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E-book Feeding Future Generations : How Finance can Boost Innovation in Agri-Food
Agri-food is more than a strategically important economic sector. It is also crucial for society, because it provides affordable and sustainable nutrition for the population. An increasingly growing part of society, especially the young, are willing to pay more for sustainable food. This is important, as the sector is extremely sensitive to price changes. Crowdfunding can give more financing to smaller agri-food innovators and it can connect consumers to small agri-food businesses. This type of funding has gained significant popularity in recent years, especially in the US (AgFunder or Barnraiser), and European platforms are starting to emerge (MiiMOSA, CONDA or platforms like Lendix). The agri-food sector can be suitable for crowdfunding, as the connection between the investor and the company (i.e. the agri-food innovator and its product) can be fairly close, geographically and conceptually. This type of funding could be supported by blockchain technology, offering transparency and a direct connection between the investor and the small business. Furthermore, the results of the investment is likely to be obvious and tangible. For example, a company developing sustainable packaging sold at local supermarkets or at regional farmers’ markets, where investors live and shop, offers a direct connection between the investment and the investor. The financing gap for small-scale agri-food innovators, especially in smart technologies, will not be filled by the market alone. This suggests that there is space for public financial institutions. Also, the investors in sustainable investments usually expect lower returns than venture capitalists. Using equity offerings on a crowdfunding platform, which would let the public invest in small businesses, will bring more capital to agri-food innovators. In addition to partially addressing the financing gap, crowdfunding for agri-food would raise awareness of the importance of the sector, create a direct local link with society and have a positive effect on the Bank’s decision to finance agri-food projects, due to the equity contribution to the small businesses’ capital.
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