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Moltex raises US$7.5m in crowdfunding 'first'
Funds raised on Shadow Foundr will primarily be used for New Brunswick Power SMR project.
UK-based Moltex Energy has raised £6 million (US$7.5 million) through crowdfunding platform Shadow Foundr in a first for nuclear fission projects.
Moltex says the funding will support the company through the pre-licensing process in Canada and allow further development of the business in the UK for its Stable Salt Reactor.
“New generation nuclear plants are some way away from first operation – perhaps ten years from now – and therefore are seen as high risk by the traditional capital markets,” Simon Newton, Business Development Director, Moltex, told Nuclear Energy Insider.
“In general, Venture Capital and Private Equity firms prefer much quicker returns. We decided that crowdfunding was a way in which we could mobilize a broad base of supporters. Naturally Moltex Energy would benefit from the cash, but also from incorporating a large number of committed shareholders who might act as advocates for the business in the future.”
Set against a backdrop of the increasing calls to fight climate change, yet slow and in some instances regressive actions by governments, securing long-term investment is a challenge faced by nuclear projects.
The cash injection from this funding will primarily be used to pursue Moltex’s project in Canada, working with New Brunswick Power (NBP) to licence the first reactor for construction. A proportion of the money raised in this round matched funding from NBP to support Moltex through the Canadian Vendor Design Review process.
Source: Canadian Nuclear Safety Commission, October 2018.
Moltex leveraged its social media followers to reach potential investors while also using Shadow Foundr’s network of registered private investors.
“We already had £3.45m (US$4.3 million) of funding in place, including £2.5m (US$3.1 million) from the global nuclear consultancy firm IDOM,” explains Newton. “Our original intention was that we would use the crowdfunding campaign to offer our own supporters the opportunity to get involved at an early stage.
“We originally hoped to get to a total of £4m (US$5 million), so a target of £650,000 (US$808,000) from the crowdfunding campaign, though after the launch we reached this number very quickly.”
While the crowdfunding was clearly a success, Newton says Moltex did have reservations of using such a public platform, such as publishing details of their business plan – making it accessible to competitors as well as potential investors. Another concern was that failure to reach their target could have damaged the brand.
However, with climate change being a high-profile global issue, large numbers of people would like to be engaged in finding and supporting solutions.
“The nuclear industry has traditionally shunned publicity, believing that public opinion is beyond their ability to change and worried about getting into debates about nuclear waste, cost or safety,” says Newton.
“At Moltex Energy we can afford to be more confident, given that our technology addresses many of the shortcomings of conventional nuclear. We have three key characteristics: carbon free electricity at a lower cost than fossil fuels, dispatchable electricity that complements intermittent renewables and the fact that we consume existing stockpiles of nuclear waste as fuel. These messages have clearly inspired many individuals to invest.”
Funders receive equity and all Round C shareholders have the same deal. There were no limitations on investors other than the need to satisfy Moltex’s AML requirements, and for investors to comply with their own local requirements. This meant that investments through Shadow Foundr were not allowed from the US, for example.
“Any company that has a credible solution to climate change, at the right cost, deserves urgent support,” says Newton. “That support may eventually come from institutions and governments, although right now those organizations are lagging well behind public opinion.
“As a result, the crowd may well be a useful route for companies in a similar position to Moltex. If they do have solutions to climate change, as we believe that we do, then all power to them. And yes, if the opportunity arose we would definitely do it again.”
Resonating with investors
Jason Kluver, COO, Shadow Founder, says he believes this is the one of the first crowdfunding campaigns for nuclear technology in the world, but that more companies will follow Moltex’s lead.
“This has been an amazingly successful campaign and has obviously resonated with many investors,” Kluver told Nuclear Energy Insider.
“Around £2.5m (US$3.1 million) was facilitated through our platform, with contributions from around 170 investors.”
All investors who invest through the Shadow Foundr platform must complete the necessary Know Your Client (KYC) and Anti-Money Laundering (AML) checks, as well as categorize as a suitable investor. For companies, Shadow Foundr conducts due diligence and background checks prior to promoting an opportunity on the platform.
“Crowdfunding allows the general public to invest into ideas and opportunities they believe in,” says Kluver. “Nuclear is obviously polarising, but there are plenty of people out there who have read the science and believe in the technology to deliver the clean future we are now demanding. Crowdfunding allows these people to put their support behind their beliefs and behind the teams they feel can deliver on the concepts they believe in. Nuclear certainly fits that mould.
“The other thing to consider is that a lot of venture capitalists, certainly in the UK, will not look at nuclear technology, so I would encourage others in the nuclear space to look at crowdfunding as a viable funding option.”
Shadow Foundr takes a small percentage fee on funds raised and also takes share options in the companies they raise for.