Colibrí: Bringing solar technology to off- grid communities
When CEO Morgan Babbs founded the company Colibrí, she wanted to share one unsettling fact with the rest of the world: more people live without access to electricity today than did before Thomas Edison invented the lightbulb.
For certain segments of the world, life can exist within the fickle window of time between sunrise and sunset. When the sun goes down, communal activities slow, and life is more or less lived at the behest of candles, kerosene, and flashlights.
Citing a misplacement of resources, Babbs endeavoured to provide solar technology to Matagalpa, a city in Nicaragua with a population just shy of 160,000. Together with James Downer and William Garcia, Colibrí distributed over 200 lamps in the summer of 2014.
Solar solutions for a diverse clientele
Anticipating differences in consumption patterns, the startup currently offers three affordable energy packages to its customers. The starter system, Colibri Empieza, begins at $250 and provides basic lighting and (cell charging) needs, while the Colibrí Entretenimiento powers a television and can be bundled with accessories like a Bluetooth speaker. The third, Colibrí Completo, is targeted towards the more sophisticated small business owner and operates at a higher capacity.
Babbs noted that Colibrí should not be mistaken as a solar lamp provider. Rather, it is a full system of home installations.
“None of these are lamps— they are all full home installations. It's important that they look beautiful in the home and remain frictionless. And small details matter— for example, all light switches should at the same height,” Babbs said.
Why finding the right financing model is crucial to business
Colibrí, which is Spanish for “hummingbird", operates under a “pay-as- you-go” financing scheme. This affords customers the flexibility of paying in instalments, or what customers might otherwise be spending on cellphone credit top- ups.
Prior to adopting this model however, Colibrí considered other potential financing models: a microentreprenuer model and a microfinance model. The former employs external sales agents to work with companies. While typically more successful with fast -moving consumer goods involving cheap, repeated buys, it proved lacking in the case of Colibrí.
Babbs, who previously worked at an impact fund, also gleaned the shortcomings of the microfinance bank-lending model. One of the aims of the fund she worked at was to encourage microbanks to offer consumer loans for solar by partnering with existing solar technology retailers.
“Solar energy is a utility, in a sense. It's not a one-time customer interaction, which is where the microbank model falls short— who is responsible for the consumer, bound to have technical and payment issues? The microbank with no technical knowledge? Or the solar retailer with no financing knowledge? It leads to mishaps and carelessness in delivery which makes solar look like a "lesser" or an "interim" solution,” Babbs said.
Despite acknowledging that a solar company will still inevitably face capital and cash flow challenges, Babbs maintained that the “pay-as-you-go” model was still superior.
“Pay-as-you-go allows full control over the quality and delivery, and full knowledge of the customers' interaction with the service, such as technical needs, payment habits, and upgrade demands,” Babbs said.
As Colibrí is working with clients that are typically ignored or rejected by both traditional business models and credit opportunities, this ownership is important for client retention.
In conversation with Babbs
In my conversation with Babbs, she explains why solar lamps should not be send as the catch-all solution to energy poverty, and debunks, among other things, the myth that Colibrí is a “development” organization.
SL: In the SOCAP 2016 investor pitch, you stress heavily that Colibrí is a solar-as-a-service company rather than a distributor of solar lamps per se. Could you speak a bit more on this?
MB: As we've grown our business and delved into the industry and our customer's demands, I—and Colibrí—actually try to avoid terms that describe us as offering "solar lamps / light" solutions. We are a solar-as-a-service company with the ability to meet most, if not all of customers' energy demands within their reasonable financial reach.
Working in an industry that can often intersect with "development economics" is interesting. I don't at all consider Colibrí to be a "development" organization just because we work in the "next billion" demographic or in a low-income economy. I think that in the development sector, there are lots of terms and ideas that get thrown around by big "Planners" (to quote William Easterly) that are far from the reality of customers' demands.
The industry, for a while, has championed solar lamps as the solution to energy poverty— but I think it has led to shortsightedness. A lamp will always be a short-term solution— and, from what we have found across the board— is not at all what the customer demands. Think of it this way: you don't empower a low-income consumer by selling them something that reinforces the notion that they indeed are poor. One of our guiding values at Colibrí is to not to prescribe need where there is no demand.
SL: What have been some of the biggest challenges that your team has faced so far?
MB: I think there are a lot of moving parts in the process of founding something and it's hard to point to one "biggest" challenge. That being said, the moving parts are all happening on top of a foundation—which is your team. So as long as that foundation stays strong, you're guaranteeing security. While team management, building, and expansion are not necessarily ever the explicitly "most challenging" parts, I believe it's extremely valuable to be constantly aware and proactive about it. Making sure your first few hires share vision and can think about "in 5 years" with you is absolutely challenging, but finding and investing in those individuals has paid off.
SL: You mentioned in the same pitch that Colibrí has some ambitious undertakings scheduled for 2017. How have you fared in terms of goal setting and expectations?
MB: Hah, to have a young company and be setting goals! It's a long road to scale and young companies face setbacks and opportunities so it's about knowing when to slightly pivot. The luxury we have is that we're agile— we can seize an opportunity we learn about from customer interactions or other failures. That being sad, our goals have changed largely due to a shift in focus that we chose to take about two months ago, in which we're going to begin focusing on higher kilowatt energy installations for on-grid consumers. I'll consider it an impressive feat and will be very proud if we reach over one thousand customers by the end of 2017.
SL: Do you have plans to expand outside of Nicaragua?
MB: Yes, we definitely do, although it naturally (and prudently) will be some time before we get to that point. The beauty is that we've reached grid parity and the renewable energy industry is going to explode in the next decade— and I'm excited about the vantage point we have. Basically, it's only getting better from here. We are best fit for markets where electricity costs are high and burdensome for lower income quintile households— and we will always remain focused on this demographic because believe will benefit most from our service in terms of financial inclusion and quality of life. For now, Nicaragua is an excellent playing field and we look forward to expanding and perfecting our model before taking it elsewhere.
Colibrí is currently a member of the United Nation’s Energy Practitioner Network and has been the recipient of numerous prizes.
Follow Colibrí's Facebook page for more updates.