SunFithe Nigerian cleantech startup that connects people and businesses wanting access to solar energy to payment plans that suit their needs has raised $2.325 million in seed funding.
The self-proclaimed energy financial technology platform received backing from Nairobi-based lead investor Factor[e] and SCM Capital Asset Management and participating investors such as Voltron Capital, Norrsken Impact Accelerator, Ventures Platform and Sovereign Capital.
In conversation with businessupdates.org, CEO Rotimi Thomas said the investment will help SunFi grow its business and enhance its ability to recommend the best systems at the lowest cost to customers.
SunFi isn’t Thomas’ first rodeo at the helm of an energy startup. In 2018, he co-founded Aspire, a solar energy installation company based on the knowledge he gained at university about renewable energy and worked in various roles related to energy, gas and power projects in Nigeria and other African countries. countries, including a five-year stint at Siemens as head of market development. Although this company changed to SunFi three years later, the launch of Aspire was the first of a lifelong journey Thomas envisioned to try and solve the electricity problems faced by individuals and businesses in Nigeria, he said during the call.
Nigerian households and businesses have little or no access to affordable and reliable solar energy technology, reducing their reliance on grid power that suffers from insufficient generation capacity and cannot serve most of the 200 million Nigerian people living in rural areas. Switching to off-grid solutions that use solar energy is an option for these people who need electricity for simple necessities such as lighting, heating and communications. And that’s what Rotimi’s previous upstart did. To strive had a power-as-a-service business model that helped install more than 500 residential and commercial solar systems. But despite being marketed as a low-cost option, rural electrification in the form of microgrids and solar systems can be expensive for these sub-consumers due to their low purchasing power.
“Customers always asked us if they could pay for the solar systems in installments,” said Thomas. “So we went to the banks and tried to work with them to finance these kinds of payments, but we realized that banks also had a problem: they couldn’t provide credit to customers to finance retail solar systems if they didn’t. I don’t understand the technical risks associated with owning it.”
Further market research showed that other suppliers of solar energy faced the same problem: customers asked to pay in installments. Thomas and his co-founders — COO Tomiwa Igun and CTO Olaoluwa Faniyi — decided to extend credit and began leasing these systems into what became SunFi. They believed that as an outfit they could manage the technical risk of solar systems and that it was very likely that customers would pay because they valued solar systems and saw them as critical parts of the energy infrastructure.
Think about it. Retail solar systems are marketed through word of mouth, but with fragmented distribution and minimal financing options, platforms like SunFi that act as aggregators are becoming attractive to customers.
“The challenge customers face with solar suppliers is that they want solutions that they can afford little; however, these sun platforms cannot provide. Because banks are afraid of the technical risk, they need an in-between to talk to good solar suppliers and do the installation work, while providing good capital to customers looking for the right solution. We are the guys at the center of it all,” said Thomas.
SunFi creates value for these clean energy investors by reducing the risk of technical and credit risk associated with financing portfolios of solar energy solutions, opening opportunities for lending as a service to clean energy providers . Since its official launch last February, SunFi has brought more than 40 solar system vendors on board its platform in various stages of vetting; 10 are the main providers, having served more than 129 customers. In the past year, the year-old energy startup has committed more than $600,000 to these customers through its partnerships with financial institutions.
The Nigeria-based energy company offers customers two payment methods: a lease-to-own, where customers pay in installments after an initial down payment before they owe the solar system, and a subscription model, where customers pay monthly to use the solar system. SunFi’s revenue comes from the margin on the lease-to-own model and the subscription costs of the latter. The company said it is working on a third revenue stream, where it will help solar suppliers with inventory financing.
Some startups are already financing solar systems with one or more entities, such as Carbon. But Thomas doesn’t consider them competitors; the same goes for solar system providers. Instead, most of these platforms are partners, as they already fill a need in the market and SunFi’s work brings them together. “Because we have a unique experience as a solar supplier and see the frustration and challenges of installations in Nigeria, we used all that technical and credit knowledge to build a system that hopefully works for customers, solar suppliers energy and banks,” said the chief executive.
“SunFi also has a portal for the solar supplier to log in, track and manage their business for building different types of products to market to customers and access financing. Investors have their dashboard to manage their portal to track how their money is spent in terms of commitment to manage portfolios or retail clients. So we’re built as a fintech for the cleantech space, which doesn’t exist in Nigeria.
The SunFi team. Image Credits: SunFi
The cleantech with fintech features will look to improve its platform over the next 12-18 months with this funding. It also plans to convert more than 4,000 customers within the same time frame as the 29-person team continues to grow. The clean tech is in talks to raise additional third-party capital, most likely debt, from commercial banks and other financing partners to channel that money through the system and fund all of the energy platform’s requirements to meet this year.
“SunFi has the ability to transform the way households and businesses across Nigeria access clean energy by creating a marketplace of clean energy products coupled with flexible payment options – all tailored to customer financial and energy needs,” said Lyndsay Holley-Handler, partner and chief venture builder at Factor[e] on the investment. “Such platforms have unlocked access to clean energy in other markets, but do not yet exist in Africa. This kind of innovation and disruption is why we decided to be part of SunFi’s journey…”
