When the “Crowd” Invests in “Green”: How Equity Crowdfunding Fuels Jobs and Sustainability
In this article, Magnus Blomkvist, Associate Professor at EDHEC, and his co-authors present their latest research (1) on equity crowdfunding: could this approach do more than "just" raise funds and actually help green startups create more jobs?
As governments across the globe search for ways to tackle the twin challenges of unemployment and climate change, the spotlight increasingly turns toward innovation — not just in technology, but in finance.
One emerging solution sits at the intersection of both: equity crowdfunding. This funding method, still relatively young, allows startups to raise capital directly from individuals, transforming ordinary people into shareholders.
A new study (1) by Magnus Blomkvist (EDHEC Business School) and his co-authors - Anup Basnet (Western University) and Aristogenis Lazos (Audencia Business School) - investigates whether this approach could do more than just raise funds: could it actually help green startups create more jobs?
Understanding Crowdfunding and Its Variants
Crowdfunding has grown rapidly in recent years, offering an alternative to traditional financing routes. In 2022 alone, the global crowdfunding market was valued at $13.9 billion, and it’s expected to reach $28.8 billion by 2028 (2).
At its core, it allows businesses or individuals to present their ideas to the public via online platforms and collect small contributions from a large number of supporters.
There are numerous variants though.
In reward-based crowdfunding, backers receive a product or experience in exchange for their support.
Equity crowdfunding, however, goes one step further: contributors invest money in exchange for shares in the company. They’re not just customers or donors — they’re co-owners. This form of investment opens access to early-stage capital for startups that might otherwise struggle to attract funding, particularly those with missions that extend beyond profit.
A Closer Look at Equity Crowdfunding for Sustainable Startups
The study in question focused on 587 successful equity crowdfunding campaigns led by UK-based companies between 2019 and 2022. It set out to understand how sustainable startups — those with explicit environmental missions — fared compared to their non-sustainable counterparts. The central question was simple: does a commitment to sustainability help a startup raise more money and hire more people?
The answer, it turns out, is yes. Sustainable ventures raised significantly more capital than others — 34.5% more, on average.
This suggests that the less sophisticated investors in crowd funding markets are motivated by more than just financial return. Many appear to be actively seeking impact, channeling their resources into ventures that align with their values. This fits with a broader finding that investors often prioritize social and environmental goals alongside financial returns.
But the difference doesn't stop at fundraising – sustainable ventures also use the funds to increase employment. One year after their crowdfunding campaigns, green startups had increased their number of employees by nearly 48.8%, compared to just over 22% for the rest. Even when controlling for the amount of money raised, sustainable ventures hired more.
This points to the broader appeal of such companies: they may attract talent more easily, or reflect founders' ambitions to scale not just for profit, but for purpose.
As we’re talking about startups and small businesses, the authors remind us that they are far from being marginal: they account for the majority of the employment in most economies! They represent, for example, 61% of total employment in the UK according to Federation of Small Business report 2023, and 80% of the net job creation during 2011 to 2021 in the US according to US Census Bureau’s Business Dynamics Statistics.
Why This Matters for Investors and Policymakers
While the study does not evaluate what would have happened without crowdfunding as a proper counterfactual would be needed to determine that, it does highlight however a strong association between sustainability, investor appetite, and job creation. And this matters, particularly as young companies often face obstacles in securing bank loans.
Regulations introduced after the financial crisis, such as the Basel accords in Europe and the Dodd-Frank Act in the United States, have made it more expensive and riskier for banks to lend to small or early-stage firms. For sustainable ventures, which may require time to prove profitability, this financing gap can be particularly wide.
Equity crowdfunding, then, offers a way to bridge that gap — and perhaps more importantly, to align capital with causes. It shows how financial innovation can contribute to public goals: supporting entrepreneurship, accelerating the green transition, and creating jobs along the way. For policymakers, the findings underscore the need to encourage and facilitate access to alternative funding routes. For investors, they confirm a growing truth: doing good and doing well are no longer mutually exclusive.
This shift in financing not only empowers entrepreneurs but also offers a blueprint for a future where financial success and positive impact go hand in hand.
References
(1) Basnet, Anup and Blomkvist, Magnus and Lazos, Aristogenis, When sustainability meets equity crowdfunding: The role of green ventures in job creation (March 07, 2025). Available at SSRN: https://ssrn.com/abstract=5169774 or http://dx.doi.org/10.2139/ssrn.5169774
(2) Estimated transaction value of crowdfunding worldwide from 2017 to 2025 - https://www.statista.com/statistics/1078273/global-crowdfunding-market-size/
Photo by Christian Dubovan via Unsplash
