Greetings, Agents of Impact!
Featured: Base of the Pyramid
Off-grid solar pioneer Bboxx is following the data to down-market growth (Q&A). Mansoor Hamayun didn’t anticipate the impact of the data revolution when he launched Bboxx more than a decade ago. “In terms of predicting where we are today, we definitely didn’t do that,” Hamayun tells ImpactAlpha. “Maybe someone else did.” Back then, the U.K.-based solar provider was designing and selling small-scale solar home systems for families in Rwanda that didn’t have access to the electricity grid—or to financial services and many other basic services. Today, the company provides pay-as-you-go water, electricity, gas and appliances, as well as loans to millions of low-income individuals in nearly a dozen frontier markets. Applying modern predictive algorithms to Bboxx’s trove of customer data has opened a raft of opportunities for the pioneer of affordable off-grid energy, which has raised nearly $200 million in debt and equity, according to Crunchbase. “I often see that Bboxx’s real contribution at the household level is not solar power and lights and TVs, but giving people a pathway to economic self-development and empowerment,” says Hamayun. “The opposite to poverty is not increasing dollars per day, it’s having access to products and services.”
Importantly, Bboxx’s customer insight has enabled the company to double down on poor customers while many of its peers have struggled to build scalable businesses for the base of the economic pyramid. About 90% of the company’s customers are rural and/or low-income, Hamayun says. The company has evolved as energy hardware and software have gotten better, cheaper and more accessible. Bboxx recently launched a new entry-level solar home product, called Flexx, and is partnering with the governments of Rwanda, Togo and the Democratic Republic of the Congo to deliver energy access to households that “the pure capitalistic model doesn’t reach,” Hamayun says. Bboxx launched around the same time as d.light, M-Kopa, Barefoot Power, Zola Electric and other off-grid solar companies that shared a similar mission of ending global energy poverty. Some of those early peers have moved upmarket. Others have failed and folded (see, “Can off-grid solar keep focus on energy access for the poor as commercial capital arrives?”). ImpactAlpha spoke with Hamayun about Bboxx’s 12-year journey, and how “big data” has helped the company deepen, rather than diminish, trust and closeness with its customers. “The more data we collect,” he says, “the more we know, the more bespoke services we can provide.”
- Keep reading, “Off-grid solar pioneer Bboxx is following the data to down-market growth,” by Jessica Pothering on ImpactAlpha.
Dealflow: EV Infrastructure
British International Investment commits up to $250 million to Indian EV venture. The U.K. development finance institution, formerly known as CDC Group, will anchor funding for the new electric-only subsidiary of Indian automaker Mahindra & Mahindra. Mumbai-based M&M, known for its sport utility vehicles, will match the investment with its own capital and hopes to attract another $500 million from private investors to accelerate the adoption of four-wheel EVs in India. “The acceleration of EV development in India will be critical to supporting the country in reaching its emission targets as well as improving air quality in many urban areas,” said BII’s Nick O’Donohoe.
- Four-wheeling. Electric two and three-wheelers are popular in India, but four-wheel passenger vehicles have been slower to catch on. Almost half of Indians surveyed said they were likely to buy a hybrid or electric vehicle, more than in the U.S. or Australia. TPG’s Jim Coulter cited “significant momentum around India’s EV movement” last October. TPG’s climate fund, along with Abu Dhabi’s ADQ, invested a combined $1 billion in a new unit of Tata Motors to build passenger EVs and infrastructure last October.
- EV infrastructure. EV makers are adopting lightweight aluminum to boost vehicle performance and range. Sortera Alloys of Fort Wayne, Ind., has raised $10 million to support its aluminum recycling business. Detroit-based Assembly Ventures led the Series B round with existing investor Breakthrough Energy Ventures and aluminum partner Novelis. Separately, Inglewood, Calif.-based Zeem Solutions pulled in $50 million from ArcLight Capital Partners to expand its EV “fleet-as-a-service” offerings.
- Take a spin.
