Olivier Houdaille's interview | Lumo


Innovation Insider with Olivier Houdaille, co-founder of Lumo | Fabrice Choukroun, Co-Founder of our Global Banking and Advisory’s division’s incubator programme | Didier Lallemand, SG Ventures

One priority in our digital and innovation strategy is to develop the Group’s leadership in sustainable finance, an essential tool in addressing the social and environmental challenges facing the planet. Societe Generale is fully committed to meeting its responsibility objectives in these domains.

Three years ago, we announced the acquisition of Bordeaux-headquartered Lumo to strengthen our existing capabilities in renewable energy and to serve our corporate and individual customers better. The company is a pioneer in crowdfunding with strong convictions on impactful investment in social and ecological transition. 

In June, Lumo launched a 4 million-euro crowdfunding raise for the renewable energy company CVE – one of the platform’s largest to date. Didier and I caught up recently with Lumo’s CEO Olivier Houdaille and Fabrice Choukroun, Co-Founder of our Global Banking and Advisory’s division’s incubator programme, to find out more.

What does Lumo do?

Lumo is an online “positive impact” crowdfunding platform that offers a new way for individuals to invest in ecological and social transition. We offer bonds issued by companies or special purpose vehicles (SPVs) that run assets or plants. For renewable energy, this would be in solar parks, wind farms or smaller hydroelectric dams. Investing starts from 50 euros. The bonds have a lifespan of three to seven years, paying a gross annual interest rate of 3-7%.

Previously if you wanted to invest in ecological transition, you would have to buy your own plant or invest through institutional funds. Lumo gives power back to investors to choose instead of an asset manager selecting on their behalf.

Under current regulations we can only market to investors in France. European Union texts were finalised at the end of 2020, so we will be able to apply to “passport” our service at the end of the year or in 2022.

Do you charge investors fees?

For investors it’s free. It’s the companies developing the projects who pay us for the crowdfunding finance. Because these projects generate reliable, predictable cashflows they are very bankable. We find projects and create space for individual investors to become involved. The projects are on average 5-10% crowdfunded.

We help developers because it’s not always profitable for banks to do the due diligence on small projects. In France, developers that use crowdfunding get an advantageous price for the electricity their projects generate - something the founder of Lumo and I lobbied for back in 2014.   

Developers work with us because local authorities often want their residents to share in the economic benefits of a project. When it involves thousands of acres of wind or solar farms in their area, the local authorities want developers to organise crowdfunding. We provide a service for the industry by providing a link to the end consumer. It’s important to have local support for large projects staggered over a number of years, otherwise they won’t advance.

Where did the idea for Lumo come from?

Alex Raguet, a classmate from engineering school, heard about crowdfunding while travelling in South America. He came back to France and later founded Lumo in 2012 to use finance and the digital world to fight climate change. 

It meant creating a new profession in finance in a market that didn’t exist and to invent online investments for individuals in projects such as renewable energy. I joined Lumo in 2014 full-time, when our lobbying helped a regulatory framework emerge in France and I was keen to see the proof of concept become a reality.

What do you do differently from others?

Lumo is one of the pioneers of crowdfunding in France. We helped found the French and European crowdfunding associations, FPF and ECN.

An enormously important differentiator is our selection process. We have a responsibility to private investors who put their savings into our projects, so we do everything possible to maintain a zero default rate (on the investor bonds) – something we’ve achieved since Lumo’s inception. We don’t want investors to take unreasonable or unexplained risks.

Secondly, we chose not to remain alone because we wanted to have impact. Lumo is a certified B-Corp company, which means balancing purpose and profit. What we want is not to be the best in the world but the best for the world. Since we became part of Societe Generale in 2018, we have not lost our identity.

What makes you a success?

Finance is a tool that brings stakeholders with common values together around very concrete, tangible things like green electricity production, soft mobility infrastructures, green buildings or smart cities. Our achievement has been to make it simple, easy and straight forward.

More than 20,000 people are registered on our site and have participated in more than 100 fundraisings for a total of 17 million euros. The financed plants generate 700 GwH of electricity per year - equivalent to the energy consumption of 140,000 homes.  

What is your relationship with Societe Generale?

It has made us sustainable in our funding. We were looking for a partnership with a large retail banking network to have impact. Being part of an international group is good because the climate and energy have no frontiers. Societe Generale is one of the leaders in renewable energy, so it means we've got the same client base.

Societe Generale has given us access to a huge range of specialists in areas where we would have made slow improvements on our own. They have really helped us scale up through enhancements to our processes, the tools and expertise. As a start-up it’s something that you dream of but you don’t do.

I think we bring a new approach inside Societe Generale - innovation, thinking outside the box, agility. It’s very exciting to help change corporate culture.

What is your long-term vision for your sector?

As we saw in France, the new European regulatory framework is moving the industry from advisory to deal-presenting. I see a market that is going to consolidate and have volume. There is high pressure on fees today and the appearance of very big projects at a corporate level alongside small projects at an SPV level.

We are well-positioned for that as an online marketplace for investments. I hope that by 2025 Lumo will be the leading positive impact platform in Europe with projects all over the world and clients all over Europe.

Fabrice, how has Lumo benefitted your business?

ESG investing is here to stay and we need to integrate new models into our offering. 

Lumo is a really interesting addition to the product range we can offer our retail bank customers, providing a new avenue to invest in renewable energy infrastructure and other social impact investments. In the prevailing low interest rate environment, the bonds offer an attractive return with a tangible social and environmental impact. It also provides our corporate clients with a more complete offering and a way to connect with the public.

Societe Generale has strong credentials in the field of renewable energy, however given the scale of the challenges confronting us, more needs to be done. The Group is pushing to develop and promote responsibility within society and towards the environment. Like Olivier and his team, we share the view that the world of finance has a vital role to play and can be a force for good. Societe Generale wants to make a major contribution in these areas, so having Lumo onboard is a great step in this direction.