Nuru Energy (A) - INSEAD start-up in Kabul that was looking for people to help expand mobile services to remote areas ... lighting solution for rural areas. ... so fuel-based lighting

Social Entrepreneurship Initiative

Nuru Energy (A): Financing a Social Enterprise Nuru Energy’s Mission: To replace the use of expensive, polluting, unhealthy and dangerous kerosene as a source of lighting for the two billion people without access to electricity.

02/2013-5847

This case was written by Anne-Marie Carrick-Cagna, Research Associate, and Filipe Santos, Associate Professor of Entrepreneurship, both at INSEAD. It is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.

We gratefully acknowledge the support of the Andy Burgess Fund for Social Entrepreneurship.

Copyright © 2013 INSEAD

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Winner of the 2012 EFMD Case Writing Competition in the category “African Business Cases”

Runner-up in the “Social Entrepreneurship” track of the oikos Case Writing Competition 2012


Copyright © 2013 INSEAD 1 02/2013-5847

“We are a social enterprise that sought to invent and commercialize an affordable and clean off-grid lighting system for the world’s poor.”

Sameer Hajee, Co-Founder and CEO of Nuru Energy

I founded Nuru in 2008 with two colleagues from my former employer, Freeplay Energy. Our goal was to develop a modular lighting system to replace the dangerous and expensive kerosene lamps that are common in the poverty-stricken parts of Eastern Africa. We also wanted to create sustainable businesses for local people who could earn an income through the selling and recharging of these lights. By November 2010, we had developed an innovative product and launched field pilots in three countries using three different business models. We are now at a point where we need to scale up our operations considerably to achieve the societal impact we aspire to. For this, however, we need to focus our efforts and we need funding. Luckily, I have several financing deals on the table, including a large bank interested in buying the carbon emission credits we will produce, a company that would like to acquire us for several million dollars, venture philanthropists willing to put “patient capital” to help grow the venture, and several individual angel investors willing to commit smaller amounts of funding for the scaling up process. All of these financing options, however, have drawbacks that our team is carefully considering. The fall-back option is to continue relying on grants and prizes to finance the venture.

On a personal level, I have spent the last three years dedicated to Nuru. I am tired of all the travelling and spending so much time away from my family. I’ve also grown weary of relying on donations that require the launch of new pilots. I wanted to alter the status quo but it seems more difficult and slower than I thought. I need a reliable source of growth capital that allows our team to focus on realizing our vision of giving the world a clean, affordable and effective lighting system for poor people without access to the grid. At this stage, however, I don’t know who I should turn to or what route to take for scaling up.

Sameer Hajee – An MBA Graduate Turned Social Entrepreneur

After graduating with an engineering and business degree from McMaster University in my native Canada, I worked for four years in different engineering and management roles in the semiconductor design industry in Silicon Valley. In 2003, I found myself with six months to spare before starting the MBA course at INSEAD. I moved to Afghanistan to work for a telecom start-up in Kabul that was looking for people to help expand mobile services to remote areas throughout Afghanistan. It was during this time that I witnessed the amazing difference that basic technology, in this case mobile technology, could make in the lives of the rural poor. I realized then that it was this career path – combining technology and international development – that I intended to pursue after my MBA studies.

In 2004 upon graduation, I went to Kenya and joined the United Nations as a private sector Development Consultant. There I worked with a small team of business professionals located throughout the world who believed that companies could engage with developing countries in ways that were both pro-profit and pro-poor – a relatively novel concept at the time. One of my roles was to broker partnerships in Kenya – to help companies conceive and implement business models that would make money while also delivering value to the UN’s “customers”: the poorest of the poor. One example was in the fruit juice industry. In Kenya,



despite the wide availability of fruit, the juice companies still imported fruit juice concentrate from abroad that they then mixed with water and packaged for sale in Kenya. I couldn’t understand why they didn’t use the fruit from farmers in Kenya itself. My role in this case was to bring together fruit growers with a domestic fruit juice company by helping them obtain financing to set up a facility that would take in raw fruit and produce concentrate for domestic sales and for export. This resulted in reduced costs and increased economic activity.

