on younger investors like Bloom, this means that funds under management per user, and therefore revenue per user, will be lower. To compensate, these apps must be able to leverage technology to reduce the operational costs to serve investors - such as automated onboarding, customer service, and investment management. In addition, the cost to acquire customers must be substantially lower in order to make sure the company can grow revenue efficiently, whether driven by a stronger value proposition or partnerships that can achieve reach more cheaply than traditional marketing channels.
Breadth vs depth of value proposition - To the question of value proposition, the tension for niche investment apps like Bloom that only provide exposure to a subsegment of the total investment market is whether investors will trade-off the convenience of having their entire investment portfolio in one place for being able to invest in something they feel great about. There are a number of competitors already providing breadth options for the Australian market, including Spaceship, Raiz, and Superhero. Niche investment apps like Bloom need to prove their subsegment is worth the trade-off. This might be by giving their investors privileged access to investments the other platforms can’t get otherwise or an impact screening methodology that gives legitimacy to their value proposition that other platforms can’t easily replicate.
Consumer education and regulatory risk - Investments are inherently risky business and regulatory bodies require that investment managers take action to ensure investors understand the risks.For retail investors, the need is especially pronounced. Illustrating this, new regulation is coming online in October 2021 that will require financial services businesses to take action to ensure they are attracting the right consumers to the product, such as disclosing the target market and reviewing their customer base to identify people that potentially aren’t a good fit. While apps like Bloom are unlikely to be heavily impacted by this specific regulation due to the wide applicability of the service, regulatory changes are an ongoing risk and additional cost in a market segment where it's already a challenge to balance unit economics.
- Impact: Adding valuable investment dollars to accelerate the cleantech transition (and increasing the profile of cleaner investment opportunities!)
- Team: Cleantech growth hacker + PhD data scientist + Future Super’s Chief Investment Officer + Ex Portfolio Manager of SVA Social Impact Fund = amazing potential
- Product: A mobile app enabling investment of as little as $500 directly into renewable energy infrastructure and cleantech companies with measurable carbon savings.
- Market: The recent successes of Future Super and Australian Ethical tell a story of a market crying out for legitimate ethical investment into our future, while the explosive growth of investment apps like Raiz, Spaceship, and Robinhood indicate that younger investors are increasingly comfortable investing their savings.
- Momentum: With a fast-growing waitlist and strong early partnerships secured, Bloom could be one to watch.
From The Founders
- Themes: Reduce emissions, Business, Consumer
- Summary: Bloom Makes Climate Impact Investing Easy and Accessible.
- Country: Australia
- Founders: Camille Socquet-Clerc; Bertrand Caron
- Product stage: PrototypeReduce emissions,Business,Consumer
- URL: https://www.bloom-impact.com/
- Capital raising: In progress
- Company Mission: Making Climate Impact Investing easy and accessible. Our money has the power to combat climate change. Let’s put it to work.
Bloom offers a simple mobile investing app, allowing Australians to invest in a diversified climate impact portfolio. Our mission is to empower our customers to grow their wealth AND use their money to fight climate change. Our vision at Bloom is to have a positive impact on climate change by moving billions of dollars of investments into companies offering scientifically-proven ways to reduce carbon emissions. We think the world is changing, the oil and gas industry is slowly declining and sustainable companies are already winning. We want to make sure that Australians can invest and benefit from the inevitable clean energy transition.
Why the team wants to solve this problem:
Our team dreams of a world where our money escapes a broken financial system destroying the planet and instead, accelerates our transition to a safe climate future. We dream of a world where we can all be unapologetically proud of being green and financially secure.
What are other climate tech companies you admire:
Exergenics - energy efficiency
Ping - Wind turbine monitoring
Short pitch from Bloom's Ventures Founder Series