Seven Tips to Help Wow Off-Grid Energy Investors
This story originally appeared on the Power Africa Medium blog.
In Nigeria, the U.S. Agency for International Development (USAID) Power Africa Nigeria Power Sector Program launched an investor pitch series to give solar home system companies the skills they need to secure investor funding.
For off-grid energy companies, securing private and public financing is critical to expanding services and product offerings and connecting homes and businesses beyond the grid to electricity. A strong, well-articulated investor pitch can accelerate a company’s ability to attract funding for their proposed solution.
However, accessing funds to scale service offerings is a challenge for many solar home system companies which must compete for limited investment funds and overcome sector barriers such as credit risk, challenges to payment infrastructure, and high collateral requirements for debt. An innovative business strategy that focuses on costs and differentiated approaches to sales and distribution from those currently in the market — as well as the ability to articulate that strategy to investors — is critical to reaching target customers at scale.
Based on Power Africa’s experience in supporting companies to secure investor funding, there are several factors to consider when developing an investment pitch.
1. First and foremost, as a founder you must be able to articulate what makes your investment opportunity uniquely compelling and why your audience should invest in you over everyone else in the market. Investors receive countless pitches, so you must make sure that your pitch is clear and concise. Critical content components include stating your company’s differentiated value proposition, demonstrating your company’s track record of success, clearly articulating your business model, and presenting your team’s demonstrated ability to execute against the stated business model. You want to show the investor that your company is capable of receiving investor funding and implementing successful projects — increasing the likelihood of a strong return on their investment. Your pitch should also include information on your company and product background, competitive advantage, financial assumptions and forecasts, and current investors and partnerships.
2. Avoid being overly general in your description of the market opportunity and your business model. Assume the investing company has a foundational understanding of the market if they have agreed to meet with you. Also assume the company has limited time to hear your pitch and needs the most pertinent information as quickly and succinctly as possible.
3. Demonstrate a clear differentiation in your business model or emphasize that you are targeting a unique, untapped market. Global energy access markets are expansive and there are many companies seeking to capture a market share. It is critical to clearly explain how your solution will solve a specific problem in a unique way and/or address a specific untapped audience/target market.
4. Present a team that is poised to successfully execute the business plan. Showing the investment committee that the company’s team has the necessary components for success is a critical component of any investment pitch. This includes presenting key management personnel, areas of expertise, demonstrated success and track record, and relevant knowledge to the market, product, and business model. It is important that your team is balanced and diverse, both demographically in terms of characteristics such as gender, as well as in competencies and skillsets.
5. Include a financial ask with credible financial assumptions and forecasts. The purpose of an investor pitch is to convince your audience to commit their limited funds to an opportunity that has a high likelihood of generating a return. Your pitch goal is to provide financial forecasts demonstrating an attractive return which are underpinned by credible, evidence-backed assumptions, such as a clear and differentiated market strategy, company track record, early market traction, and underlying market trends.
6. Seek feedback from external reviewers and take the time to practice your pitch. By the time you pitch to investors, your presentation should be seamless and fluent. Your presentation is meant to complement your presentation script and serve as a guide — it is not for you to read or follow as notes. Consider drafting a separate script at first but avoid rote, robotic memorization. Find external reviewers to listen to your pitch and incorporate their feedback into future iterations.
7. Review and polish your final materials. Professionalism, branding, and visual presentation are also important elements of your pitch. It is easy to fall into the trap of providing excess information or filling slides with too much content. Ensure that your pitch deck is clearly branded with your logo on each slide. You want to present a visually clean and cohesive pitch deck. Make it clear why the investor is reading your deck with a concise statement on the risk and return of the business early on.
COACHING NIGERIAN SOLAR HOME SYSTEM COMPANIES ON INVESTOR PITCHING
In Nigeria, where roughly 80 million people lack access to energy, there is extraordinary potential for solar home system companies to expand access to power across the country, particularly for customers who reside beyond the grid.