Nuru Energy: Identifying a Neglected Societal Problem

After a year in Kenya, I returned to Toronto with my wife. By this time I was sure I wanted to become more involved in the actual implementation of the models that I had worked on in Kenya. A colleague from the UN put me in touch with the founder of Freeplay Energy1 who needed help in creating a distribution strategy for rural markets. I went on to work with them for two years, helping to sell products to different aid agencies throughout the world, including the Red Cross and the UN. During this time I visited Sudan, Ethiopia and other poverty-stricken areas of the globe. We were selling low-power electronic products to the base of the pyramid, such as radios and portable lights that were charged through hand cranking. I realized, however, that some of the products just weren’t affordable or effective for the customers we were trying to reach. I also noted how basic services that we take for granted, such as water and lighting, were missing in many rural regions of the globe, curtailing the development prospects of entire populations. I had to do something to address this problem.

By mid-2008, with two ex-colleagues, Simon Termeer and Barry Whitmill, (Exhibit 1) we set up a venture to address the global problem of lighting. We obtained US$200,000 in seed funding from the World Bank for the venture we called Nuru (Swahili for ‘light’). The grant was for the development of a suitable product and subsequent testing in the field. Our multi-disciplinary team (which by then included industrial designers, manufacturing experts and development workers) spent the next few months working on the concept of a portable lighting solution for rural areas.

The first task for the team was to go into the field and observe how people in isolated rural areas used light. So we lived in Rwanda for the month of July 2008. What we found was that burning kerosene was the most common way for villagers to obtain light. However, imports of the substance were subject to restrictions and the prices were usually high as villagers often bought it on the black market. A survey in Rwanda showed that rural and urban families spent over US$8 per month on kerosene even though most of the population lives well below the poverty line, earning less than US$2/day. The world’s poor spend between 10% and 40% of their income on kerosene! A 10oz. bottle of kerosene (300 ml) cost about 50 cents and would only produce six hours of light.

In addition to the high cost, kerosene is known for its great health risks – the fumes from using one kerosene lamp in a tent or small room are the equivalent of smoking two packets of cigarettes per day. Many homes have poor ventilation, so fuel-based lighting poses serious health hazards such as respiratory and eye problems. Kerosene is also extremely dangerous,

1 Driven by its core purpose: "To make energy available to everybody all of the time", Freeplay Energy seeks

to maintain its leadership in creating and developing the market for self-sufficient energy products internationally.



with skin burns being a common occurrence as a result of lamps accidentally knocked over. A quarter of households reported kerosene-related accidents in 2009, including fires and skin burns. The fuel also emits carbon dioxide (CO²) and is therefore harmful to the environment. Kerosene burning for lighting produces 100 million tons of carbon dioxide annually. Ironically, the light provided by a kerosene lamp is not actually very bright and is therefore inefficient. Studying or reading next to kerosene light is difficult, thus hindering education in these regions. We also noted that 90% of the needs for lighting after dark were task-based – from milking cows to doing homework and cooking. Therefore an entire room didn’t need to be lit most of the time. We also needed to take into account the villagers’ irregular source of income. Kerosene was unaffordable for most of the time and further trapped parents and children in the poverty cycle.

After the field research, we better understood the costs to society that the use of kerosene for lighting entailed. It dawned on us the enormous positive spill-overs of replacing kerosene lights at a global scale with a solution that was less costly, more efficient and healthier. We had found the mission of Nuru Energy.

Designing for the Base of the Pyramid

My colleagues and I had seen how fast-moving consumer goods (FMCG) companies such as Unilever and P&G had successfully adapted their products to sell to base-of-the-pyramid markets: they began to package their goods in smaller volumes to make them more affordable to the rural poor. We needed to find the equivalent for delivering lighting to remote rural areas.

There were four specific criteria that we aimed to meet when we began designing the lighting product it had to be:

valuable to the people (had to directly meet their specific lighting needs)

something that was a unique product offering (relative to other options available to them)

more affordable than the existing alternatives (and the population we targeted had to be able to pay)

accessible (there was no point in developing a valuable, affordable product if we couldn’t ensure access and delivery to the end consumer).

