For the 940 million people around the world without access to electricity, solar power can be the quickest, most affordable way to light up their lives. The global solar social enterprise d.light intends to reach each and every one of them.
Since 2008, d.light has helped put solar-powered lanterns, cookstoves, TVs, radios, and other products into the homes of more than 100 million citizens in 70 countries. This year, the company announced a new goal: To transform a billion lives with its products by 2030.
They’re already on their way toward that target, and a partnership with Kiva is making d.light’s solar devices more accessible in more locations than ever before.
A light in the dark
“While it’s about unlocking affordability for transformational products that allow people to have internet access for the first time, we also need to find big opportunities.”
Founded by Stanford students Sam Goldman and Ned Tozun, d.light was inspired by Goldman’s time in Benin as a Peace Corps volunteer, where he witnessed a neighbor suffer terrible burns from an accident with a kerosene stove. Back at school, he and Tozun developed a practical solution that used safe solar power for cooking and light, along with low manufacturing costs to make their products affordable to underserved communities.
Investors backed the idea, and d.light launched first in India, then expanded into Africa and Asia. While the simple solar lanterns were inexpensive enough to be sold for cash or on a pay-as-you-go basis, larger products like mobile charging stations and cookstoves required more payment options.
“In India, we ended up partnering with microfinance institutions to provide financing,” explains Karl Skare, d.light’s Managing Director of Global Partnerships and Strategy.
“However, when we tried to replicate that same model in East Africa, microfinance institutions weren't really interested. As a new sector, they weren't quite comfortable with the technology.”
Accessibility also proved a challenge. In many developing countries, lack of a commercial framework can prevent products from finding their way into a market or store.
“We realized that distribution was very difficult in these markets because there wasn't really a distribution infrastructure for rural populations we were trying to reach,” says Skare.
“There was distribution for fast-moving consumer goods like salt or bread or things like that, but not a channel to reach those same rural customers with a consumer electronic. We had to build our own distribution in all of these different countries that we entered.”
As demand grew for larger products, such as entire solar home systems and TVs, d.light expanded its role in order to bring rural communities a safe way to power their homes, continues Skare.
“We had to become a bank, a distribution company, and a product company all rolled up into one. And that's kind of our business today.”
Read more: Kiva Labs launched its largest ever loan to fund affordable solar energy in one of the world’s least electrified countries
Two kinds of business models
As d.light rocketed towards its first goal of serving 100 million customers, it split between two types of operations. The first, a vertically integrated business model, employs large teams of people on the ground that directly handle everything from distribution to sales to financing, all the way to the end customer.
The company currently runs vertically integrated operations in Uganda, Kenya, Tanzania, Nigeria, and India, though the tremendous amount of bandwidth and capital required to implement this model limit it in other locations.
“We also want to reach people outside of that small handful of countries with our products, so we work through partners that essentially provide the same role that a vertically integrated entity would,” says Skare.
“They're providing the sales, marketing, distribution, financing, et cetera, in these other countries, but they are a separate company.”
This second business model is where the partnership with Kiva comes in. By using microfinance tools to raise capital, d.light can help its partners weather unstable markets and bring more solar products to more people.
“This is a very capital-intensive business. We are constantly raising equity and corporate debt, and our partners are facing the same struggles. What the Kiva loans allow us to do is pass on those loans directly to our partners in the form of extended payment terms,” says Skare of working with these small businesses.
“So let's say, instead of having to pay d.light back in thirty days after shipment, now maybe it's six months instead. That gives them time for the products to arrive, and maybe get the first few payments from customers before they have to pay us. So it's a working capital facility for our partners.”
Kiva Senior Investment Manager Manon Genouille explains further how the loans work to help distributors located on the African continent in markets where d.light is not vertically integrated or does not have an internal distribution network.
“In these markets, d.light carefully selects one distributor per country and provides holistic business support to promote the distributor’s growth,” says Genouille.
“It is exciting for us to see how successful the partnership has been, and how quickly d.light is scaling their funding with Kiva.”
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Helping small businesses grow
“Given the excellent repayment track record and use of the credit line, Kiva was able to double d.light’s credit line in just under two years, which is quicker than most partnerships.”
Since establishing the partnership with Kiva in 2019, d.light has grown past the initial $400,000 credit line and now offers distributors larger working capital loans ranging from $50,000 to $100,000 to meet customer demand.
“Given the excellent repayment track record and use of the credit line, Kiva was able to double d.light’s credit line in just under two years, which is quicker than most partnerships,” Genouille reports.
“This increased credit line allows d.light to not only support additional distributors in new countries, but also provide additional funding to existing distributors.”
To date, Kiva lenders have supported d.light operations and distribution in the following countries:
- South Africa
As distribution channels become more established, d.light intends to grow its solar-powered offerings into communication and other sectors. From ultra-efficient smart TVs to smartphones to transportation, these new products will not only bring more connectivity to their customers but are essential to the mission of reaching the entire world.
“While it’s about unlocking affordability for transformational products that allow people to have internet access for the first time, we also need to find big opportunities,” enjoins Skare.
“We can't be focused on small and niche products because we're trying to impact a billion lives. We're focusing on product categories that have massive market potential. And financing is the missing piece to unlock that potential.”
Working with Kiva to access that financing is key to bringing clean energy and advancing communication capabilities to areas that still currently burn polluting fuels and have no access to the digital technologies that power other areas of the globe.
Larger loans “provide the needed funding for distributors to purchase d.light products to meet customer demand and as such, enable [and] democratize access to solar energy in their markets,” says Genouille, who hopes that Kiva and its lenders continue to support the partnership.
“In the future, we would love to be able to support d.light with other products as needed, as well as expand our offering to other continents [and] regions where d.light is present, such as Asia.”
Skare estimates that more than 350,000 people thus far have been impacted by Kiva loans that enabled them to access d.light products. While that may be a small drop in the bucket of the billion lives the company intends to transform in the next seven years, Skare believes that the company’s tremendous goal is most definitely on track.
“We're early on in that exponential curve, and now we just need to really get it revving,” he affirms.
“It's definitely still within reach.”