Streamlining Dealflow in the Off-Grid Energy Sector

Business Analytics Persistent

Data Analytics for Investors

Molly Doyle, Senior Advisor, Scaling Off-Grid Energy, USAID

As a donor, we receive hundreds of inquires annually from companies operating in the off-grid solar sector seeking funding and guidance on fundraising. Companies labor over pitch decks to fine-tune their offering, yet struggle to progress beyond initial diligence without sharing extensive customer data analytics. Investors comb through data rooms only to find themselves hard pressed to compile a clear picture of a company’s financial and customer portfolio health.

Investors cite limited data availability as the leading reason for an otherwise promising transaction opportunity to fall through in the pay-as-you-go (PAYG) solar sector. A lack of understanding of a company’s customer portfolio often stalls required diligence. As a result, the industry has responded with a key performance indicator (KPI) framework to assist in standardizing data collection and reporting, developed by the Global Off-Grid Lighting Association (GOGLA) and IFC’s Lighting Global.

This KPI reporting methodology encourages increased transparency on the business performance of PAYG companies and expands market data availability and reliability, which in turn enables investors to better understand the sector. All of the companies that the Scaling Off-Grid Energy Grand Challenge for Development (SOGE) currently works with report against these KPIs, and we are always advocating for PAYG energy startups to integrate this standardized reporting method as early as possible to help streamline the diligence process during critical fundraising periods.

While the sector continues to institutionalize this framework, the Persistent team has recently taken it one step further with a Business Analytics Toolkit developed with support from responsAbility. Building on the KPIs developed under IFC/GOGLA leadership, Persistent’s toolkit is designed for a financial analyst assessing a company’s performance and customer portfolio health by measuring established metrics against the total amount of capital invested. This investor-facing toolkit utilizes the existing KPI framework to allow an investment team to compare any two PAYG companies side by side, regardless of products sold or distribution strategy, or level of company verticalization.

SOGE is working closely with private sector investors and donor partners to promote investor-facing tools like this to drive more investment into the off-grid energy sector. Recent research by Catalyst Off-Grid Advisors and the Shell Foundation shows that the off-grid energy sector in sub-Saharan Africa requires $32 billion of commercial capital, including $1 billion of catalytic grant/blended capital, in order to achieve true universal energy access across the region. Unless clear metrics allow for comprehensive diligence on PAYG solar and other off-grid energy companies, these figures will remain unchanged.

Read Business Analytics for PAYG Companies toolkit.