After several months working on the problem, we developed the Nuru Light, a small portable light that can be worn on the head like a miner, fixed to a helmet, or hung around the neck for reading – the options are numerous. If for some reason extra light is required – the family is entertaining guests, for example – the lights connect in modules to make stronger lights which can be hung on a nail to light up a whole room. It is designed to be practical to use and effective for multiple types of usage.



The light uses a light-emitting diode (LED) bulb that is unbreakable and so never needs replacing. The lights are the size of a hockey puck. When fully charged each POD light can be used between 9 hours (high bright) and 28 hours (low bright) – enough light for one or two weeks’ usage.

The next challenge to address was the charging of the lights. We developed solutions based on two conventional methods – the AC charger and the solar panel charger. Our first solution used electricity with adaptors charging up to five lights at a time.

The drawback is that there isn’t always electricity in rural areas, especially in sub-Saharan Africa, where nine out of ten people do not have grid electricity. We therefore developed a second solution based on a solar panel that could charge up to five lights simultaneously.



Unfortunately, this is an expensive unit and solar panels are not an efficient technology – it is a lengthy operation to charge anything with a solar panel. So we needed another charging solution if we wanted to have widespread distribution and market adoption. Although cranking by hand had been used in the past for recharging, we found that people didn’t want to use this sort of device as it took effort and did not seem natural. We therefore looked at a more natural system based on pedalling – we have all seen bicycles whose lights are powered using the energy generated from pedalling! After some research and clever design options, we developed the POWERCycleTM as an innovative method for recharging the lights. These bike-like stationary units can produce enough energy to fully recharge five lights in 20 minutes of pedalling. This is actually the most efficient way to recharge lights, as well as being accessible to everyone.

Once we had developed a promising technical design, we needed a convincing business model that would diffuse our solution widely.

The Rwanda Pilot: Market-Based Business Model

Providers of technical solutions for the poor usually rely on donor funding and free distribution through NGOs or traditional rural distribution channels. However, mark-ups along the value chain often make the end product ultimately unaffordable to poor populations. Although models based on sustainable income were rare in the developing world at the time, this seemed to us a more promising approach. So we started a pilot in Rwanda, where we had done our initial field research.

We decided to set up a network of rural entrepreneurs, which created a sustainable livelihood for people in the villages and also allowed us to get the lights directly into the hands of consumers with few intermediaries. Our approach was to help an individual or group to set up a micro business through which they could sell or rent the Nuru Lights and offer a recharging service via the POWERCycle.TM

Nuru Energy acts as a “coordinator” between the microfinance institutions (MFIs) who offer loans and micro-entrepreneurs who are interested in starting a sustainable business to make money. Supported by MFI partners, Nuru Energy screens and selects entrepreneurs from local cooperatives to operate their own micro-franchises. Located in the customers’ communities, each micro-franchise operator sells lights and can then charge their customers a small fee to recharge the lights using the pedal generator. Each entrepreneur can earn up to $13.50 per day. Such an income launches an entrepreneur comfortably out of poverty, giving them three to four times the national average income, while still saving customers 95% on lighting. Indeed, assuming 2.5 hours of light per day, our solution was 20 times cheaper than kerosene.



Students at the Gihembe refugee Camp

Nuru Light Kerosene Cost per hour $0.007 $0.13 Cost per month $0.44 $10.12 Cost per year $6.50 $118 Nuru targets mainly female entrepreneurs, whose earnings are more likely to be spent on the education, health and feeding of children, therefore creating a broader social impact. We also decided to offer training to our entrepreneurs in basic book-keeping and accounting, and to provide them with marketing materials to help set up and expand the business.

The business model thus offered two revenue streams: money generated from margins on the sale of the products (lights and charger), which is initially financed by the microfinance institution, and recharging fees from the entrepreneur. We had people in the field to support the micro-entrepreneurs, monitor the number of recharges in the PowerCycle and collect the recharging fees, but we soon realized that it was costing more to recover these recharging fees than the actual money due, so we are looking for alternative collection models that are more efficient. In any case, our model provides two revenue streams and could become profitable over time.

