 Hello, everyone, and welcome. My name is Robin Steffen, and I work at the White House at the intersection of impact investing and global development. And I'm thrilled to be here to kick off today's conversation on powering Africa beyond the grid. As many of you know, two out of every three people who live in sub-Saharan Africa lack access to electricity, a critical building block for economic development, education, health, and so much more. So a little over a year ago, President Obama launched Power Africa to double access to electricity in sub-Saharan Africa. And this summer, recognizing that Power Africa's ambitious energy access goals cannot be met solely through extending the electricity grid. The administration launched Beyond the Grid, a new Power Africa initiative that will double down on the administration's support specifically for distributed energy solutions. As you're going to hear today, the African distributed energy market is still quite young, but it holds great promise to follow the mobile phone in leapfrogging centralized infrastructure in Africa. The Beyond the Grid, at the heart of it really, is more than 35 private sector partners. And these private sector partners truly power the initiative with their investments, investments in capital, investments in talent, investments in innovative off-grid business models. In fact, the 35, more than 35 private sector partners to Beyond the Grid collectively have committed to invest over a billion dollars over the next five years in distributed energy solutions in sub-Saharan Africa. And our commitment to them in return is to leverage the full tools and resources of all 12 Power Africa agencies to be the grease and the glue to help unlock further private sector investment and growth, whether that be by helping companies be investment ready through risk mitigation of specific deals or through strengthening the enabling environment. Now we are very privileged to have three of the Beyond the Grid private sector partners here with us today. We have Graham Smith from Off-Grid Electric, Sandhya Hegbe from Coastal Impact, and Simon Desjardins from Shell Foundation. And they're going to be able to speak to the distributed energy market from the unique perspectives of an equity investor, a philanthropist, and a pioneer clean energy company, respectively. So I want us to go ahead and jump right in with a round of introductions. Graham, I'm hoping you'll kick us off by sharing with everyone today a little sketch of the business model that Off-Grid Electric is pursuing in Tanzania. Sure. Thank you, Robin, and thank you to everyone here at SoCAP for having us and having this discussion today. So we are the implementing company up here. So in some ways we are the poster child of sort of the on the ground work that's going on through the Power Africa initiative and the Beyond the Grid initiative. Off-Grid Electric is focused on one simple thing, which is to provide aspirational modern energy lifestyle that is accessible and affordable to everyone. So the way that we do this is through a distributed solar solution, which is a prepayment. Customers pay for their energy in advance, and they receive it through small scale solar home systems that are installed on their rooftops. And they, in return, are not just receiving the energy that these systems generate, but they're also getting service to support that. So we feel this is overcoming some of the big barriers that are really hindering the growth of energy access in Africa. Currently we're working in Tanzania, but we're expanding throughout East Africa in the coming years, and ultimately our goal is to provide a complete technical, operational, and financial model that will help us to power Africa in the coming decade. Thank you for organizing this, Robin. My name is Sandhya Hegde. I help run the Khoosla Impact Fund, which is a broad-based sector agnostic fund that invests in early-stage enterprises across India and Africa, and we have a thesis around supporting great entrepreneurs with businesses that will help people and small businesses become more productive. Given that thesis, obviously, energy is a very important part of the investing ecosystem for us, and we have spent the last two years getting smarter about what are the potential investments we can make in the space to make clean energy a reality for a lot of the developing world. I'm Simon Desjardins from the Shell Foundation. I'm a portfolio director working on access to energy. Shell Foundation is the independent, charitable arm of Shell, and we support enterprise-based solutions in the energy and mobility space to get from a point of blueprint or seed to the point of scale, and we use philanthropic funding to do that, and we're working with a range of partners from technology providers and customer-facing enterprises to financial intermediaries, bringing new kinds of capital to the market to industry bodies that are able to provide information and other services to the access to energy market, so we're proud to be Power Africa partners and Robin, thanks for organizing this. My pleasure. Fantastic, so I wanted to jump in and begin to paint a picture of what the market looks like now and what it will look like in the future, and so, Graham, I want to start with you since you're closest to the ground, and have you tell us a little bit about who are your target customers? Before you began to provide service to them, where did they get their energy from? What is most important to them in an energy solution, and what does that mean for off-grid electric in terms of your potential market size three, five years down the road? Sure, and I think maybe I'll take that in two phases, talk around sort of what we see today, and then we can talk around sort of where we see that going in the next five or so years. Today, as you suggested, approximately two out of every three households in Africa, Sub-Saharan Africa, lack access to energy in the form of lighting or basic electricity, so that means when we look at the market, it's approximately the 120 million households across Africa that are in that situation. They have no access to a grid, they have access to an unreliable grid, or quite frankly, it's too expensive of a grid to present a viable option for them. Most of these people are actually sort of in rural areas, or what we would term in other conditions to be the last mile or beyond the last mile. So the reality is that the grid is not going to reach these people in any time in the near future. So that leaves them in a situation where what they're looking at for their energy needs is traditionally kerosene. Most people do that and they do it in small sort of daily quantities. There's sort of substance, you know, farmers, people who are looking at the dollar a day sort of income levels. Beyond that, you do have a lot of people that are using solar lanterns, and there's a good availability of solar products for a lot of these people. Some of them have moved in that direction, and I think that that's a real testament to those who've been working in that space to get those lanterns into those people's