Image 1: The Investor Pitch Competition coached off-grid energy companies on best practices for raising capital and delivering effective investment pitches. With these skills, companies will be able to secure investment funding to expand their off-grid energy sol
To build the capacity of solar home system companies, with a specific eye towards innovation and scale, Power Africa hosted its quarterly pitch competition in March 2021 with participation from five solar home system companies: Cloud Energy, PAS Solar, A4&T, Greenage Technologies, and Black Bit Solar.
The competition included coaching the companies on best practices for raising capital and delivering effective investment pitches, as well as providing an opportunity to practice their pitches with Power Africa experts.
“We have a track record of success in coaching companies on how to present a strong investor pitch to secure funding and a strong understanding of what investors want to see when considering an investment. We helped Renewvia prepare for an investor pitch that ultimately secured $1.45 million of equity funding from Dream Project Incubators,” explained Narlene Egu, USAID Energy Advisor and Team Lead for Power Africa Nigeria. “We realized there is a great opportunity to equip energy companies with the skills and knowledge needed to deliver strong and effective pitches to investors and we are thrilled to see the success of our Investor Pitch Series.”
The five participating companies spent eight weeks working with Power Africa developing their investment pitches. In March, the pitch competition was judged by a panel of investors active in Nigeria’s off-grid energy market, including representatives from Power Africa partners Acumen, All On, and ARM-Harith, as well as Camco Clean Energy, ElectriFI, First City Monument Bank, and Nithio. The judges evaluated the pitches against eight categories, including presentation of the business model, expertise as well as gender balance in management, credibility of forecasts and assumptions, and attractiveness of the investment opportunity.
“A well prepared and delivered pitch allows the investor to assess the two fundamentals for the investment decision-making process: risk and return. If the promoters demonstrate credibility, knowledge and expertise in the sector, commercial viability of the opportunity (stress tested against identified net risks), passion and preparedness, then chances of investment are higher,” explained Sele Inegbedion, Manager of the All On Hub.
Following the five pitches, the judges convened to deliberate on their decision and selected PAS Solar as the winner and Black Bit Solar as the runner up. Since the competition, both companies have received financing opportunities for their innovative solutions, demonstrating the value of a well-articulated and impactful investor pitch.
In-kind prizes for the winning companies included voice coaching from a professional voice coach and a three-month subscription to Fraym’s geospatial database that provides localized data to support decision making in emerging markets. Prizes seek to further build capacity within selected companies and assist them in future fundraising.
When asked about their experience participating in the Solar Home System Pitch Competition, PAS Solar’s Country Manager, Olumide Sanya, shared, “PAS Solar has started equity fundraising, so this competition was very timely. The support we received from Power Africa is assisting our senior management team with ongoing engagements with interested investors.”
Black Bit Solar’s Group Managing Director/CEO, Wale Ajibade, shared, “the experience was refreshing and insightful and enabled us to reinforce our belief in the vision to light up Nigeria one home at a time. We are encouraged to do more to continue growing our agent network at the grassroots level while pitching to investors to scale our business to the next level.”
Following Power Africa’s December 2020 investor pitch session for mini-grid developers, two of the participants (Ventura and Darway Coast) secured debt financing from FCMB, a Nigerian commercial bank. Ventura received approximately $150,000 for the development of a mini-grid project located in Mebiowa Okposi in Ebonyi State. Darway Coast received $200,000 in debt financing from FCMB and is being approached by more investors such as ElectriFI and Power Africa partners All On and InfraCredit.
Power Africa will stay in touch with participating companies to track how they are using the skills they developed in the pitch competition to leverage investment opportunities. Visit Power Africa’s social media pages regularly for updates on investments in the power sector in Nigeria and significant progress made by these companies as they contribute towards electrifying Nigeria.
The USAID Power Africa Nigeria Power Sector Program, implemented by Deloitte, is the signature initiative of Power Africa in Nigeria. PA-NPSP has a target to enable 10,000 MW of new and rehabilitated generation capacity and 3,000,000 connections by 2023. PA-NPSP promotes Power Africa goals by working to increase electricity availability, access, and reliability throughout Nigeria. Learn more about Power Africa’s work in Nigeria by visiting https://www.usaid.gov/powerafrica/nigeria.