The Kenya Pilot: Donor Based Model

In our continuous search for funding, in 2009 we received a grant to supply lights for free to particularly vulnerable groups with no source of income, such as refugees. To pilot this model, we donated lights to school children in refugee camps who had no income, and therefore no means to buy lights. These children’s only chance to escape the refugee camps is to do well in the national exam and earn a scholarship to university. Without a light, however, they cannot study. By providing Nuru Lights, we can give these children a future.

This model was piloted in Kenya, where we put 100 lights into schools with a charger and monitored the effect on children’s education. We saw a strong adoption rate among children and had encouraging evidence of impact on their school efforts and educational results. We could try to secure more donors to expand the programme to other refugee camps or schools or by serving poor populations. Two of our team members in particular were excited about the potential growth and impact of this model.

India – Learning Good Lessons the Hard Way

In the summer of 2009, we made our first move out of Africa to India, home to over 580 million people without electricity (40% of the population is off the grid). The size of the population we believed could be targeted was as large as that of sub-Saharan Africa (Exhibit 2). Moreover, with India we would be dealing with only one large country and therefore potentially only have to deal with one microfinance institution, one set of import duties, and similar procedures involved in setting up operations. Given these considerations, we were convinced that it would be easier to expand into India, where we could reach as many people



at a lower cost than setting up operations in several different African countries. This was important given that at the time we still had no stable source of funding.

In September 2009, we partnered with the microfinance company BASIX and, based on their recommendation and using grant funding, set up a pilot with two entrepreneurs and 100 lights in two Indian states. They were monitored by BASIX over a four month period. However, when we received the monthly reports on the entrepreneurs, we were disappointed as they were making about one fifth of the revenues that the African entrepreneurs were making with their recharging activities.

On further investigation, we learnt that their customers were only using the lights for an hour or two at night, during power cuts. We hadn’t realized that the two pilot villages actually had access to the power grid. Thus when we spoke in more depth with the customers we discovered they didn’t really want to pay someone to pedal; they would rather purchase the recharger and charge the lights themselves.

With this in mind, we suggested to the two pilot entrepreneurs that rather than selling in their own villages, which had access to the grid, they look further afield for customers. Perhaps they could go to the nearby villages with no access to electricity and set up the POWERCycle in the weekly markets, offering to recharge lights for the locals for a fee – thus earning an additional income. While they initially agreed, it was soon apparent that these particular entrepreneurs didn’t actually like pedalling since their other income-generating activities, which included mobile phone, music downloads and providing internet access, offered higher margins with less effort. The demand for Nuru Lights among end customers, however, was great as we found that the villagers were coming to the entrepreneur and recharging the lights themselves using his POWERCycle for a fee!

The pilot in India proved to be a learning exercise as we realised that we needed to adapt our products and business model according to the geography. In mid-2010 we hired an MBA alumnus, Deepak Punwani, to lead our efforts in India from Mumbai. Another person has been taken on and is spending six months in the field to discover exactly what works in the Indian climate and conditions. With this valuable information, we can then adapt the model accordingly.

Kenya – Scaling Up Too Fast

As we had already piloted the school-based donation model in Kenya in 2009, it seemed obvious that Kenya should be the next African country (after Rwanda) where we would set up our commercial micro-franchise operations. Although we didn’t have funding for this expansion, I was confident that it would be forthcoming. Therefore, in January 2010, I recruited a recent MBA graduate from the Spanish school IESE to launch Nuru Energy Kenya. Her first job was to find local MFI partners – once an MFI was on board, the next step would be to find entrepreneurs and organise the logistics of the operations. After six months, however, my forecast of closing a financing deal by early 2010 proved to be too optimistic. We had several options on the table but no obvious or ideal choice. Since we hadn’t secured financing for the Kenyan expansion in due time, our Kenya manager became frustrated and finally quit, forcing us to interrupt our expansion plan into the country.