homes. And then as you get a little bit further up the the income level, you start to see people that have diesel generators potentially. But I think ultimately what you're looking at most of those cases is a really expensive solution, something where people are putting a lot of money into what is not necessarily the most efficient energy solution for their needs. So what they're looking for today, I mean, I think you're you're looking at for the majority of people they're starting from sort of the basics. They're looking for lighting for their household. They're looking for phone charging. They may be looking for radio in terms of communication. That's sort of where we think of as the entry point. And so for us, we price the entry point, which is those services, the basic lighting, the phone charging and so forth, at the cost below kerosene, so that we can make this an economic value proposition so that they can look at and say, I can save money from day one by moving to solar, in addition to the health benefits, in addition to the environmental benefits, in addition to the economic development benefits that are there. From there, though, we see people moving up to things that are a little bit more aspirational. And that's kind of where we want to play in this space. Ultimately, you know, we see people moving towards things wanting televisions, wanting larger entertainment systems, whether they be radios or otherwise, wanting tablets, wanting satellite decoders, wanting to find productive energy usage for small business. And so those are all things that I think over the next five years or so are going to be things that really become more apparent. Just a quick comment on sort of where people are today versus where they will be in five years. I think when we look at the market, we've seen sort of four big barriers that have prevented widespread adoption of solar in Sub-Saharan Africa. The first has been that the upfront capital cost has been rather prohibitive for customers. The second has been that there's a risk diversion. If you're a low income household, one poor financial decision means no school fees, it means lack of food on the table. It can be an incredibly devastating situation to be in. The third barrier that we're seeing is one of service. If something breaks, then ultimately there's very little local knowledge to fix products in particular solar home systems. And so that leaves people in a position where they may buy something but six months from now some unforeseen issue occurs and they don't have the ability to fix it. And then the last one, and I think that everyone on the panel is well aware of this as well, is that distribution is a major challenge. So getting to those households that are beyond the last mile. So our approach is really to try to address all four of those barriers. And I think that in the next five years you're going to see that people have more and more options that really do address each of those. There's going to be more products available. There's going to be more services available. There's going to be more people that try to meet people where they are and give them the products that they want and provide more choice. Terrific. So zooming out from that really helpful portrait of your customer base. Sondia, I'd love for you to talk a little bit more about the market as a whole. As you look at multiple companies who are exploring various distributed energy business models across Sub-Saharan Africa. You know, I was taken by the fact that coastal impact is actually going to invest perhaps as much as a third of your initial equity fund in distributed energy solutions. And so tell us a little bit about why you're so bullish on distributed energy in Africa. What are some of the data points that you think are most compelling in terms of where you see the sector going as a whole? And why now? What's happening? What are the trends that are making this the moment? So I could talk about that for two hours. I'll try and be very brief. So there are three or four reasons why we want to invest so much in early stage energy entrepreneurs. I think one very macroeconomic reason is from the analysis we have done, we think off-grid energy is the kind of sector similar to microfinance, which can actually create a lot of large for-profit enterprises where the growth of the business will be completely on track with them having impact. There is no dissonance between what you're serving your customer with and sort of having impact that you want in your mission, which is a great spot for us to be in as investors. I think that statement is a little harder to make for healthcare services, education services, where you're trying to reach the poorest of the poor with a service that doesn't give them short-term returns on income the way energy does. Energy is a very quick payback even for the poorest because they are spending on kerosene, they are spending on diesel and all you're doing is replacing that with a much cleaner modern technology. So it's easy for us to make for-profit investments and I think it's going to become similar to financial inclusion, it's going to become a massive sector with a lot of mainstream participation. The few other reasons why we are investing now is I think if I look at what has happened over the last five years, there is now a very broad diversity of different types of entrepreneurs operating in the space. It's not just sort of one fad here or there, it's not just one lantern idea that a lot of people are going after. You have everything from large solar farms to ingredient extension that OPIC might be putting in 300 million dollars in setting up a farm in Mexico that will help the local manufacturing industry access more electricity. You have sort of those large projects now happening and you have micro grids, you have solar home systems and not just solar, you have biogas, startups coming up. You have people trying to reach everybody from one household that needs light and phone charging to a mining company that is using diesel to run their entire operations and want to switch to solar. So the market size is humongous. Just in off-grid residential solar I have met about 60 startups. So there is a lot of momentum and interest and innovation in the space which will drive its growth. It's here to stay, it's not going away anywhere, it's not a fad. The other two reasons why I think these startups, a lot of these startups will be successful is one, the solar sale is no longer a concept sale. They don't have to go explain that there is a solar auction. There is enough market penetration now that there is that tipping point where people accept that this works and you can see that in the extreme sharp growth of very simple consumable products like solar lights. It's become a part of the rural language now that this is an option and the question is more you know what's the best solar option and how can I afford it rather than should I trust this or is it just going to break down on me in three days. That perception has shifted and I think it's demonstrated by the fact that the solar industry grew about three, four x in the last year as a whole and did about 300 million dollars of sales. So they have a lot of traction. We have companies with tens of thousands of households paying them every month for doing this as a service. You have Mcopa with like 80,000 houses. You have Offred Electric with about 30,000 households. We have Bebox which has done about 40,000 solar rick and Bangladesh has done about 40 or 50,000 like these are significant basis of customers which is great and finally I think there's a lot of technology costs changing the cost of mobile solutions. We just heard about this $40 smartphone launched in India which is going to help build a more affordable distribution platform for a lot of these companies. The cost of solar PV panels has come to a point where it no longer really makes sense for most people to use kerosene and emerging markets. So it's a conference of all of these that makes us bullish and we hope that a lot of people in this community will observe these things and get involved because the space has seen very little investment like maybe a quarter billion dollars of equity if at all which is kind of like what Snapchat has raised. The whole sector has seen about that kind of investment to date. And I wanted to dig a little bit deeper on this question about what the future looks like in that regard because one of the things that is striking is that many of you know in many ways the investment thesis is predicated one might think on the limitations of the grid right that when Graham talked about the type of energy that he's competing with he talked about kerosene or diesel generators but not actually access to the grid and so you know as an investor do you worry at all that your investments will be eclipsed as the grid does continue to extend in sub-Saharan Africa and as an impact investor do you feel any tension because it might be a better outcome for some of those customers to be able to plug directly into into the grid. So to be honest that's like the one thing we don't worry about we trust the governments that the grid is not really going to reach to many people to be honest and even if it did you know solar is a form of electricity generation that should coexist with the grid it should replace all coal solar city is selling solar electricity to very well grid connected households in the US it's not it's still a better option long term and as the cost of fossil fuels increases it's always going to be a better option if tomorrow all these houses have the option of like putting in two hundred dollars to get a line extended from the grid to their house you know they will have to compare it with the cost of getting an off grid system which is you know two hundred dollars or less it's it's comparable economics even if they have both if for example simple networks in India a lot of their customers are actually grid connected customers who get like four or five hours of grid electricity mostly at a time when they don't really need it and when they need it there's no light they can't turn on a fan and you know it's Uttar Pradesh where it's hot as hell so we see you know a future where they coexist and hopefully distributed energy is the majority of all electricity generation um in in these parts of the world because economically it makes more sense if I can add one comment there I mean I think you're entirely right we don't view the grid as competition I mean Tanzania is 90 unconnected to the grid and and I made a comment before to the to the group you know the the population growth is currently outpacing the grid growth so there's going to be more people off the grid but that's not the idea of where we view competing with the grid you know we're not doing it today but where we would like to compete with them in the future it's for that capital I mean as you suggested if there's you know a quarter of a billion dollars that have gone to the sector worldwide we want to be competing for the 100 million dollars that goes into you know expanding the grid in a couple of years and the reason we want to do that is because we think we can deliver a better solution and we can do that quicker you know we'll be able to get to those last mile households quicker than the grid will get to them and we'll give them an experience that is if not you know the same then hopefully superior to it so let's talk about that for a little while and you know one of the common challenges for impact enterprises is having the right type of capital in the right amounts at the right moment in your growth trajectory so grant walk us through the types of capital the sources of capital that have been key to the growth of off-grid electric you know including grants debt and also your most recent venture round sure so i also i don't want to leave simon out of the conversation we won't we won't we're coming right to you simon yeah from our perspective i would suggest that maybe we've we've tried to be as opportunistic as possible around our capital stack but i think we found a really good place of of sort of balancing you know those who are impact-driven finding those that are say development driven through the form of grants and the power africa family and u.s. aid and div program in particular but also the asaf program through opic uh and then also from the equity side you know finding a commercial proposition that allows um you know private investors to say that there is something there that they're interested in i think on the impact side um you know one of the things that sort of we take for granted but i think is is probably really important is that the impact from our side is it's embedded in what we do i mean the idea of providing access to electricity and all the wonderful benefits that come from that um you know whether it's education whether it's health benefits whether it's uh environmental benefits the economic development piece that comes along with that all that's a very clear very core part of our business so for an impact investor to say that they want to support that you know they can clearly see where their money is going and what they're getting from that and honestly that's that's where we started we started with impact investors who clearly saw that what we were trying to do was going to transform a lot of lives and that that's what they wanted to support in terms of the development side of things and and sort of the usaids the opix the power africa family is i think really looking for new ways to try to expand you know and build upon some of these entrepreneurial ventures i think that what we were doing and where the impacts support and the impact investors got us started um you know div could come in and be a little bit more catalytic and they could help propel us from where we had a good idea to showing that we had a good idea that actually worked we had something that could get a little bit bigger and reach a few more households we could try some new things um with a little bit more comfort in terms of the risk that was being um being taken on by us and and ultimately being borne by our investors and at the same time we'd be able to you know deliver tangible results to them in a way that you know say a larger program or a less entrepreneurial venture would maybe be a little bit constrained so they've been incredibly transformative and supportive in terms of getting us from you know kind of that early stage pilot phase to something that's you know reaching into the tens of thousands of households and now getting us more towards what i would say is is kind of more traditional commercial stage you know private sector investors um we've been very fortunate to have those investors come in um probably earlier than i think a lot of other impact driven organizations have seen but i think to go back to the earlier idea of the impact being embedded in our offering our our commercial uh investors see a great business but they see that business also being able to do a lot of good and so it's not that they disassociate say commercial returns in a business that's going to make some money hopefully from the idea of a business that also helps to change a lot of lives so i think they firmly believe in that mission and we're fortunate to have that but we're also hopefully building a business that is going to be able to return something to them on the capital side but also be self-sustaining you know the the role that grants the role that impact investors the role that venture investors play you know is ultimately one of helping to try to propel you forward and so i think that that's where there's a commonality amongst all those groups where what they've been trying to do at each respective stage and in each individual way has been to prepare us for the next stage and to help us get from where we are today to where we want to be so you know as i said if we're going to try to you know access things like 50 million or 100 million dollars in capital to compete with you know grid expansion at least for for that amount of money you know that's that's probably not going to come from exclusively impact investors it's probably not going to come exclusively from the grant side of things and from usgs programs you know it's probably going to be some sort of combination of those things that says you know can we de-risk the opportunity or can we de-risk the the the proposition so that the commercial sector can get more engaged the private sector can say you know we think there's a really good opportunity here when we want to be a part of that we just need to get a little bit more comfortable and so for us we've been incredibly fortunate that i think everyone has sort of played really well with each other um has and has understood that you know one group has not pushed the other out of the way um you know no one's getting preferential treatment no one's sort of dictating where we go as a company everyone's pretty well aligned in terms of here's where we want to go here's what we want to accomplish and so whether it's a grant whether it's an impact investor whether it's some sort of subsidized debt whether it's you know um a pure play equity investment all those people see the same future for the company i want to dive a little bit deeper on um this question about the role that grants can play as early stage risk capital and actually Simon this is something that you spend you know 24 hours a day thinking about and so i'd love for you to speak a little bit about the role that film philanthropy can play in helping to make companies investment ready but also talking a little bit about how foundations how the public sector should really structure that financial support to make it most effective in terms of leading to the follow-on investment from impact investors or from commercial investors sure so when we think about some of the businesses that are potentially disruptive in the energy space we often see them when they are before or pre legally incorporation they're they're they're preceded and when we think about the customers that they are trying to serve in the markets in which they're operating these are the toughest as we all know probably in the room here toughest markets in the world to serve customers who are are the most price sensitive in the world places where it's very very difficult to access talent and we're expecting in some place and when I say we I mean the broader funding community I think is expecting sort of immediately investable opportunities to emerge out of this incredibly tough environment where we would call it the enabling infrastructure physical roads and everything else that would be required to launch a business and we're expecting those to go from to operate in those environments and to immediately be able to go to Asandia or a COSLA impact or another impact investor and receive you know millions of dollars of funding and we think there is that's one of the main reasons why there is you often hear this refrain of entrepreneurs saying well there's no capital out there and investors saying well there are no opportunities out there because often I think what we see are businesses that try to raise a ton of capital before they're even ready to raise a ton of capital they don't really have business models fully baked yet and so the role that we play as a foundation where I think philanthropic capital can play an enormously positive role is to help businesses get to the point of establishing their blueprint establish initial validation and establish what their actual business model is such that they can go to next stage investors and raise actual investment capital to go to scale I think the other difficulty or misconception that we often hear in the market is the role that grant can play with for profits I think when we're I think we're still and this audience here might be an exception but we're still living in a world I think where most grant dollars are going to non for profits and most investment capital of course is going to for profits and we think that there's an incredibly powerful use of philanthropic capital if it's deployed as what we call smart subsidy in other words we're deploying grant to a for profit in a way that doesn't distort the end price of the product or service that's critical to us so we're deploying capital to enable firms to hire world-class talent from day one build prototypes invest in early stage geographic expansion they want to test multiple markets to see where their business might actually be viable and to us that is very complementary to investment capital and there's if we get to a stage where a business that we supported gets to a level of scale where it's providing a return a financial return back to its promoters and its investors even though we're not taking any of that financial return to us that is success we effectively help the business reach scale and it will have achieved our social and market objectives so the other thing and your question Robin on where can public money be used and we're starting to see examples where I think public money is starting to be used in much more intelligent ways than it has in the past and I guess maybe one key example is USAID's global development lab PACE initiative which is meant to accelerate the types of incubation models that could bring numerous companies to scale and we're very proud to say that Shell Foundation is one of the first PACE grantees and this is effectively from a public money perspective if I put my government if I imagine myself as a member of the government what we get is a foundation that is able to at least match funds and in the case of USAID we're putting orders of magnitude more capital as leverage so you get a lot more bang for the buck we both get to do more as partners and we're able to take more risk by pushing the boat out in terms of who we're able to support and test multiple different incubation models so we're both stronger for it and this is a really innovative example of how I think public capital is being used alongside philanthropic and ultimately private capital to build the ecosystem of energy companies so we're hoping that provided that PACE is going to be a success and we think it will that other governments ought to take note and look at what the PACE program is doing hopefully I think the space is big enough certainly in the energy side to warrant multiple PACE programs I think USAID is really acting as a leader in this space I think we've seen that as well I mean in some of the groups that we talked to it's kind of amazing to say from 12 months ago to today or from two years ago to today sort of the way that people have matured or the way that people have become more creative I think in particular on the grant side of things you know there's more there's more of a willingness to share that risk I think just as you're saying you know going forth and trying new things and understanding that the way to get innovation the way to attract more private sector capital the way to convince people like Coastal Impact to actually invest in the space is to sort of think outside the box as far as what has traditionally been done so rather than just writing a check and saying here go and do you know whatever you've just told me you're going to do in your project plan and make sure I get my M and E indicators every six months and we're fine you know there's more of a collaborative effort to say well what do you actually need what are the things that you really do want to test or what are the things that we can help you do in order to get to the point where you are self-sustaining or where you're able to attract private sector capital and so you know whether it's through the PACE program whether it's through the DIV program whether it's through ASIF I think I think our Africa Clean Energy Finance sorry Africa Clean Energy Finance which is an OPIC program which is sort of OPICS OPICS program and we were one of the beneficiaries of this but to prepare companies through a grant program to ultimately you know be positioned for for hopefully receiving OPICS support and a more traditional senior debt facility way down the road so whether or not that happens there's not a commitment on their part to do so but there is an understanding that their support will help us do things that otherwise you know we'd be asking investors to put money to or we would be paying out of our own pocket to do that would take away from the you know the the end beneficiaries and the users that of our products that we want to to ultimately receive the service so I think it's it's something that's definitely trending in the right direction at the same time I would put out the challenge to say you know we need to continue to innovate and need to continue to think creatively around what public money grant money foundation money whatever it could be whether it's first loss positions whether it's you know providing assurances to groups to to ultimately leverage their impact and the dollars they put into whether it's working directly with funds to find ways to to bring them a pipeline of opportunities I think that there's all kinds of things that could be done but it's definitely moving in the right direction and those programs that you mentioned are really core to the DNA of power Africa in terms of thinking about ways to use to be even more catalytic with our foreign assistance to be able to crowd in more private capital in addition to div and pace and asaf which you mentioned I'll also mention just one other which is the USADF GE Off-Grid Energy Challenge Shari Berenbach who's the president and CEO of the US Africa Development Foundation is here so I'd be remiss not to mention it has one other source of catalytic grants that are really targeted at for-profits for early stage energy companies Simon just one follow-up for you on what you talked about which is so at this point you talked about all the reasons why you see a great need for the role of philanthropy to help help companies be ready for a coastal impact or for another impact investor how will you know when the sector is sufficiently commercial that you should step away sure so I guess that's a great question I think what we're and we're already starting to see signals that this is beginning to happen I guess where the broader narrative that we see and it's it is a scenario and it might be wrong but what we see if I look five, 10 years out is in contrast to today where we we tend to see that the world of Socap and social enterprises on one side and the world of mainstream business on the other and these are very separate worlds we believe in in that over the next five to 10 years we're going to see convergence between these two worlds so I think the role of the role of philanthropy is effectively to help businesses broaden their product base broaden their value proposition to the point where they can compete with the larger the larger businesses that are going to be serving the same communities that many of the social enterprises serve today so I think it's it will be a in many ways we hope that the impact investing world will not be needed in in years to come and I think the biggest signal that the market has evolved is where we start to see actual the majority of capital going into these kind of enterprises is coming from commercial banks or it's coming from pure play commercial venture capital and we're starting to see that now with some of the pioneers in the space are beginning to attract capital from from private sector banks and venture capitalists but we're a long way off and those are outliers and in terms of where the capital is coming from and it's only a matter of time I think there's a lot of when I talk to venture pure play venture capitalists and banks I think many of the risks that they identify that prevent them today or that they say prevents them today from investing in this space are actually perceived risk they're not actual risks they are many of them are not yet convinced that low income customers can actually afford to pay for energy services they aren't convinced that you can set up distribution models in places tough as East Africa and India and so a lot of this part of our role as a community I think is to just help educate through bringing businesses to commercial viability that this is actually a legitimate market and this is actually worthy of any kind of capital and that ultimately impact investors hopefully as a separate asset class defined as such will not be needed in the future before we leave the topic of capital Sanya I want to turn to you and talk a little bit about working capital for many of your portfolio companies for the sector for a whole working capital is just critical to being able to scale so as you tell us a little bit about why that is and also what is the landscape of options for reasonable low cost debt available to companies in your portfolio and beyond Yeah, the working capital is definitely a billion dollar question I think new types of assets need new types of finance and this has spanned out even in the US right like the residential solar industries now really mature but a new type of financing had to evolve we had companies like Google doing tax equity funding for these projects and it took a lot of creativity support from the government some reform and regulation to make these what we now call commercial so there will have to be a lot of financial innovation from the investment community to respond to this new category of growing assets called off grid energy right and I guess the biggest there are two big challenges with providing debt to this space one is of course that the end consumer doesn't have a credit score unlike a developed market even Mexico for example most residential solar households struggle with credit scores forget Tanzania you need to evolve new systems for that the second biggest risk both for venture and debt in the space is just people and young companies it's easy to provide debt to a business that has been around for 15 years has 10 years of profit the company is not really like run by passionate founders it's experienced professionals who can be replaced tomorrow if one leaves that's a stable situation that lends itself to debt when you have a company like these companies we're talking about providing debt for they are like three years old forget having three years of profit right they are far from being easy to lend to but they have business models and consumers who need debt so this is the sort of vicious circle of debt that we need to break out of and the only way that will happen is with a lot of support from impact investors even you know long after I think equity might be commercial debt will still need impact investors to be involved in terms of options available I think in the last couple of years the community has responded really well I remember we talked about this water year ago right where we started saying capital stacks we need an evolved capital stack which has philanthropic money for protecting doing first loss we need family foundations and family funds to get involved because they are willing to take more risk with a debt investments and then we need sort of the large pools of opaque style capital but you know these deals are still really small for them they don't see it as a large deal so we are asking them to be creative far beyond their mandate and all of these options I think have sort of just come on board in the last two years it will take a lot of time for them to evolve but the more people who get involved the better and we definitely think that it's both a huge need and a huge market opportunity which is why one of the companies we are supporting in this space is actually a solar finance company that spends all its time figuring out how to create different capital stacks where people from completely different sources of capital can participate together de-risk each other and get more bang for their buck right? If Simon wants to do a first loss guarantee and no one is willing to do the actual debt he can't really move ahead with it and for debt investors who really want some first loss protection they need someone like him to step in so you need all these different folks to come work together and you can't have entrepreneurs trying to chase you know one private fund in Netherlands and then OPEC in the US and maybe one other bank in Kenya and try to they would have to do that instead of run their business if that's what they had to do every time they needed a million dollars of debt so which is why a Sun funder which is a solar finance company we have sort of tries to do that and offer structured finance products they have now offered debt to about most 20 companies and are working with everyone else in the space including folks like OPEC, USAID as well as private investors who have been so supportive of them from the beginning and have gotten their money back they haven't you know lost the money so they've kind of demonstrated that this sector can can accept debt and return it but needs to be very careful about and innovative about the structure of that debt I mean having chased around those different groups and having spoken with some of them quite extensively I completely agree with everything you've said I mean it's a challenge and it definitely detracts from operating the business and from trying to do what we would like to do and so I mean I think that we've seen a lot more we've seen a lot of people asking questions and a lot of interest and people trying to explore the space and I think that you know to the extent that there can be you know collaboration you know more broadly than just saying you know the three of us on the stage or the handful of people in the crowd who sort of work together you know there there is sort of a need to educate people and to bring more into the space and I think that that's that's really how it's going to grow I mean when we think of capital you know not just our capital stack but when we think more broadly you know if I'm a fund investing or if I'm an implementer ultimately there's sort of three considerations that I think are sort of there's a tension between and so there's trade-offs and so one is size one is going to be speed and then one is going to be sustainability so if if we're looking at the idea of trying to you know raise ten million dollars in debt you know how do we go about doing that how quickly can we do that and how well can we pay that back and and make that something that's going to be sustainable are we a business that's going to turn the revenue and turn the profit over so that we can actually burden that that type of debt you know alternatively if you're a fund and you have a limited amount of money to put to work what are you putting it into how quickly can you deploy that you know if you're a foundation it's the same question sort of do you want to place multiple small bets you know can you do that quickly does it take a year for it to go through sort of the you know the intake process and come out the other side you know all those things are sort of naturally you know need to be evaluated from all sides to say you know are we getting money you know are we getting money from funds quickly enough that we can put it to work so that we can then pay them back you know that's that's effectively what it comes down to in terms of that equation so you know sometimes that might be on small amounts sometimes it's going to move towards larger amounts sometimes we can be more patient sometimes we you know sort of are at odds and I think that's okay but I think that that's where the education needs to happen it needs to sort of say you know it's great if you want to provide grants but if it takes a year to go through the grant application process to then receive funds in a slow trickle that's going to be really difficult to work with right if there's a way that you can make that quicker then then all the better similarly if we come to a group and say we need a large ticket size and they say we don't write that that's good to know so that we're not chasing the you know the wrong thing great thank you so we have such a phenomenal group here with us in the audience as well I want to at this point open it up for questions is there someone who has a microphone okay great Shari do you want to start us off oh there is a mic uh-huh a mic I was I'll just get keep going as we look to the future of this distributed energy market are we likely to see a small number of large players that are sort of stepping in and in providing these services across whole swaths of regions of Tanzania or Uganda or wherever in East Africa or really throughout all of Africa or is it more likely to be sort of energy entrepreneurs local energy entrepreneurs that are meeting you know the needs of specific regions where they already have relationships and they already have established networks I mean because before coming to this session I was sitting at the in telecap session listening to local entrepreneurs pitching to try and raise a half million dollars to in effect provide solar home solutions with the metering in the same kind you know it's it's often the same business model that you're seeing being repeated and you can only imagine that that gentleman might be able to operate that much more efficiently that much cheaper with local talent in that local knowledge in that local expertise compared to a large multinational coming in that's operating across multiple boundaries and I'm just wondering if you might share some insights as to what you think it might be looking like five years now down the line in 10 great and before you guys jump in on that I'm going to give you a moment to to noodle on it a bit as we take one more question I'm just cognizant of time I think it's useful to do a couple in a row go ahead thank you very much my name is Michael could you argue me founder of Love Tank we operate a startup accelerator in Lagos Nigeria actually my question is along your line but maybe I'm just going to be a little of a band born out here kind of a contrary right I'm wondering if we're not making the same mistake an impact investment as aid and grant as well as loans made in the 70s and 80s when Africa was first the first attempt to electrify Africa after independence because in the 70s later in the 80s the problem was the solutions was coming was it worth the solutions were coming from the outside to the inside and so when the big companies left the left out with light dams that we could not maintain the left out with technology that we were not familiar with 20 years later we have dams running at about 20 percent of capacity so what the question I have is it seems the power Africa initiative that's that question is specifically for you I seem to be so focused on exporting US technology to Africa and also sometimes to actually compete with China we saw that in the president's event that held in August should the focus not be to actually drive and help local entrepreneurs that understand the environment to actually develop technology that is suitable for the environment I say this because for example in Nigeria we have I mean you mentioned that there were 120 million people of the grid in Africa in Nigeria we have 150 million on the grid but get power for just one hour a day as an engineer electrical engineer with two degrees in the subject and a power industrial power engineer myself I know solar power connected to the grid is 40 times more efficient than the one that is offline so what can we do and are we not just going to the comfort area doing things in Tanzania can East Africa again the areas that outside grants and NGOs and non-profits are used to and instead of going to the really hard countries Egypt today Cairo had a blackout 20 million people affected Nigeria 170 million people market growing crazy but the money's not coming the heads are the impact investment easily is going to the easy area in Kenya in Uganda we have a joke in West Africa you go to the safari it's easy over there but you don't get returns come to the hard area let's do the real hard work on the ground in Cairo in Egypt in Tunisia in Nigeria in Mali in Ghana these are really hard countries to operate in but you have a whole lot more impact one out of five Africans live in Nigeria two out of five Africans live in West Africa when you take Nigeria, Egypt and Ghana you're touching three out of five Africans so what can we do to actually encourage local entrepreneurs in those area instead of going to easy things and doing the outside technology and bringing them in that's really my question great I do have thoughts on that but I want to open it up to the other panelists first on either either of the two questions that were posed I'm happy to take a stab at this um we do want to invest in local entrepreneurs we have not reached Nigeria yet because we have a small team which hasn't had exposure to Nigeria but we are trying very hard to catch up and learn more I grew up in Mumbai so it is easier for me to invest in Indian entrepreneurs than Nigerian entrepreneurs that's a fact there's you know this is not our political correctness I obviously tend to build my network out seek people out where I know folks to begin with which is why I like events like this because it gives me an opportunity to meet you you probably never heard of me before I've not heard of you but now we can meet and that's a fact the countries that are more are less accessible to west on capital will have fewer investments coming from the west that's not something fundamentally we can change the openness of our hearts I hope that this will change a lot and our fund definitely wants to invest in Nigeria and we are trying to figure out how and what to invest in you're the first question you had it's an excellent question which is that you know why is it is this like expat driven you know foreign product trying to do local business some of it is and I don't think we can escape the fact that a lot of the technology required to make energy service happen will come from places like China places like Europe because they are leaders in this technology we don't need to reinvent what they have done they need to improve it they need to make batteries last longer be cheaper and if we start reinventing that wheel it will actually be more expensive for the end consumer so there are some things that will come from countries or entrepreneurs who have already done that work and have discovered a new market for the product they have invested 10 years building right like for Sera for example is what a German company they've spent years and years working on perfecting their small scale lithium ion batteries and now they have set up shops to assemble and manufacture it in Africa they are in Ethiopia in Uganda and you know they're sort of doing this locally with local entrepreneurs trained to do the manufacturing across the value chain different parts of the business will happen in different areas there will be a lot of local entrepreneurs doing the local distribution because that's what they will be really good at and there will be more foreign entrepreneurs on the product manufacturing innovation side and the panels will probably always come from China let's accept that that can't change because those are the fundamentally best economics to build this with but the broader point of Western funds having to work much harder to try and reach local entrepreneurs in Africa and India and Latin America very true and the I think we're all trying to find ways to change it and the easier it is for us to meet local entrepreneurs the better we will be able to support them we are definitely trying to do it and accept that we haven't done as good a job as we could have done so thank you so much for bringing that up can I make one so Michael I lived in Nigeria for a year I can agree with you that the power grid there is terrible the honest truth is we're in Tanzania because that's where we're starting you know hopefully we'll get to other places one difference that I would say the distinction between say building large hydroelectric dams or you know large power plants that are were you know rather excessive amounts of capital that went into building something that is maybe challenged now to service or to continually provide energy we're looking at a capital cost of say between 100 to 200 dollars per household and so it's a much more controlled deployment so it's not suggesting that there's going to be 200 million dollars that's sunk into one power plant that then ultimately may or may not be online half of the time but instead what you're looking at is say you know approximately a million people who are able to either individually have their power on or off dependent on their ability to pay and where they sit in terms of you know individual circumstances so I think that's a bit of a distinction the idea I think that bridges between your common and also Sherry's I'm standing up here but I mean one of our managers from Tanzania Eric is in the crowd I think I can see him he could just as easily be staying up here and discussing exactly what it means from an African point of view and from the Tanzanian point of view 90 percent plus of our staff is Tanzanian and when it comes to the local entrepreneurs we use an agent based model so what that means is that they install the systems they service the systems for them individually it's about a three to four x monthly increase so there is a local entrepreneurial element even if they're ultimately sort of feeding into what is a larger organization to your comment of whether or not there's going to be one or two sort of dominant players my hypothesis is no I mean I see D light sitting over there we see M copa all over the place you know we speak with Sun funder we know the groups that they're investing in as well I think there's going to be you know some players that maybe have larger footprints than others but I think that's true of sort of any industry I think right now it's still such a nascent market I mean we're talking around the tens of thousands of households for even the most well established largest players today but that's not even you know a fraction of a percentage point in terms of the number of households that are out there so you know there's a long long way to go before anyone has really entrenched themselves as any type of dominant player so I think we'll see how it shakes that yeah just if I could just one minute on on sherry's question which is great on how do we avoid replicating the same mistakes in smaller businesses I mean I think strategically if I look at if I think of the market as a as a whole this is why we need really strong competent industry bodies that are able to provide market information to new entrepreneurs so we've just for example put in a grant into the global off-grid lighting association or GOGLA which is a spin-off of IFC's lighting Africa and here and and Coon Peters is here today who runs it small entrepreneurs sitting in Africa or Asia should be able to go to their industry body and say hey who's done this before what can I learn so that's that's one thing we need as a sector and the other thing we need are our technology folks that are actually investing in new technologies that can also act as a source of information and one of our partners is called Factor E which is a early stage venture builder that invests in technology risk out of Colorado but looking at the at the global markets global emerging markets and that kind of organization can act as an information hub for small entrepreneurs who want to avoid making the same mistakes that have been done before because we do see a market where there's going to be hundreds of of businesses providing services to the hundreds of millions and ultimately billions of people that need reliable energy so this is a conversation that clearly cannot be kept within the confines of an hour there's so much ground to cover here I just want to close with a couple final thoughts to your questions specifically which is that both the Power Africa and the beyond the grid partners of the 70 plus partners for both of those initiatives they come from around the world including from Sub-Saharan Africa and the investments that are being made are being made across Sub-Saharan Africa in particular I know that there are some of our partners that are specifically looking at and funding deals that are in Nigeria not just off-grid residential but actually renewable slash diesel hybrid units that can power small businesses and things along those lines as well in fact you know some of the Power Africa and beyond the grid flagship initiatives such as the US Africa Development Foundation GE off-grid energy challenge are 100% focused on funding African owned and operated energy businesses and so we take your point very seriously and it's you know very core to the work that Power Africa is doing and I'd be happy to continue that conversation afterwards we sadly have to wrap as much as I'd love to talk with all of you for for much longer I just wanted to end by flagging two upcoming events that are the Power Africa beyond the grid will be co-hosting in the coming months one is later this month on September 24th in New York City Power Africa is co-hosting with the UN Foundation an event called Towards Universal Energy Access there's also one on October 16th that's being co-hosted by State USA the World Bank and the UN Foundation it's going to be a workshop specifically on midi-grid best practices if you want more information on either of those you should feel free to reach out to my Power Africa colleague Maria Hilda Rivera directly and her email is mhriverrausa.gov thank you