Clim8, the investment platform that aimed to have a positive impact on climate change by channelling money away from fossil fuel investment and into clean, green energy and sustainable companies, has announced it is closing and will shutter for good on May 30th.
In a message to clients, Clim8 said:
“It is with deep sadness that we have made the decision to start the process to close customer accounts as of 28/03/23”
What happened to Clim8?
Clim8 was unable to raise funds from existing and new investors to continue operations and grow their clients base.
Clim8 was founded in 2019 to offer impact investing to individuals, who like its founders, were unhappy about the greenwashing of environmental issues in other parts of the finance industry.
But as Clim8’s blog makes clear the economic environment has changed and the appetite for investment into start-ups has shrunk over the last 12 months. And as a result, the business has been unable to secure additional VC funding.
Clim8 has written to all clients and stakeholders to inform them that it is winding down its operations and the firm is working with Wealth Kernel which is an FCA regulated business, to ensure its customer funds are protected during this process.
Wealth Kernel is also a fintech and is a provider of turn-key embedded finance solutions, and provides its customers with platforms to manage client onboarding, trading, custody, payments and other services.
Clim8 also point out that money manager Wealthify is offering Clim8 customers a welcome bonus if they transfer their portfolios into one of the firm’s ethical plans. Which are designed to support sustainable investment and exclude companies that damage the environment or cause social harm.
What are the issues when you invest via a start-up?
The Good Money Guide looked at the issues surrounding fintech start-ups back in October 2020 in an article which asked are loss-making fintech investment providers worth the risk?
Clim8 is not the only Fintech start-up thats had to make some tough choices recently.
Spiral a New York-based business has pivoted away from its original plan to offer an ethical banking app to allow users to easily donate to charities.
Instead Spiral will now transition into a B2B business that offers banks, credit unions and other Fintechs, the ability to embed sustainable and social impact investing into their existing operations.
The pivot seems to have met with venture capital approval as Spiral has raised a further $28 million, via a series A funding round to get the new business off the ground.
What happens if your investment platform goes bust?
If the firm that you invest through goes bust or shuts down and is FCA-regulated, then there are protections and procedures in place to safeguard your assets.
Not least the insurance provided by the UK FSCS or financial services compensation scheme. The FSCS guarantees £85k of clients’ money and assets held by FCA-regulated firms.
Not every Fintech will be successful and ultimately the market will decide which ones survive and which shut down or are taken over.
It’s unlikely that Clim8 will be the last fintech to call it a day in 2023 and we think that further consolidation and wastage within the industry are on the cards.
Having a good idea and a desire to do good is no longer enough to succeed.
Financial services businesses need to gain critical mass to survive, particularly in an environment where fees and profit margins are being driven lower, by increased competition.
You can read more about Clim8’s objectives in our: