Off-grid product developer BBOXX has announced its Series B round of funding has raised $3 million for for Sub-Saharan Africa. The funding has come from private investment firm Bamboo Finance and the DOEN Foundation.
In a statement, BBOXX said that it aimed with the new funding to supply 20 million people with electricity by 2020.
Christian Schattenmann, chief operating and chief financial officer at Bamboo Finance, told pv magazine that his company believed BBOXX to be well-positioned in the off-grid market, and had chosen to invest because of its "strong presence on the ground."
Schattenmann added, "Bamboo Energy Fund – Solar for All invests in fast growing companies serving the 1.4 billion off-grid people with renewable, mostly solar based energy solutions. The fund’s geographic focus is Sub-Saharan Africa where high population growth and slow and costly grid extension drive the demand for distributed energy. BBOXX’s innovative business model and strong local presence with shops in rural Kenya, Uganda and Rwanda perfectly fit the scope of the fund.
Other investors in BBOXX include Khosla Impact, Ceniarth, and Synergy.
The Series B round of funding for BBOXX follows heavy investment in the off-grid solar space. Greentech Media reported that investment in this space reached $42 million in January 2015, equivalent to two-thirds of all off-grid investments in the entire previous year. Those investments were Greenlight Planet’s $10 million financing led by Fidelity Growth Partners, M-KOPA receiving $12.45 million in expansion capital from LGT Venture Philanthropy and $20 million in debt from the Commercial Bank of Africa, the IFC and Cordiant Capital loaning $4.5 million and $2.5 million to Off-Grid Electric, and a USD $12.6 million venture round for Fenix International.
Off-grid solar in Asia and Africa is going through a boom, with heavy investment geared towards a largely-untapped market. Last month, The Climate Group released, in partnership with Goldman Sachs, The Business Case for Off-Grid Energy In India, a report that took in an exhaustive survey of the market in India. There, the report’s authors concluded, There are over 40 established players and new entrants trying to capitalize on the growth opportunity in the solar home system market in India, but no single player has achieved any meaningful scale to date.
A large industry focus, said the report’s authors, had been on consumer finance.
They concluded, Gross product margins hover between 10-25%, but after adjusting for marketing, transportation and distribution, margins are closer to 1-5%. A lack of meaningful scale has meant few enterprises have achieved profitability to date. Even leading players claim they need to grow to at least two-to-four times their current size in order to break even. As a result, the solar home system market seems viable, but enterprises who sell only solar home systems are unlikely to see high returns. Despite these challenges, fast growth and cross/up-sell opportunities mean solar home system enterprises could represent a high potential, albeit risky, investment opportunity for investors.