In the past clean-tech start-ups would focus on gaining funding from business angels, venture capitalists or large financial institutions, investing large amount of capital with the expectation of a big and quick return. Today digital crowdfunding platforms enable members of the public to invest almost any amount in a wide range of businesses and projects.

Some institutional investors remain sceptical, but others are following the crowd. A report from UK Business Angels Association showed 45% of angels[1] now invest via crowdfunding platforms. GE Ventures and the Israeli equity crowdfunding platform OurCrowd co-invested in selected early-stage companies, while established venture capital funds such as Meridian Venture Partners and the Anthemis Group are doing similar things on Seedrs, a UK-based platform.

There are more than 700 active crowdfunding platforms worldwide, accessible by more than 90% of the world's online population. The global crowdfunding market is expected to exceed US$90 billion by 2025, which would be almost twice the size of the global venture capital industry today[2], and almost 20 times the size of the global crowdfunding market in 2013[3].

The UK is poised to become the leading crowdfunding market, with London already crowned by the Crowdfunding Centre as the world capital of crowdfunding, thanks to the city’s thriving start-up market and active investor base. This is supported by the UK government’s stance towards innovation in financial services, recognising the crowdfunding industry as the ‘dawn of a new era’ and taking a series of steps to promote growth, including a commitment to invest £5 million through UK equity platform Crowdcube.

Despite this huge potential, the market is still in its infancy. This is particularly true for the low-carbon sector, which in 2012 accounted for less than 6% of funding volumes globally, a small percentage of this (or 5%) relating to equity funding.[4] In the UK, only 44% of SMEs were aware of alternative finance models and only 9% of them used crowdfunding to raise funds in 2014[5].

Small clean-tech enterprises find it harder to raise money than companies in other sectors, as their projects often involve higher capital requirements, riskier technologies and longer timeframes to market. Only a few clean-tech companies in the UK have been successful at raising investment through crowdfunding platforms, and only a small fraction of platforms are specifically servicing the low-carbon and clean energy space – such as Abundance Generation in the UK or Mosaic in the US.

Success in raising funds from the crowd relies on the ability to generate a positive buzz around an idea. Socially or environmentally responsible ventures can harness the desire of the general public to invest in the sustainable and profitable future they want for the world, and are thus particularly suited to crowdfunding. Despite the inherent risks, as with all investment, there has hardly been a better time to use crowdfunding to start or invest in a clean-tech business or project in the UK.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.