Village Infrastructure Angels aims to raise up to USD 20m for solar micro-projects

Village Infrastructure Angels (VIA), a UK/Australia-based manager of solar micro infrastructure projects in remote areas, is looking to raise USD 10m- USD 20m to build further projects, Managing Director Stewart Craine said.

Likely investors are angel investors, high-net-worth individuals, and impact investors, Craine said.

What VIA offers does not fit standard VCs due to the risk of investing in remote, third world countries and their unfamiliarity with the market, he said, adding that he expects to raise the vast majority of the capital from investors outside of Australia.

USD 10m would take the company to break-even, and additional capital beyond that will allow it to grow faster, Craine said. It offers a 10-20% return on investment, and the first million raised comes with a risk guarantee, he said.

The company kicked off the capital raise two weeks ago with a pitch at the Bloomberg New Energy Finance (BNEF) summit in New York. Facebook [NASDAQ:FB], which attended the conference, recently set up a USD 50m green power accelerator to fund energy access projects in Indonesia, India and East Africa, along with Microsoft [NASDAQ:MSFT].

“We had a very good talk”, Craine said. VIA expects to have closed the round within 12 months, he added.

The company is not using a corporate finance advisor at this point, Craine said, reiterating that most advisors do not know the investors in this market. He added that he has used Unitus Capital for a capital raise for his previous business in the same space, Barefoot Power. VIA works with Simmons & Simmons as legal advisor, Craine continued.

VIA, which was established in 2012 and has raised USD 5m to date, has revenues of around USD 1m a year, Craine said.

It builds solar home systems in rural villages in Indonesia, Vanuatu and Honduras that do not have access to the electricity grid. The systems are leased to the user for around USD 10 per month, which is no more than they would otherwise pay for fossil fuels, according to Craine. In addition, VIA offers solar-powered agro-processing mills, for example flour grinders, as well as solar-powered water pumps, also via lease agreements.

Projects cost USD 100-200 each, so with the planned capital raise VIA could help 100,000 households to get solar power, Craine said. About one billion people in the world do not have access to grid electricity and process crops by hand, most of these are in Africa and Asia, as well as in the Pacific region and Latin America, he said. USD 200m was invested in pay-as-you-go solar in East Africa last year, and this is expected to be a billion-dollar industry in 2020, he added.

The World Bank provides subsidies for low-income families in Vanuatu to get electricity to their homes, making this an interesting market, Craine said.

Competitors to VIA include Kenyan M-Kopa, German Mobisol, and UK-based Azuri Technologies, Craine said. These could also be potential collaborators for VIA by providing VIA’s solar grain mills and water pumps in a shared revenue arrangement, he said. The company will work on this and on entering the African market once it has raised the capital, he said.

VIA is currently a non-profit organization fully held by a trustee, in order to avoid burning more cash than necessary, Craine said. However, it is likely to convert to a for-profit company in the next year as it raises equity, he said. It will then have around 10 owners, including Craine, he said.