Arnergy and Auxano Solar have raised a combined total of $10.5 million in funding to build renewable businesses. In this episode, we speak to the founders of the 2 companies to understand the unique challenges of building and scaling in Africa.
Arnergy and Auxano Solar have raised a combined total of $10.5 million in funding to build renewable businesses. In this episode, we speak to the founders of the 2 companies to understand the unique challenges of building and scaling renewable energy businesses in Africa.
Femi Adeyemo is the Founder and CEO of Arnergy, in June 2019 the company raised $9M in Series A Funding - Led by Breakthrough Energy Ventures, Norfund, All On, Electrification Financing Initiative.
Chuks Umezulora is the Co-founder and COO of Auxano Solar, in September 2020 the company raised $1.5M in Seed Funding led by All On.
Recommended Reading
Learn more about Arnergy | Auxano Solar
Connect with Femi and Chuks on LinkedIn
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Olu Olajide: [00:00:00] Hello and welcome to the energy talk podcast. My name is Olubunmi Olajide and thank you so much for joining us again this week. Today, we have a very special episode, because we have not one but two guests. This is episode four of our series on renewables in Africa and our guests for today are Femi Adeyemo, who is the founder and CEO of Arnergy, and Chuks Umezulora, who is the co-founder and chief operating officer of Auxano solar. So combined, both companies have raised $10.5 million in funding so far, although the founders have very different backgrounds, something that they do have in common, other than both being Nigerians, is that they've both been invested in by all on which is an impact investment firm based in Lagos, Nigeria.
[00:00:57] And we actually had the privilege to have the CEO of ALL-ON Dr. Weibe Boer on the podcast. Two weeks ago. So I highly recommend you check that out. We talk about building a cleantech ecosystem on the African continent. And these two companies are very much part of that ecosystem on this episode of first going to be hearing from Femi.
[00:01:14] So Femi first got his professional career, started in the telecommunication sector where he worked with different companies. And later as a consultant, traveling to countries in Europe, South America, the Caribbean, and the middle east, and after he had done his travels, he later came back to Nigeria to start Arnergy.
[00:01:31] In 2019 on Arnergy raised $9 million in Series-A funding led by breakthrough energy ventures, which was funded by Bill Gates and also the Norfund electrification financing initiative. And of course, all on Femi talks first about what it was like first coming into the space and breaking down a lot of the barriers and initial myths that came with working in the solar industry. And later he goes on to tell us about the projects that have solidified his belief in the renewable energy sector and the projects that I've had the most impact on him. So we're going to hear from Femi first, and I hope you learned something from this conversation and enjoy.
Femi Adeyemo: [00:02:12] So we're able, to demystify the myth then that solar doesn't walk by I mean, going all out there, deploying systems that are completely off bridge people that do not live in the city. And then I've been media coverage that was under national televisions. And we're seeing the indeed people that are not living in Lagos or Abuja, we're able to enjoy 24 hours electricity of solar.
[00:02:42] Yeah. So I think all of those helped, and we also then started at the leasing program, which was more or less saying that the risk is on us. We were happy to put our solar assets on customers' roofs. And, they will pay us over 10 to six months. So what people were used to was a system deployed by freelancers.
[00:03:05] That, I mean, we had instances of some customers run into us to come, help them fix a system that they deployed, or they acquired six months prior, but are longer functional. So the fact that we were able to offer long-term leasing, all of those helped to resolve those obstacles. And I think on the finance side yes, of cause I mean, it became clear to us that we might not be able to get the kind of investment that we needed locally, which was what made us look abroad.
[00:03:37] . And we're able to bring in the capital of, cause several of our organizations in Nigeria and I'm talking of Nigerian funded organization on the back. of what we're able to do, we're able to use our success story as a case study, to be able to convince other investors, to give them equity or death for the organization.
Olu Olajide: [00:04:00] That's actually really excellent. To hear. And I know that this, this story is to adapt in. So, so far, I think I have two final questions to go here. What projects from Arnergy have really impacted you the most and really reinforced the mission.
Femi Adeyemo: [00:04:15] So I think I will mention three projects. The first project was a project we deployed in Owerri.