Financing Nuru Energy

Nuru Energy’s growth up until November 2010 had been a somewhat frustrating stop-and-start process, dependent on awards and grants obtained from a variety of organisations (Exhibit 3) – which were the lifeblood of Nuru Energy. The total amount (over US$400,000 to date) had enabled us to pursue what was perceived early on as a risky idea and make it tangible. We had scaled up to a certain level and done several pilots so that commercial financiers could see our progress and have the confidence to make an investment. Although we were delighted with the interest generated among the donor community, we didn’t think we could rely on grant funding to scale up and reach profitability.

We were working with an annual budget of US$200,000 at the time. This covered local field staff salaries, office rental, and transport to and from the field to identify, select and train service entrepreneurs. It also included all the manufacturing and shipping costs of the lights and POWERCycles and international travel for the management team, who were not all based in the same location. By this time, the staff had expanded. There were the three co-founders –myself, Simon Tremeer (our Manufacturing director) and Barry Whitmill (our Design director). In Rwanda, there was a country manager, a grants manager and three field staff. There were also two staff members in India: a country manager and a field manager.

I had spent most of my time and energy in the last two years building awareness of Nuru Energy worldwide in the hope that it would lead to suitable and sustainable financial backing. With this goal in mind, I had been pursuing different types of investors.

Angel Investors

I started out thinking that an easy way to raise financing quickly would be to look for money from high net worth individuals, especially given the interest that Nuru had generated over the last two years. We were looking for finance partners who could add value beyond the capital. I considered several angel investors and discussed different options with prominent wealthy investors throughout the world. However, we were looking for more than US$250,000 and none of them were willing to invest sufficient capital into Nuru on their own. The pre-money valuation I was discussing was US$750,000 or US$1 million post-money (i.e. US$250,000 investment for 25% equity). If we syndicated several angel investors it would have met our financing needs, but I didn’t want to deal with multiple stakeholders and the different ideas for the company’s future they might have.

Social Venture Capitalists/ Venture Philanthropy

I also contemplated social venture capitalists – they were less demanding on time and had “patient capital”, realising the value of the investment over time, unlike traditional venture capitalists who want results and a return on their money quickly. However, this is a relatively new type of investing. I found that many players in the space had just left their traditional banking/corporate careers and, although they wanted to do something impactful, the majority lacked the experience and know-how required to build a pan-African or emerging market business. I was adamant that I wanted a business partner, not just someone I reported financials to each quarter.



I also noticed that we were often ‘stuck in the middle’, being a for-profit enterprise with a social mission. For venture philanthropists the social mission often takes precedence over the financial mission. Most of the investors were concerned about impact first. The impact drivers that they looked at were varied. Three typical metrics they used were: how many jobs were created, income generation for franchises, and environmental impact. Ironically, sometimes capital is too patient and can curtail efforts to make the business profitable as soon as possible. In addition, I had not witnessed many exits among the venture philanthropy community, which also had difficulty in dealing with profit distribution to shareholders. I was thus a little reticent about opting for this sort of funding as it would limit the founders’ potential upside. At the other extreme, I was afraid that traditional venture capitalists would put profitability ahead of impact and aim for a quick win and early exit.

Carbon Financing

I also investigated the possibility of financing through the relatively new carbon credit markets. The emission of gases such as carbon dioxide and methane from manufacturing, deforestation and energy generation is generally believed to be a source of climate change. Nuru Energy, with its CO² reduction impacts, could be eligible for carbon emission credits that had a monetary value and were tradable on the international market. To qualify for these credits we needed to be approved by the United Nations “Clean Development Mechanism” (CDM). The carbon credits could be earned through the replacement of CO²-producing kerosene lamps with LED lighting technology (Exhibit 4).

In July 2010, I decided to approach some of the carbon credit brokers to see whether Nuru Energy could make a financial deal. What I found was that while many carbon brokers were open to discussion, only Bank of America Merrill Lynch (BAML) was willing to consider advancing capital against non-guaranteed credits – a unique deal in the carbon space at the time. BAML proposed a multi-million dollar deal whereby they would provide funding upfront for the right to buy a certain volume of credits from our Eastern Africa operations.2 BAML was taking a risk by offering capital without a guarantee of credits in return – they would have the right to buy the credits over a ten-year period at a pre-negotiated, market-pegged price. They could then resell them at a higher price in the future. For BAML, the deal could be both commercial and brand enhancing (as a socially motivated project).

