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SunFi, a Nigerian cleantech startup that connects people and businesses looking to access solar power with payment plans that fit their needs, has raised $2.325 million in seed funding.
Self-proclaimed energy finance technology platform receives backing from major investor Nairobi Factor[e] and Sterling Bank’s SCM Capital Asset Management and participating investors such as Voltron Capital, Norrsken Impact Accelerator, Ventures Platform and Sovereign Capital.
In a call with TechCrunch, CEO Rotimi Thomas said the investment will help SunFi grow its operations and improve its capabilities to recommend better systems to customers at lower cost.
SunFi isn’t Thomas’ first rodeo at the helm of a power startup. In the year In 2018, he co-founded Aspey, a solar installation company based on his expertise in renewable energy acquired in college and working in various roles on power, gas and power projects in Nigeria and other African countries. As head of market development at Siemens. Although that business has since morphed into SunFi three years later, launching Aspen is the first of a lifelong journey Thomas says on the call to fix the electricity problems facing individuals and businesses in Nigeria.
Nigerian households and businesses have little or no access to affordable and reliable solar technology, leaving grid-based power suffering from insufficient generation capacity and failing to serve most of Nigeria’s 200 million rural population. Turning to off-grid solutions that use solar power is an option for people who need electricity for simple needs like lighting, heating and communication. And that’s what Rotimi’s previous startup did. Aspire developed an energy-as-a-service business model that helps individuals and businesses install more than 500 solar systems. But despite being marketed as a low-cost option, rural electrification in the form of microgrids and solar systems can prove costly for these sub-consumers of low-cost power.
“Customers were always asking us if there was a way to pay for solar systems,” Thomas said. “As a result, we went to the banks and tried to work with them to finance this kind of payment, but we realized that the banks also had a problem: they couldn’t take out credit to finance retail solar systems for customers. I didn’t understand the technical risks involved in ownership.”
Further market research shows that other solar providers have faced the same problem of asking their customers to pay per unit. Thomas and his co-founders – COO Tomiwa Igun and CTO Olaoluwa Faniyi – decided to take credit and began leasing these systems to what later became SunFi. They believed that they could control the technical risk associated with solar systems as clothing, and that customers would pay because they value solar systems and consider them an integral part of their energy infrastructure.
think about. Retail solar systems are sold by word of mouth, but because distribution is fragmented and there are fewer ways to provide financing, platforms like SunFi attract customers.
“The challenge customers face with solar providers is they want solutions that can pay less; however, these solar platforms cannot deliver. Banks are afraid of technical risk, so they want something in between to talk to good solar providers and provide good capital to customers looking for the right solution. We are the people we have; Thomas said.
SunFi creates value for these clean energy investors by de-risking the technical and credit risk involved in financing portfolios of solar solutions. Since its official launch last February, SunFi has onboarded more than 40 solar system vendors at various stages of screening. 10 are the main suppliers who have served more than 129 customers. In the past one year, the one-year-old power startup has deployed more than $600,000 to these clients through partnerships with financial institutions.
The energy company in Nigeria offers two payment methods to customers: a lease, where after an initial deposit, customers make payments before incurring debt for the solar system, and a subscription model, where customers pay monthly to use the solar system. SunFi’s revenues are from the margin on the lease-to-own model and from late subscription fees. The company stated that it is working on a third source of income.
Some startups finance solar systems with one or more components such as carbon. But Thomas doesn’t see them as competitors; The same is true for solar system providers. Instead, many of these platforms are partners because they already fill a need in the market and SunFi’s work includes them. “Since we have unique experience as a solar supplier in the first place and we have seen the frustrations and challenges of installations in Nigeria, we have taken all that technical and credit expertise to build a system that promises customers, solar suppliers and banks,” the CEO said.
“SunFi also has a portal for the solar supplier to log in, track and manage a wide range of products to market to customers and access financing. Investors have a dashboard to manage the portal to monitor how their money is being spent when they are engaged to manage portfolios or retail clients. So we have a portal to manage the pure technology space like fintech that we don’t have in Nigeria. We are built.
The SunFi Group. Image Credits: SunFi
Pure technology with fintech features is looking to upgrade its platform with this finance over the next 12-18 months. It also plans to convert more than 4,000 customers as the 29-person team continues to grow. Cleantech is in talks to raise additional third-party capital, possibly debt, from commercial banks and other financial partners to funnel the money through the system and bring together all the energy platform needs it needs this year.
“SunFi has the ability to change the way families and businesses across Nigeria access clean energy with clean energy products combined with flexible payment options – all personalized to the customer’s financial and energy needs,” said Lyndsay Holley. – Controller, partner and main entrepreneur at Factor[e] on investment. “Such platforms have opened up access to clean energy in other markets but are not yet available in Africa. This kind of innovation and disruption is why we decided to be a part of Sunfi’s journey…”
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