[00:04:23] I mean, this was for, I believe 150 rooms student hostels. So it's a private student hostel for the student of the University of Owerri. Sorry, the Federal University Of Technology Owerri and Federal Polytechnic Nekede, our solar solution we deployed it's 154 rooms hostel with a gym, with the library, with a restaurant and the Cafe.
[00:04:49] So that's was a landmark project for us. I would deploy that in 2017 and the fact that students were able to have access to uninterrupted electricity, to be [00:05:00] able to, study, when there want. Not constrained to when at the national grid provide them electricity. That was a very big one for us.
[00:05:09] The second was a project that we deployed in partnership with general electric healthcare and shell. So, a hospital in Oloibiri the town where Nigeria discovered oil was adopted by Angie at care as the contractor that was responsible for the whole transformation. So it was an old community township hospital, but it was rebuilt.
[00:05:37] And then. Given that the community might not be able to afford the ongoing operating expenses to fuel. I mean, the generator with diesel, it was decided that they will power it with solar. They were meant to fly in equipment. From, uh, from outside Nigeria but the cost was prohibitive. And during one of the meetings, someone just asked a question that isn't there a Nigerian company that could do such a project.
[00:06:04] I mean, they didn't think they could find it until someone mention maybe they should try the Arnergy guys. And I mean, the rest is history. After that project in 2017, we've gone ahead to do, I mean, several projects. And that was because we were able to deploy the first successfully. The third will be I had mentioned as to why the company was founded, the eureka moments, which has us power in telecom.
[00:06:28] You realize that all of what I've mentioned, I've not mentioned telecom, but I think what happened last year globally, which was COVID more or less reminded us what our first love is. Right. We're able to also bring in, develop new products specifically for the telecom sectors, and really excited at where we have now because we are now in a position where instead of the telecom at the tower infrastructure companies, or even the MNOs impotent products from.
[00:07:02] Wherever they are able to walk into Arnergy's offices, assign a partnership. And instead of them, especially for the, for the, for the telecom towers in rural Nigeria or peri-urban, we're not able to power sites, telecom towers, completely off-grid without generators. So that's something we're very, very excited about.
[00:07:25] And, and that we believe that with such opportunity in the future is bright, not only for the company but for the opportunity that we'll be creating for young Nigerians.
Olu Olajide: [00:07:34] That is, that is really fantastic to hear. And I wish you could dive deeper into that but, I have to go to the last question is very good you brought up the example of the universities and young Nigerians, because as the renewable energy industry grows. It is going to attract a lot of talent and create a lot more jobs. So what advice do you have for young people looking to enter the renewable energy space and what skills do you think are most relevant for them to be looking to build right now,
Femi Adeyemo: [00:07:57] Skill that is most relevant. Number one, grit, grit, grit, and grit, because it's not going to be easy entrepreneurship. It's not, it's not easy. But with enough grids, the opportunity is huge. Of course, for young Nigerians to get into the sector. I will say that it's maybe a good idea. If such a young Nigerian is just getting out. from university maybe.
[00:08:25] Gets a paid employment. however short. I mean, and I'm talking of the period of time, maybe when it's one year, two years, just to understand, I mean, from a project developer point of view, or maybe an ecosystem enabler, because that's will give room to be able to understudy and then. Of course, technical skills cannot be, cannot be overstated, right?
[00:08:52] So the technical skills on a PV deployment, PV stringing nowadays is no longer conversations around lead-acid battery lithium-ion batteries. And beyond that, some of the competitive advantages that we have as a company, we are not a trader. We don't just buy and sell we add values. So we have software engineers we have even the hardware engineer.power engineers that add value to whatever we bring in the ones that we cannot manufacture locally. We bring in, but we add values, so those are the different value chains, right? That I see young Nigerians being able to tap into, this space because visualization, remote monitoring are very critical.
[00:09:36] nowadays right. So, I mean, those are the parts of the value chain that young Nigerians can tap into as an organization like ours. And maybe the top three in the country that decline across the country that even expansions outside Nigeria now into Anglophone Africana, and even Francophone so even developing capacity [00:10:00] to be able to do operational maintenance. Developing the capacity to be able to set up an installation company that can install at the highest level of professionalism. Those are opportunities that are still untapped, in the sector.
Olu Olajide: [00:10:15] Now we are going to be hearing from Chuks, who again is the co-founder and chief operating officer of Auxano solar in 2020 Auxano Solar raised 1.5 million in seed funding, which was led by ALL-ON. And as you are going to hear, Chuks had a very unique start in the renewable energy industry.
Chuks Umezulora: [00:10:36] So my name is Chuks Umezulora. I studied Industrial Chemistry at Imo State University, here in Nigeria.You know, my venturing into entrepreneur the solar space, was mostly accidental.
[00:10:48] I will say you know, most of the people that are left school, I mean, trying to see where and finding a job and all of that. So, you know, so when I came to Lagos on did, a couple of bank interviews and wasn't getting anyone, so I decided to start looking at the informal sector. You know, so I started going out to the market or they sell mostly building materials, you know?
[00:11:10] So I started acting as site supervisors for some people that I know from the east so when they are building, I act as the site supervisor, you know, so one day I was sent to pick up a building plan from one architect, you know, somewhere in amuwo odofin so I stumbled in, I saw some Chinese talking about solar, so I was interested. So I said to him, I said, so sorry. sir, I mean, if you don't mind, can I stay, you know, for the training, he said sure no problem you know, so that was, I started, so I stayed for day one.
[00:11:36] So they say they don't have the second day. I told them, please, if you don't mind, can I come back the next day?And as they said no problem, So after the 2 days training you know, I had a deep interest, you know, so I approached him. I said, please you know, that I would like to work with him, you know, he told me that as I can see that he's just starting.
[00:11:51] I mean, that he cannot take the burden of employing people. So I told him okay, if it's just the financial burden, that I wouldn't mind working for free. Also, at least it will give me the opportunities. So he says, okay if I'm working for free, I mean, that's, you know like I can't turn that down. Of course. You know? So that was how I started, you know, so, you know, so what I did is, as I told him, okay, then I'm going to be taking Tuesdays and Thursdays off.
[00:12:19] You know, to also do some other side hustles. Because I was still supplying building the materials and all of that. So, so that I can, you know, make some money. So, but anytime we have a project, I told them, okay, let them feel free. anytime we have something serious you know, let me know I can come in every day. You know? that was, how it continued, you know, so I worked with them for two years, two years, a little above 2 years.
[00:12:42] After that time then, you know, I told them, I think that I've tried, uh, you know, giving them some value. And I've also learned, you know, that I think it's time now I'm starting on my own, you know? So he said to me okay, fine. You know, so he wished me well, so that was how I now ventured. So I was able to rent a small office in Alaba International market you know,
[00:13:03] Alaba International market, is a wholesale market where they sell solar components in Nigeria. It's somewhere in Ojo. You know, so I had that, you know, small shop, the other small television, small table, and desk, you know, so how I entered was you know because basically two years. I worked with the company as far as resources, I was working with the installation team, you know, so I know a bit about installation. And so what I did is, so when I opened that office, it was more like a consultant more like what people will call a consultant of today
[00:13:32] you know, so I met the big guys who are the importers, you know, so I told them okay, okay see, you know, so I'm an engineer, I can design, solar system,I can discuss the solar system. So if you have any requests, just call me my shop is close by you, just up there you know, so that was how we started. When you have walk-in customers come and ask for solar systems, you know, asking questions they will quickly call me,engineer come come come you know, so, I will rush down there so I explained to them, I'll do the design so they will sell the components to them.
[00:14:03] Then I will charge the client. for the installation. I mean, you know, it was something, it was something very small then I mean, 5,000, 10,000, 15,000, you know, it was a very large system. I can try that as high as 50,000 so that was how it started. But what started happening is that my reputation started growing in the market, you know, I mean, so people are calling me a bit more often.
[00:14:25] So from getting small jobs they started calling me for big jobs you know
[00:14:29] so what happened is this and it's typical in any service business like ours So many of the customers, you know, after I install for them, if they need something the next time they don't call the importer anymore, you know, so now they call. You know, so I now migrated from, okay, not just in installation. So I supply the components, you know, so even though I still buy from the semi importers in the market, so but I started also making it, you know, a little more margin on the sale of the components.
[00:14:57] So that was how it started. So as [00:15:00], I save a little money, I also started importing a few things I started with led bulbs because you know, the capital requirement wasn't so much. That was how I started any my reputation started growing I think on until it was in 20 13, 20 14 that I got, you know, the first big break, you know, I got a call from someone saying that some people are looking for someone who can install solar street lights, you know, for the assembly plants so it turned out Stallion bought over Volks wagen so they were revamping the place. So they have massive fields where they are parking the cars so they needed solar street lighting installed you know, so, you know, I went, I told him I can't do it. So I was invited for the peach so I went to the office in VI, you know, had the long chat with them and all that time, you know, so I got, I got the job.
[00:15:47] Somebody other thing was, I didn't have enough reputation to handle a project of that size. . You know, because I mean, it was huge then. I mean, a little above 50 million you know, so they needed me to give them a bank guarantee, you know, to show that I can deliver, you know, so it wasn't easy, but after a while, I was able to get that from Zenith Bank you know, so I did that job successfully and got paid.
[00:16:11] So that was basically how it started. So I think it was in there. In 2014 we formally registered Auxano Solar and then in 2016 was when we started the assembling, you know, the thought started in 2014. So the thought for assembling first came you know? So like I told you, you and I started from an informal market, Alaba international. So the first major issue I started having with the market was because they are traders, you know, so for them just to make sale.
[00:16:39] So I started having the issue of quality of the components, you know, so I started having that issue, you know, and this was beginning to affect my work. So what I started doing, I started asking okay, so how can I be sure of the quality of what I'm offering to these clients I'm servicing because mine is not just to sell and go, I mean, six months after one year after some people, even five years after they are still calling you
[00:17:04] you know, so, I mean, so it's, I find that it's better for me to just do a good job the first time and reduce the call-out time so that was how the idea started because when we started facing quality issues with batteries. I was trying to find a way to manage that. I was quality issues with inverters, I started to find ways to manage that,when I had quality issues, solar panels. I said, no, no, no, no, no.
[00:17:25] I mean, this is just going to kill the whole set up you know, so I spoke with my brother. Uche so I told him, I said, that's all I'm thinking that maybe Why not we invest into maybe testing, buying testing equipment, you know, for solar models. That was the first idea that we'll have so when I checked out the testing equipment, you know, it was slightly expensive but then very bulky. So because of the size, we just say, okay, instead of just buying testing equipment for solar models I mean, why not just maybe take it a step further, you know, and start solar panel assembling so that was basically how we started
Olu Olajide: [00:18:00] this, this is actually like a pure entrepreneurship story. And that's actually really excellent to hear it's, it's, it's actually very fascinating. Cause you had to learn a lot of different skills as you, as you scaled up. So it was that particularly challenging. And how did you go about it?
[00:18:15] I think this is going to be very interesting for people who are maybe in similar situations right now as well.
Chuks Umezulora: [00:18:20] Yeah. You know, of course, you know, entrepreneur is very challenging. You know, there is no, there's no need to I mean to sugar coat it, you know what I mean? Because most times when you're listening to inspiration people, you know talk.
[00:18:34] I mean, and sometimes it's, it is very challenging but what I tell people is this you need to enter it. I mean me just like, you know, the general that took some people to battle on the burnt bridge, you know, so he told him, he says the only way we can go back is to win this war are you getting me. So I tell them I say, if a want a win in Nigeria, you must make up your mind that it's either you win, or you die here.
[00:18:59] You know, if you have your plan B, believe you me, it's not going to work because there's going to be so many obstacles thrown at you. I mean, you could build things, something would take six months, it will take 6 years, you know, so there's going to be a lot thrown at you so but what I tell people, if, is, first of all, ask yourself, what do you have?
[00:19:19] You know, so for me, that's what I had was I had time, plenty of time. So I now started asking myself okay so what can I exchange for free time and get value in return for my time. you know, so that was how I started with the installation. I mean, because I tell people this I said you know with installation skills, with just a plier and a screwdriver, you can make money in emphasis in Nigeria, you know?
