The mindbogglingly large number of people in the world–1.3 billion–without access to electricity is providing a growing market opportunity for a lot of social entrepreneurs. I just wrote about one, Nokero, selling solar-powered light bulbs.
But SunFunder, another fledgling venture, takes a very different approach: It’s helping sellers of solar-powered lighting systems based mostly in Africa, India and other developing countries find funding.
The San Francisco-based company was co-founded in 2012 by Ryan Levinson, who had been toying with the idea for a few years before officially launching. Other founders include Audrey Desiderato, who heads the company’s Tanzania-based operations, and web developer Sameer Halai.
The company focus is not only on solar power as a tool for providing lighting in places without the infrastructure for electricity, but also as a mechanism for charging cell phones. That is, SunFunder is after helping communities get lighting and also improve their communications and access to information through the use of mobile phones.
To that end, it targets two funding streams. One is a crowdfunding site which lists individual projects that individuals can loan money to, a la Kiva. Go to the home page and you’ll see a listing for, for example, a $10,000 loan to an outfit providing solar-powered lighting and cell phone charging to 600 families in West Nile, Uganda (fully funded) and another for $20,000 for 1,232 more lights in a town in Zambia (also fully funded).
The other funding source is private, accredited and institutional investors through something Levinson calls solar empowerment notes, which, basically, are debt instruments.
Levinson spent about ten years in clean energy before launching SunFunder, first doing policy work for a non-profit in Washington, D.C. and then helping to build an environmental finance group for Wells Fargo Wells Fargo, which as of now, according to Levinson, has invested around $1 billion in solar projects. Much of that time he spent traveling in South East Asia and India, becoming more and more convinced he could help find a “business solution to clean energy and climate change,” he says.
In the process, he also became increasingly aware of a few other things. First was just how many people he encountered in his travels without access to electricity both for lighting and for cell phone charging and the far-reaching negative consequences, from lack of safety to poor economic growth to just a really low standard of living.
Second was how, thanks to a new generation of solar energy products designed for less-developed parts of the world, solar energy had become affordable for consumers, even without the government subsidies that have helped boost larger-scale projects in the U.S. The small companies selling these products, however, lacked the financing to grow their businesses. The answer, then, was to help them get money. It was too ambitious a project for just himself, Levinson knew, so he teamed up with his two co-founders.
The initial projects have been small-scale, at the same time that they have “already changed people’s lives,” he says. But Levinson hopes to help fund bigger off-grid systems, starting, for example, with residential systems. They pose a big problem for companies getting started because it’s capital-intensive, but customers usually pay through an installment plan. As a result, the startups need a money infusion upfront before their customers start paying their bills.
So far, the company has raised about $150,000 from over 590 funders in 37 countries through the web site. The average loan is $200. And it just closed the first issue of notes, raising $250,000 from several angel investors and a Netherlands-based foundation. But with the growth of interest in impact investing, from institutions to government agencies, SunFunder is hoping to start ramping up its fund-raising quickly.
As for its own funding, the company initially was completely bootstrapped. Last June, it raised about $500,000 from 14 angel investors. (Just thinking about the effort that went into getting money from all those people makes me tired). It also recently got a $25,000 grant from Facebook Facebook, an award it won for an idea to integrate “the social aspects of Facebook into our web platform, to help drive investors,” says Levinson. And it got about 20,000 euros from the government of Sweden.
The initial focus has been on East Africa which, “seems to be a hub for these business,” Levinson says. The plan is to move from East Africa to West Africa and India. Headquarters will remain in San Francisco, where, fundraising-wise, it makes sense to be. But ultimately Levinson hopes to fund “hundreds of millions of solar energy systems a year.”
Some of the projects have been surprising even for Levinson. For example, one company in Kenya he just encountered installs solar powered street lights. Levinson says that one small village was able to double economic activity in a market held at night, thanks to a system installed last year. Says Levinson: “Now you can see all kinds of activity, from lots of little shops to someone fixing their motorcycle.”