Argentinian agtech startup SIMA raises $2 million to help farmers boost yields. SIMA’s mobile app is used by farmers to monitor 129 million fields of soy, wheat and other crops across Argentina, Uruguay, Paraguay and Brazil. The funding, led by Buenos Aires-based Xperiment Ventures, will help the company expand in Brazil and Mexico. “We want to be the leading agricultural digitalization company in Latin America,” SIMA’s Andres Yerkovich told LatamList. Share this.
Dealflow overflow. Other investment news crossing our desks:
- Blackstone invested $400 million in Xpansiv, an environmental commodities marketplace for trading carbon offsets, renewable energy credits and low-carbon fuels.
- Enterprise Community Partners secured $341.5 million for a low-income housing tax credit fund that will create and preserve nearly 3,000 affordable homes in 15 U.S. states.
- Boston-based private equity firm Partners Capital closed a $143 million environmental impact fund to invest in net-zero and energy-transition tech businesses.
- Women-led venture firm Maya Capital in Sao Paulo is looking to raise $100 million to invest in Latin American companies solving the continent’s most pressing issues.
Series: Seeding Impact
Maximizing the impact of catalytic capital when supporting emerging fund managers. Philadelphia-based Spring Point Partners began supporting emerging fund managers in 2020, focusing on wealth-building opportunities through business ownership for BIPOC and other underrepresented founders. Since then, Spring Point has supported 10 emerging managers who turned to investing in order to address the market inefficiencies and bias they experienced as BIPOC operators, investors and founders themselves. Its portfolio includes the founders of Ruthless for Good, Debut Capital and Plain Sight Capital. “Without risk-tolerant capital that can be deployed in unconventional approaches, such as in seeding a first-time fund or warehousing early investments, these fund managers may never have an opportunity to prove out their investment thesis and grow into sustainable businesses with long-standing impacts,” Spring Point’s Margot Kane writes as part of ImpactAlpha’s “Seeding Impact” series in partnership with the Catalytic Capital Consortium, or C3.
- Optimize for other investors. In seeking to seed or anchor a fund, it’s important to commit as early in the fundraising process as possible so the fund manager can leverage that commitment to reach their minimum fund target, Kane writes.
- Accept the unknown. Investing the time and energy to build relationships and trust with partners is essential to risk mitigation strategies, Kane says. “Overly structuring deals for control and downside protection does not sufficiently mitigate against the unknowns and can meanwhile have adverse impacts upon your partners by slowing deal closing, complicating decision-making, and hampering open communications.”
- Learning labs. Kane’s post comes out of a series of learning labs supported last year by C3, an effort of the MacArthur and Rockefeller foundations and Omidyar Network (Disclosure: C3 also sponsors ImpactAlpha’s Catalytic Capital coverage). MacArthur’s Debra Schwartz kicked off the series with some takeaways from the labs and Emily Duma rounded up answers to frequently asked questions about catalytic capital. Follow the series on our Seeding Impact landing page.
- Keep reading, “Maximizing the impact of catalytic capital when supporting emerging fund managers,” by Margot Kane on ImpactAlpha.
Agents of Impact: Where To Meet
Tideline presents “State of the impact investment market: Trends, tailwinds, challenges,” as part of its Compass series, tomorrow at 11am ET… Big Path Capital’s Impact Capitalism Summit convenes July 20-21 in Nantucket, Mass… The Global Steering Group for Impact Investment gathers for the second part of its virtual Impact Summit Series, “Boosting capital flows in emerging markets,” September 22.
The GIIN Investor Forum will convene in The Hague, Netherlands, Oct. 12-13… SOCAP will return Oct. 17-20 at a new venue, the Yerba Buena Center for the Arts in San Francisco… GenderSmart hosts its global summit, “Traction to transformation,” Oct. 17-19 in London… Enterprise Community Partners will hold its 40th anniversary conference Oct. 19-20 in Washington, D.C.
Thank you for your impact!
– July 11, 2022