Unfortunately, in the midst of negotiations with BAML, we discovered that the design of our light would require some revision. According to newly adopted CDM technical specifications, our lights did not meet the approved level of brightness. Although it was inconsistent with the lighting needs that we had witnessed in the field – our brightness level was correct for our users’ needs – if we wanted to be eligible for the credits, we had to redesign the light accordingly, probably with an increase in the cost of the units. If we were unable or unwilling to meet the specifications, the BAML deal would be a non-starter. In any case, this would be an unusual deal and I was nervous about being reliant on a large investor such as BAML and whether they would neglect the social mission of Nuru Energy.

2 Precise figures cannot be disclosed due to confidentiality agreement.



Selling Nuru Energy

I had been mulling over the idea of selling Nuru Energy outright for the last few months. It wasn’t just a question of funding; I was not sure we had the right human capital in the company to scale up properly. Moreover, I was tired after more than three years of intense effort in building and leading Nuru Energy.

I decided to test the waters and see if there were any potential buyers for Nuru Energy. I approached a company that I knew through Freeplay Energy, my former employer, to see if they might be interested in acquiring Nuru. It was a global consumer product business that had recently acquired an alternative energy business so they might be interested in making a deal. The company’s response was positive – they believed that Nuru Energy was moving in a promising direction in tackling the energy access problem. By November 2010, I had met them several times and negotiations were progressing well, with a US$5 million valuation and a lock-up period of two years during which I had to remain in the company. This would give me a good pay-out and alleviate some of the responsibility on my shoulders.

Was it time to sell the business? A sale now would reduce the founders’ risk and ensure resources for the scale up process. However, we would lose autonomy and control of the strategic direction of the venture (which could potentially jeopardize its social mission).

Financing a Social Enterprise with Hybrid Goals

Interestingly, it was not the lack of options but rather the availability of multiple options that made my decision difficult. On a personal level, I was growing weary of the constant travelling and the uncertainty regarding Nuru Energy’s future. It had been an all-consuming three years – an emotional roller coaster. I moved from Canada to the Netherlands in June 2010, in the hope that by basing Nuru Energy’s headquarters in Europe I would see more of my family, but it hadn’t really panned out as I’d hoped. My energy levels were low and finding the enthusiasm to motivate and re-energize the team was increasingly challenging.

Should I sell? It was appealing and could be a good time to exit and harvest the value that we had created. The alternative was to pursue the BAML deal but, again, I was concerned about compromising the social side of our vision. I didn’t want to hand over Nuru Energy if I wasn’t 100% certain its social mission would be continued. I could also accept funds from venture philanthropist investors or build a syndicate of angel investors. Or I could try to continue a bit longer on the current path, despite the personal challenges I was facing, and pursue new donors or awards to finance operations for six to 12 months more.

That Was Then...This Is Now!

That was the situation at the end of November 2010. It is now the beginning of December and I urgently need to make a decision by the end of the month, when our current funding will run out. It is critical that I regain momentum, energy and focus. A new venture is charged by the energy and commitment of its founders. Maybe it is time to step aside from my leading role and allow someone else to recharge Nuru Energy?



Exhibit 1 The Co-founders of Nuru Energy (together with Sameer)

Simon Tremeer

Simon is a co-founder of Nuru Energy. He currently manages the manufacturing and electronics of all Nuru products. Simon has over 15 years of experience in the Industrial Design and Manufacturing field, having worked for the likes of Electrolux and Volkswagen. He later gained experience in the renewable energy field while working for Freeplay Energy. Starting off as an industrial designer, he designed some of the company’s most successful products, in the process winning the prestigious CES award in Las Vegas. After successfully taking these projects from concept through to manufacturing, he joined the operations department as Manufacturing Manager, overseeing the manufacture of all products. Simon graduated cum laude from the Cape Town University of Technology, where he obtained a BTech in Industrial Design.

