Like Facebook's $19 billion acquisition of WhatApp, the announcement that d.light design has closed $11 million in new financing is a signal of Silicon Valley's increasing interest in technology's role in meeting the needs of emerging middle-class consumers in the developing world.
Investors in d.light, which makes affordable solar lanterns, included Draper Fisher Jurvetson, a leading Sand Hill Road VC firm, and Garage Technology Ventures, along with well-known “impact” investors such as Acumen and Omidyar Network. With the closing of its Series C financing d.light has raised a total of $40 million in capital.
D.light is on a fast-growth trajectory, selling 6 million solar energy products in the past year. Basic solar lighting, the company says, helps students study longer, small business owners work later and families save money compared to expensive, and dangerous, kerosene lanterns, while reducing indoor air pollution and carbon emissions. D.light's higher-end products can also charge mobile phones.
“We are seeing an enormous growth opportunity to provide clean, affordable solar light and power products to the relatively untapped markets of the developing world,” Mohanjit Jolly, a managing director at Draper Fisher Jurvetson who is joining d.light's board, said in a statement. He said d.light has built “an extraordinary distribution system in the developing world.” DFJ has been an investor in d.light since the firm won $250,000 in a venture challenge in 2007.
Facebook's purchase of WhatsApp was also driven by a desire to reach untapped markets for growth, especially the “next 5 billion” Internet users in places like India and Africa who are taking advantage of increasingly cheap services, such as free messaging.
D.light, with about 100 employees in San Francisco, China, India and Kenya, is valued at a tiny fraction of WhatsApp's $19 billion purchase price. But it is a rare example of an impact-driven company successfully executing the high-volume/low-price strategy required for success in “base of the pyramid” markets.
D.light co-founders Ned Tozun and Sam Goldman teamed up in 2007 as students in Stanford University's famed Entrepreneurial Design for Extreme Affordability course. Their simple premise: The falling costs of solar power and LED lights made it possible to provide affordable lighting for the 2 billion of so global consumers who lack access to reliable power.
The alternatives would not seem hard to displace. Centralized electricity grids won’t reach many villages anytime soon, and those already in place are notoriously unreliable. Kerosene lanterns are dim, dirty, dangerous and expensive to operate. A potential D.light customer in Kenya might spend roughly $30 a month, or up to 25 percent of its income, on fuel to provide lighting in evening hours.
Still, d.light's challenges in reaching its current growth stage provide lessons for other impact ventures struggling to go to scale. D.light's sales to the poorest of the poor have failed to reach targets, requiring new strategies. The company had to shed its product focus to establish the complex distribution channels needed reach the right consumers with the right message.
Prices had to be low, but shoddy solar products had already soured many potential customers. Warranties have helped allay quality concerns, highlighted by a manufacturing problem in 2011 that forced D.light to announce an expensive product recall.
Now, d.light appears to be a on roll. A deal with the French oil giant Total to sell d.light's line of lanterns, priced from the mid-teens to about $30 each, in its gas stations in countries like Cameroon, Indonesia and the Republic of Congo has boosted its shipments from less than 30,000 to more than 500,000 lanterns each month, the company says.
According to the company's figures, as of December 31, 2013, d.light's lamps have generated 35.5 million kilowatt-hours of renewable energy, generating $874 million in savings and offsetting 2 million tons of carbon dioxide.
The new funding will enable the company to accelerate its product development and expand distribution in developing markets. Omidyar Network's Matt Bannick, who will also join d.light's board said the company is “one of the best examples in the world of how impact investing and a market-based approach can fundamentally transform people's lives for the better.”Photo ©2011 d.lightdesign