Tuesday 25 January 2011

Profile on… Barefoot Power


Profile on… Barefoot Power

A Founder of Barefoot Power, Stewart Craine, recently spoke to the AIC about the company’s journey along the commercialisation pathway. Barefoot Power designs and manufactures technology products that have the potential to reduce poverty in developing countries.

1)    Briefly describe your business

Barefoot Power designs and manufactures affordable and high quality LED lighting products that are powered by small solar panels. These products allow poor people in developing countries to invest less in kerosene lighting and to stop literally burning their money. Savings can be used by families and communities for other things like school fees, thus improving their lives and opportunities. By providing a viable alternative to kerosene for these families, Barefoot Power is also reducing carbon emissions.

2)    How did you generate the idea?

Barefoot Power founder Stewart Craine spent two years volunteering in Nepal and later worked in rural villages in Papua New Guinea with co-founder Harry Andrews. Here they saw an opportunity to reduce poverty by helping people access electricity using white LED lighting and solar power, a solution for energy poverty reduction which is one of the necessary and solvable issues for the economic development for millions of people.

3)    What made you decide to progress it from just an idea to a real business?

Commercial companies and aid donors were ignoring this opportunity to help developing communities access energy, so Stewart and Harry set about establishing Barefoot Power to build electricity grids in reverse, one unit at a time, and in turn redirect kerosene investment towards building energy infrastructure.

4)    What are the main challenges faced?

The biggest challenge faced so far is investors’ fear of investing in products for the poor, but this is gradually reducing.

5)    What tips would you pass on to other entrepreneurs who are starting out?


Stay employed full-time as long as possible while establishing your start-up and apply for peer-reviewed business plan awards because they will help you to secure finance and gain some good free advice. Always do your own books, and don’t fall behind.

6)    Knowing what you know now, is there anything you would have done differently?

The cost of not raising finance quickly was underestimated, and I would have accepted certain deals that were offered earlier to the company, even though they did not quite suit our preference. Finding capital is hard, and living without it drains staff morale, particularly if they are not paid market salary, plus being short of capital creates supply gaps when demand rises, annoying important early customers. Also, the worst advice ever received was from our first book-keeper, who suggested we do not spend money on MYOB or similar accounting software, but simply send in data on Excel spreadsheets.

7)    Where do you see the business in 5 years’ time?

Barefoot Power should have reached more than 10 million people within five years and be operating at a profit of more than $1 million pa.


8)    What would you suggest that the AIC strives to tell government in Australia about commercialisation? 

There is a huge hole in Australia for access to scale-up finance of $500,000-$2 million. This is too small for many VCs, and angel investors are very difficult to access. 80% of our funds during this period came from overseas, and were often linked to business plan competitions, which are a great way to help investors and entrepreneurs to meet, and can leverage 30 times as much investment as the cost put into the competition (based on results from the Clean Technology Initiative – Private Financing Advisory Network, which raised $150 million for about 50 clean tech companies over 3-4 years on a budget of about $2 million / year, mostly from USAID. Most AusIndustry grants require patents or export from Australia for support, and hence do not help us at all – thus it is important to ensure some windows for assistance remove these restrictions.

9)    If you could have been responsible for any innovation, what would it be and why?

Barefoot Power has been responsible for creating an affordable, efficient and expandable energy system that helps reverse rural electrification, decrease capital intensity, reduce payback periods to 3-12 months instead of 5-10 years, and has so far enabled more than 600,000 people in developing communities around the world to access electricity, reducing kerosene use which has saved 10,000 tonnes of carbon dioxide and reducing the number of kerosene-related burns and respiratory illness in these communities. We’re pretty happy with this innovation, as it gives a potential platform to roll out many other solutions for the poor in the future. If it wasn’t this, I would love to have invented the wheel.


10)    Which entrepreneur do you most admire and why?


Mum runs a Bed and Breakfast, which is darn hard work, but she boot-strapped it from start to finish, and does a terrific job to survive doing something she loves to do, even if it doesn’t pay well – a great demonstration of the dedication required to succeed. Richard Branson is an inspiration for the “bugger it, just do it” attitude that is so opposite to Australian investment attitude, while David Bussau's Entrepreneur of the Year award and huge commitment to social enterprise by creating Opportunity International gives direction and a high benchmark for any Australian striving to make a difference in the world at scale – an achievement decades ahead of its time that generates enormous respect.

www.barefootpower.com

 

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