Update from Electric Motos in Rwanda: Finding our Route to Scale…
Newcomers to this project should check out our previous blogs here and here, which capture our journey to realise the economic and environmental benefits of electric motorbike taxis in Rwanda.
In this blog, we talk about how we’re crossing the chasm: maximising the remainder of our time on Frontier Technology Livestreaming to make sure we’re best placed to receive follow-on support.
Vehicle testing: Driver Interviews
Our initial vehicle testing is concluded. I’m happy to say we successfully identified a vehicle style that a) meets our performance criteria and surpasses the incumbent petrol motorcycles at hill climbing, and b) drivers say they like and are willing to pay money for.
Since our last post, we continued our driver interviews, and in total have interviewed 30 drivers. Of these, all drivers except two prefer the same vehicle model: The one that most closely resembles the vehicles they are familiar with. Only two expressed a preference for a different vehicle (a smaller and presumably cheaper motorcycle, for rural areas).
We also sought to quantify how strong the driver preference was. We asked drivers to imagine that the other vehicles on offer had all the same performance attributes (speed, etc.) and running costs, and even incorporated some basic changes (e.g. longer wheelbase). We then asked what they would pay for such a vehicle. The answer was resounding: They would pay 40% less for a scooter than for an equivalent motorcycle. Some drivers said they would not buy the scooter under any circumstances.
The 30 drivers we interviewed also continued to give us good and implementable feedback for the next vehicle. For example, alloy wheels rims instead of wheels with spokes. Getting feedback directly from the user, and before investing in building any bikes, has been an invaluable process and positioned us in great stead for the next phase.
Speaking of which…
Investor interviews
The main focus of our next phase, along with some further technology R&D, centers on producing and beta testing at least 20 vehicles for several months, with real moto drivers in their normal daily routine.
We are in the process of filing a grant application to a large Foundation. This would cover our costs for this next ‘beta’ phase. One of the questions the funder asked was whether our proposed use of their funds would get us to a point where we would become ‘investable’ by the sort of commercial impact investors active in East Africa, that could provide the capital to really grow.
From previous conversations with investors, we had found that the main criteria for investors in the region before they are interested is to have paying customers and revenue. This is one thing for an app or solar lantern, where a prototype can be put together and even given to paying users for well under $100,000. It’s quite another for an electric vehicle with an advanced battery system*.
But from the investors’ perspective, what actually counted as enough paying customers and revenue?
We applied a similar approach to the customer interviews, and actually interviewed prospective investors. We pitched our plan for the beta testing. We discussed how many motorcycles we’d have on the road, and for how long. There was a lot of back and forth discussion about how many vehicles it would take to go from too small to be statistically significant, and actually have a number of motorbikes and customers that would start to be representative, and hopefully also reveal any critical kinks in our plan or our hardware.
20 motorcycles or 30 motorcycles would meet the threshold for being ‘real’.
But it turned that it was just as important to have recurring revenues (from battery swaps etc), and a clear route to sales (possibly bolstered through partnerships with ride-hailing companies and microfinance lenders), as to have a set number of bikes on the road.
Among the investors we interviewed was an experienced investor working at a fund that would be unlikely to invest in us at the end of the beta testing, whose fund would typically invest at a later stage e.g. to get us from 500 motorcycles on the road to 5000. This meant we had someone more neutral to advise us, but also someone who is looking to the future as well.
It was useful to have someone who was thinking about how much money we should aim to raise in the next round, and what the next logical milestones might be: Break even point? $1m in revenue? Five hundred motorcycles on the road?
We were also humbled by how generous the investors were with their time and feedback, and how much thought they put into their responses.
There is a key lesson here for any early stage venture looking for impact here: Stepping back and considering what it would take to get others to help you scale is vital in making sure we invest finite time and resources wisely in exactly what we need, and focus-group your prospective investors in much the same way you approach your investors. In our case 20–30 motorbikes, and recurring revenue. We’ll check back in March next year to let you know how we are getting on.
Ampersand’s work, part-funded by Frontier Technology Livestreaming, was recently featured in an Al Jazeera short video! See below:
