Why We Invested: d.light

Image courtesy of d.light

When Ned Tozun and Sam Goldman founded d.light in 2006, their ambitious goal was to reach 100 million lives by 2020, providing families without access to reliable electricity with high-quality, affordable, and innovative solar-powered consumer products. They have now reached 65 million people across 62 countries (equivalent to the entire population of France or South Africa) and expect to reach the original 100 million goal by the end of next year — three years ahead of schedule.

The recently announced $22.5 million in equity financing will help fuel their continued growth and expansion. Omidyar Network has supported d.light since 2010 and invested in this recent round of funding to back the company’s expansion of pay-go solutions that broaden the reach of small solar home systems to millions of households via flexible financing payments.

Many others have joined the effort to reach the 1.4 billion people who live off-grid without any electricity and the additional 1 billion people who don’t have access to reliable electricity. This includes public-to-private partnerships in Pakistan and Tanzania, innovative venture companies like Off Grid Electric, M-KOPA, BBOXX, Greenlight Planet, Simpa Networks, and larger organizations including Facebook, Google, or SolarCity. Actors like the World Bank, the IFC, OPIC, and USAID have helped support the growth of the sector through thought leadership, risk capital, and distribution partnerships.

The work of these and other diverse players gives us good cause to hope that the massive global issue of access to power is on a path toward progress — if not resolution — over the next few decades. These complementary approaches are well aligned with Omidyar Network’s flexible capital model, which is rooted in the belief that impact investments as well as traditional grants drive global impact at scale. And it gives us a great case study on the crucial role that impact investing can play in leveraging market forces to drive innovation, impact at scale, and ultimately systems change. Systems change is defined as aiming to “bring about lasting change by altering the underlying structure and supporting mechanism which make the system operate in a particular way. These can include policies, routines, relationships, resources, power structures, and values” (Ellen Harries, Rachel Wharton, Rob Abercrombie, 2015).

Utilizing the full suite of impact investing tools — from equity and debt to grants and other catalytic non-financial support — has been essential to helping d.light create systems change. Grant capital has allowed the company to innovate with product development and enter new geographies. Equity capital has fueled the growth of the organization and its global expansion. Debt funding has financed working capital needs and consumer credit for pay-go solutions. Non-financial support, such as export/import assistance, has facilitated distribution in countries with significant power access needs; human capital support has supported the growth of d.light’s talent. d.light has inspired replication of its products and solutions; has spurred changes in behaviors in governments, multilateral organizations, distributors/agents, and end-consumers; and can be credited for catalyzing a movement around off-grid solar power access.

Among impact investing circles, the question of whether an impact-first or financial-return-first approach is appropriate is often debated. We believe this debate misses the fundamental point, as the way our firm approaches impact investing is, at its core, about creating sector-level change — addressing major social issues with a critical sense of urgency and efficiency that market-driven solutions often help spark. The primary question is not whether d.light can deliver direct impact or financial returns, but rather how, and how quickly and efficiently, global energy access can be resolved through innovative approaches from d.light and others.

And, as d.light’s track record underscores, market-based solutions are a powerful force in getting millions of people access to reliable power sources.