CEO Explains How to Launch a Technology Start-Up in Tanzania - And Raise $48m in Funding

25/07/2016 16:04 | Updated 25 July 2016

Whilst many start-ups have a strong vision of using technology to drive positive social change, Xavier Helgesen, CEO of start-up Off-Grid Electric, is a serial social entrepreneur taking the reverse route. Whilst insisting Off Grid are a "for-profit technology company first" the drive for positive social change by providing power to Africa is his inspiration behind starting the Tanzanian based company. Having recently raised over $45m in funding from top investors like Solar City, Vulcan Capital and Segal Family Foundation, he says the aim is "not to reach one million homes in Africa" with power for the first time, but to reach "a hundred million homes". It is an audacious claim that demonstrates the ambition of Xavier and his founding team to change the fortunes of huge swathes of rural Africa.

Off Grid Electric deliver solar-powered, electricity generating systems that are implemented to help a household meet basic energy requirements such as lighting, charging mobile phones and even now power a small business. Operating in Tanzania and Rwanda currently, Off Grid are powering 50,000 homes every month. Xavier is now looking to deliver expansion in two directions: stretching to more countries, and delivering more power. "I would say [we are targeting] more power first and more geography second. We have a real clear sense of what our customer's aspirations are, and nearly all of them want more power than they get today. So it really is our job to keep delivering that at increasingly affordable price points."

So how have Off-Grid Electric managed to deliver such growth of a cutting edge technology in a country with a GDP per capita of $694.77?

For Xavier, the main reason is simply delivering a product that meets a customer need. "I'd been to Africa and stayed in off grid communities (those without access to mainframe electricity), and I was very struck by the fact that no one had any power and how awful and expensive the alternatives were. I was also motivated by the advances in solar energy, both in cost and the improvement in performance."

But the success of the enterprise rested on the execution of this product. "I think [our success] is a combination of really good technology that gets high performance, and delivering it for an affordable price. We sell directly to the consumer so that cuts out tremendous amount of cost, and we offer financing for every single customer, which also makes it much more risk free for a customer." The financing method is the true revolutionary element of the product: by offering a pay-as-you-go payment option via mobile phone payments, Off Grid opened up the system to a market who previously could not afford the up-front costs traditionally associated with solar power.

Delivering a technology start-up in Tanzania and Rwanda is a difficult undertaking, and cannot be done alone: getting the right team on board was central to navigating the inevitable difficulties associated with delivering a new product to market in an unfamiliar environment. It started with the founding team: "I think the key point was we were all aligned and motivated to make this happen, but really flexible in how we did it. Everyone brings their speciality together as a cohesive whole. We are almost five years in and all three founders are still playing critical roles within the company, so that's a good indicator we have started with a good team."

Wider hiring policy has changed as the company has matured over its five-year life. "I think what is important to us, especially at this point, is specialised experience that can be translated into our industry. In earlier days we had a tendency to bring on skilled generalists, and let them figure out whatever needed to be figured out. As you mature, everyone becomes a bit more specialised. That is our focus right now."

The headline grabbing element of Off Grid Electric's success has been its ability to attract funding from some extremely successful partners such as Elon Musk part-owned Solar City and Vulcan Capital. The way in which Off Grid's funding has "cascaded" can give an important lesson to other start ups. "We certainly didn't start with any of these partners. We've had to build these relationships one at a time, and keep them strong after we built them. But I think the core element is that we've been able to demonstrate there is a big market and we have an approach that customers really love." This blend of relationships and a powerful value proposition has allowed Off-Grid to obtain the required capital to meet the financing needs of the start-ups operating model.

It is the question of whether Off-Grid see themselves as competitors to other companies producing a similar product in other African nations that really reveals Xavier's ambition. "We absolutely do, and I think you will see us in the next two or three years show up in lots of different countries. The goal is to make sure we feel really good about the platform, the technology and the financing architecture, and then focus on replicating to other markets. I think when you see us come into other markets; you will see us come in pretty big.

"This is an industry still measuring its saturation in single digits rather than double digits of market share. I think we are now just getting the platform and the financial backing needed so that we can go big into markets and start looking like mobile phone companies rather than social enterprise start ups."

Swathes of entrepreneurs are now seeking to apply technology to solve pressing social problems. Perhaps the unicorns of the future will not come from Silicon Valley, but from other companies with their heart in alleviating poverty.