Barry Whitmill

Barry is a co-founder of Nuru Energy. He currently manages Nuru’s industrial design team. He has 15 years of industrial design experience and has worked for numerous companies, taking products from the concept stage right through to mass production. The products include Freeplay Weza foot-powered generator, Lifelight developing world LED lantern, Crank Charger for the OLPC laptop, and the ML1 Mini Lantern, which won a CES Design Excellence Award.



Exhibit 2 Market Sizing Data (per country) and Current Coverage of Nuru Energy Solutions

Population Electrification rate

Population without

electricity

GDP per capita rank (out of 180

countries)

GDP per capita

($)India 1,200,000,000 48% 580,000,000 143 1,017 Tanzania 45,000,000 11% 40,500,000 158 520 Kenya 40,000,000 14% 34,400,000 147 838 Uganda 32,000,000 9% 29,000,000 165 455 Rwanda 10,000,000 5% 9,500,000 163 465 Burundi 8,300,000 2% 8,150,000 180 138

© Copyright 2009 Nuru - All Rights Reserved



Exhibit 3 Awards

Award: World Business and Development Award Organization: International Chamber of Commerce, 2010

Award: Sasakawa Prize Organization: United National Environmental Programme, 2009‐2010 Prize: $100,000

Award: Tulane University Business Plan Competition Organization: Tulane University, 2010 Prize: $50,000

Award: Lighting Africa Development Marketplace Competition Organization: World Bank, 2008, Prize: $199,275

Award: The Good Entrepreneur, (Top 10 Ideas to Change the World) Organization: CNBC and Allianz, 2009 Award: St. Andrews Prize for the Environment (runner‐up) Organization: University of St. Andrews, 2010, Prize: $25,000 Award: Grand Prize, People’s Choice Award, and Global Health Prize (runner‐up) Organization: Global Social Entrepreneurship Competition (Foster School of Business, University of Washington), 2010, $13,000

Award: Social Responsibility Prize (Grand Prize), Africa Prize Organization: William James Foundation, 2010, Prize: $7,000 (and three in‐kind prizes) Award: Clean Energy Prize (semi‐finalist) Organization: Massachusetts Institute of Technology (M.I.T.), 2010



Exhibit 4 Carbon Credit Summary

Two billion people worldwide routinely purchase and burn kerosene for light, emitting over 260 million tons of CO2 annually – using up to 40% of their income while exposing themselves to harmful fumes. Because current lighting alternatives are inadequate, access to electricity/light remains a primary obstacle to improving health, education, and eradicating poverty. Nuru Energy aims to reduce global CO2 emissions and light up rural households in Rwanda by distributing an innovative and affordable lighting system to replace fuel-based lighting. The design and delivery model of our modular, rechargeable, LED lights allows a greater reach and more immediate environmental impact than other lighting solutions.

Nuru Energy sells the Nuru Light to replace kerosene. The Nuru Light is a very strong light that is much brighter than kerosene. The Nuru light allows customers to:

Have access to up to 28 hours of light (10 days of use) with a full recharge.

Use individual lights in a variety of ways, including as a head or neck lamp, hung up, or on a table.

Connect multiple lights together.

Customers bring their lights to local people to recharge their lights when the battery in the light is dead. The customers pay 150 Rwandan francs for every recharge. With the Nuru Light, customers pay 1/20th the amount they pay for kerosene.

Nuru Energy Lighting Project and Carbon Credits

Emissions of gases such as carbon dioxide and methane – from manufacturing, deforestation, energy generation and many other sources – are driving climate change.

Projects working to reduce these greenhouse gas emissions are eligible to receive carbon credits if approved by a United Nations body known as the Clean Development Mechanism. Carbon credits have a monetary value and are tradable on the international market.

By distributing over 300,000 lights over a period of two years, Nuru Energy will achieve carbon dioxide emission reductions by replacing the use of kerosene. It is expected that the project will generate average emission reductions of 35,000 tonnes of carbon dioxide equivalent per year. The revenue from the carbon credits will help the project make their products affordable and accessible to rural households in Rwanda.

Documents

Nuru Energy (A) - INSEAD start-up in Kabul that was looking for people to help expand mobile services to remote areas ... lighting solution for rural areas. ... so fuel-based lighting