Beyond the Grid at Invested Development

On Tuesday, the Obama Administration announced Beyond the Grid: a framework within the Power Africa initiative created to catalyze private investment in distributed energy solutions for the 240 million people living without household electricity in six targeted Sub-Saharan African nations. We are proud to be one of the 27 founding partners who have committed to investment of over $1 billion over the next five years.

Beyond the Grid has set a lofty goal that we are proud to work towards. In fact, it’s a goal that we have actively embraced since 2009 when ID first opened for business. Our investment thesis acknowledges that alleviating energy poverty is something that neither public nor private sectors could achieve in isolation. That awareness is exactly why we joined Beyond the Grid as a founding partner.

As seed investors we are comfortable taking big risks on great ideas paired with great teams, and we’re not afraid to be first. However, we recognize that in many countries, like the six Sub-Saharan African countries targeted by Power Africa, even great companies need help overcoming the lack of physical, financial, and political infrastructure that often stagnates growth. For that reason, nearly all of our energy portfolio companies have benefited from U.S. government support on the path to electrifying 10,000 homes, schools, and businesses. Below are just a few great examples from our portfolio.

EGG-energy – As the first outside investor in EGG-energy, we helped bring one of the first truly scalable distributed home energy models to Tanzania. Despite a business model referred to as “the Netflix for batteries,” the market was risky, unproven, and certainly not easy. At a very critical time in the young company’s development, EGG-energy received a USAID Development Innovation Ventures grant that provided the working capital the company needed to grow. With ID and USAID’s support, EGG has developed its staff’s expertise in installation and after-sales support, positioning the company to become the most experienced and respected off-grid home energy installer in that market.

Promethean PowerFrom the start-up community of Boston and Cambridge to the dirt roads leading to India’s rural dairy cooperatives, Promethean has developed and manufactures affordable and efficient cold storage solutions for off-grid markets. Its rapid milk chilling technology has not only won praise from some of the largest dairies in India, but also the support of Phase I and Phase II SBIR grants, USAID’s Powering Agriculture grant, and USAID’s inaugural U.S.-India Science and Technology Endowment Board grant developed by Hilary Clinton. As an equipment manufacturer in India, Promethean has created lasting value beyond the dairies and farmers themselves. But they couldn’t have managed without grant support for continued R&D and working capital to build out production.

Simpa NetworksWe knew that starting a pay-as-you-go (paygo) solar-home system company in 2010 was going to be tough but quickly backed Paul, Jacob, and Michael as the right guys to get it done. This was before people appreciated the impact pay-for-use models had in making mobile phones one of the fastest adopted technologies in history, and long before most people appreciated the need for ultra-affordable solar home systems. Along with support from the Hilti Foundation, our investment got Simpa’s Progressive Purchase system into market, but the company really needed low-cost working capital to scale. Luckily Simpa’s radically affordable approach to distributed energy landed them a USAID Development Innovation Venture grant that helped bridge follow-on investment from several Beyond the Grid founding partners.

SolarNowWith over 40 franchises across the nation, SolarNow is the number one provider of solar home systems in Uganda. But it hasn’t been an easy journey for a company whose strength comes from providing affordable financing for a largely agrarian clientele.  With a business model that is more akin to an asset finance company than a solar distributor (but a foot solidly in both camps), leverage is critical for SolarNow to grow. Along with our early investment, USAID’s Development Credit Authority (DCA) stepped in with a critical loan guarantee to help SolarNow secure the working capital it needed to keep growing.

As impact investors, we pride ourselves on using a scalable, market-based approach to overcome the issues that plague underserved markets. Yet we recognize that private investment alone is not enough for issues as pervasive and intractable as energy poverty. For investors and innovators, the opportunity is massive but the hurdles are nearly insurmountable without a blend of capital sources and investment approaches. The U.S. government has supported our energy portfolio companies with grants, prizes, working capital, and loan guarantees that are targeted to the unique challenges they face while solving the enormous problem of energy poverty. This is why we are so excited about being a part of the Power Africa: Beyond the Grid framework and we hope to see even more committed investors, philanthropists, and international development organizations joining the original 27 founding partners.

The progress our portfolio has made and the support they’ve received from both private and public partners to date is a great example of what can be achieved, and with more of us actively working towards the same goal under Power Africa: Beyond the Grid, we are sure to multiply our success. Building on the momentum in our portfolio, we’re eager to actively channel the much-need capital to growing companies reaching beyond the grid and collectively create measurable impact with Power Africa.

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