[00:19:44] Yeah. Even though I can, I will also accept that it is a bit more challenging today than it was for me. 10 years ago, to be honest, you know, because that time, we weren't many of us, you know, so I was kind of [00:20:00] highly sought after, you know, so, I mean, let me even give you a very simple scenario. You go to your point in Alaba international markets that, you know, people will get jobs.
[00:20:09] They will call me, they will say my prices is high I mean, so I find that to know some other guys who had less experience came in and they were charging one-third of what I was charging you know, so, but you know what I also did after a while I said, you know what, I'm gonna you know, you know, move up you know, so what I did is, is, so I moved out of the markets.
[00:20:29] I got another office outside the markets, you know, I said that my target market now has changed. No longer the guys in the market, You know so one thing is to understand the market two is also know who is your target market. So, I mean, today I still do installations. So but everybody's not my target markets sometimes you're speaking to me, tell me how you got this price. I tell you, okay sir, I am not sure I am your right guy
[00:20:53] you know, so if you want this, you want this talk to me. Well, if you want somebody at that price that you can find them but it's not me but you know what happens I can understand because I was also in that position some time ago. I mean, there used to be a time that I was charging five, 10,000 to do an installation. I once charged 15,000 to install a 10KVA system, I mean, you know, so but what I learned, was that after a while, the money I spent in call-outs I get to, I ended up spending all the money I charged, in call out you know, trying to resolve issues, you know? So what happened is with experience, I now learnt okay. I need to price in this. are you getting me into my pricing from day one, you know, so you're calling me, I'm already thinking, okay.
[00:21:40] I mean, that is like a two years contract going to be calling me for two years. So I'm already present that into the cost. You know, so obviously I'm going to be a bit more expensive than someone who is, who has a little experience, even because for the person who just, we can not, okay, I need cable, I need this, I need that.
[00:21:57] You know, so that's another thing. Then but the other good side is that the industry is growing industry has grown you know, there. are a lot more projects solar projects happening, bigger projects. And then the confidence in the sector has also grown you know when we came in, you know, the initial thing people say is that solar,does it work. I mean, but you hardly hear that anymore these days, you know?
[00:22:22] So, so people say, okay, I want someone who will do a good solar job for me, who will do a quality installation for me. So you see we migrated from does it work. So now they know okay it works, but you have to find people that can do quality installations and the other thing is also understand the industry.
[00:22:42] End to end for me. It's also another good thing, you know because I must say this having played in different strata of the industry has helped me in a lot a whole lot you know, so I was a technician. I was a trader, you know, I was in design. I, you know, I was an importer and now, you know, the manufacturing side of the business, you know, so that helps me.
[00:23:03] That helps me juggle the ball, you know, that helps me juggle in the ball. Sometimes, you know, this set of the market is not doing so well I just switch out to the sector, you know because like I told you, the first thing is that I made up my mind that I'm going to make money from this sector and I tell them, I say, I mean, there may be a few of us that every dime we'll have we made from this sector, you know, from the one naira to the millions and even the billions when we're making you know, of course, a whole lot depends on understanding the whole sector.
[00:23:32] Someone told me this is work for the industry. Not for a company, you know, so I always have that at the back of my mind. You know, that I'm working for the industry, not for a company. And everything I do affects the industry, it's not just about Auxano Solar.
Olu Olajide: [00:23:47] Thank you so much for listening to the episode. I had such a great time speaking with these two amazing founders of renewable energy companies in Africa.
[00:23:56] And I want to say a huge thank you as well again, to Dr. Weibe Boer from ALL-ON who made the introductions to these two amazing men that I had the pleasure of speaking with today. And also after this series ends, I'm very happy to take recommendations about any companies you feel is making a difference in this space.
[00:24:13] Or any investors who would like to get a message across to a much wider audience, much later in this series, we're going to be speaking with somebody from the shell foundation, which is also going to be a very great conversation as well. So thank you once again, look forward to seeing you next week and I hope you have a lovely day.
[00:24:29] Bye-bye.