Acumen has exited Orb Energy, a company bringing affordable rooftop solar energy to small and medium enterprises (SMEs) in India.
In 2011, Acumen became Orb Energy’s first institutional investor. At the time, the company focused on providing off-grid solar home systems to low-income households in India with limited or unreliable access to grid electricity. However, obstacles to scale proved formidable, including a reduction in available affordable financing options for customers as well as improvements in the supply of electricity to rural customers combining to reduce demand for one of their core products.
Yet Orb Energy co-founders Damian Miller and NP Ramesh were determined to increase India’s use of clean, renewable solar energy. So Orb pivoted to another business line: rooftop solar energy for SMEs ranging from textile manufacturers to schools to agricultural processing centers to hospitals. The company paired the solar panel product offering with collateral-free loans to make the upfront costs of installation affordable. Once paid, customers enjoy cost-free renewable electricity. This is a significant benefit for SMEs—for whom electricity is often the second largest cost.
Today, Orb offers off-grid rooftop solar (photovoltaics) as well as solar water heating solutions for residential and commercial customers, with a primary focus on small businesses. Orb largely measures its impact by the SMEs it has enabled to thrive through reducing energy costs—and the jobs created by these SMEs, which employ about 40 percent of India’s workforce. The company has provided an average energy cost savings of 60 percent for over 6,600 SMEs in India.
ACUMEN’S NINE-YEAR INVESTMENT IN ORB ENERGY
Over the last nine years, Acumen has accompanied Orb Energy on its journey, including providing guidance at the Board level, leading employee training and connecting the co-founders to customers and investors. “There is no question that Acumen goes the extra mile for its investee companies, recognizing the need for not just money but institutional support for entrepreneurs and start-ups, as well as facilitating key contacts. We could not be where we are today without the early investment from Acumen,” said Damian Miller, Orb Energy Co-Founder and CEO.
Following Acumen’s initial investment, Orb Energy went on to raise more than $25 million in follow-on equity and debt from investors such as Shell, FMO, OPIC and DEG. It has gone from selling 31,000 rooftop solar systems by 2011 to approximately 160,000 by 2020 across 10 states in India, offsetting 236,000 tons of carbon emissions. In 2014, the company expanded internationally for the first time to Kenya.
“Co-Founders Damian and Ramesh have been steadfast in their commitment to solar energy. They were willing to pivot their core business model to focus on providing access to those who need alternative, affordable energy the most—whether households or small and medium enterprises. Acumen is thrilled to have invested patient capital in Orb’s early stages and looks forward to seeing the company continue to grow,” says Acumen India Country Director Mahesh Yagnaraman.
EXITS FOR INDIA’S EARLY-STAGE IMPACT INVESTORS
Exits in India’s impact investing market are rare, particularly outside of the microfinance sector. But stories like Orb’s prove that exits in energy are possible—and that India’s impact investing ecosystem is growing. Acumen exited via secondary sale of its shares to FMO and Shell Ventures BV. Secondary investors like FMO and Shell Ventures are essential in enabling early investors to recycle their capital into more early-stage companies.
Since Acumen first invested in Orb nearly ten years ago, we, like Orb, have evolved our clean energy strategy to deepen our impact. Acumen India now focuses beyond access to off-grid electricity, on productive use appliances that drive income generation at the intersection of agriculture and energy. Investee Promethean Power Systems, for example, produces off-grid rural milk chillers increasing Indian dairy farmers’ yields. Looking ahead, Acumen is excited to take its lessons from accompanying Orb Energy into the next frontier of off-grid productive use energy investments to increase our impact and share the lessons we learn as we blaze new trails.