Entre­pre­neur­ship meets phil­an­thropy to lift people out of poverty

Through Oorja, you offer services to farmers in Uttar Pradesh, India, inclu­ding the irri­ga­tion of fields with solar pumps. You are set up as a profit-making company, yet you are speci­fi­cally commit­ted to helping the poorest segments of the popu­la­tion. Did you consider start­ing a non-profit orga­ni­sa­tion instead? 

Clemen­tine Cham­bon: We were clear that we wanted to take a market-orien­ted approach. It simpli­fies scaling and it is more sustainable.

Amit Saraogi: But we were also clear that we wanted to be social entre­pre­neurs and offer afforda­ble solu­ti­ons to the market segment being left out by the corporates.

How does that mani­fest itself?

AS: We have a clear mission: our company Oorja serves low-income commu­ni­ties. Our services are aimed at people who struggle on a daily basis and who do not receive support from govern­ment program­mes or the private sector.

What is it that you achieve for these people? 

AS: Our impact is reflec­ted in social, econo­mic and envi­ron­men­tal dimensions. 

CC: We ensure that diesel pumps are repla­ced by effi­ci­ent irri­ga­tion pumps that run on solar energy, which has an impact on the envi­ron­ment. Instead of fossil fuels, they are driven by clean energy. We have found that this redu­ces diesel consump­tion among farmers
by at least 95 per cent. 

AS: We can mone­tise the CO2 savings and use the proceeds for new project deployments.

CC: Yes, we know how much diesel has been saved for every litre of water pumped and we can sell rene­wa­ble energy certi­fi­ca­tes. We also provide advice to our custo­mers. For exam­ple, we give them trai­ning on climate-smart agri­cul­ture and demons­trate the new crops they could grow year-round. 

AS: If they diver­sify to grow higher-value crops or prac­tice multi-crop­ping, they can earn more income.

CC: We are also active in regi­ons that are on the front­li­nes of climate change. Heat­wa­ves, droughts and chan­ging rain­fall patterns have a major impact on their yields. We help to main­tain and improve their crop yields.

AS: In the past, many farmers in India harve­s­ted crops three times a year. Because of climate change and unpre­dic­ta­ble rain­fall, many have stop­ped growing in the third season. With access to our year-round irri­ga­tion service and advi­sory support, they can re-estab­lish the third season, which impro­ves their earning potential.

CC: We show them how to irri­gate more precis­ely throug­hout the year, which helps them increase their crop yields by 30 to 50 per cent. So this also touches on the econo­mic dimension.

AS: In addi­tion, our services with solar energy result in direct cost savings of
at least 20 per cent compared to the use of diesel. And we stimu­late the local economy by crea­ting local jobs for the opera­tion of our solar systems. We train farmers on-site and they manage the day-to-day opera­ti­ons of our distri­bu­ted facilities.

CC: Finally, the social aspect is impli­cit. We have focu­sed on disad­van­ta­ged, low-income small­hol­ders, who basi­cally have no other way of gaining access to this type of technology. 

You help low-income commu­ni­ties switch to clean energy … 

CC: … and increase their produc­ti­vity and income in the process. One real chall­enge is the highly patri­ar­chal envi­ron­ment, which makes it diffi­cult to involve women farmers in the tran­si­tion. But we are endea­vou­ring to recruit women for our field service teams and, of course, in the wider orga­ni­sa­tion, and to speci­fi­cally target women farmers to make it easier for them to access this technology. 

For an inclu­sive society?

CC: We focus on the most disad­van­ta­ged commu­ni­ties. They become part of the solu­tion for a more sustainable future.

AS: You see sepa­ra­tion between castes and segre­ga­tion of commu­ni­ties in many villa­ges. We empower people to come out of their situa­tion of social exclu­sion and inte­grate into main­stream society. We measure these three dimen­si­ons of impact so that we know what we are actually transforming. 

How do you measure that?

AS: We conduct a base­line study which forms the basis for measu­ring the impact.
We coll­ect data every year and a sepa­rate unit at Oorja evalua­tes it and measu­res the impact. We compare the data with a compa­ri­son group of farmers who didn’t access our services. We publish the results and share them with our inves­tors, donors and partners.

You two comple­ment each other as co-foun­ders of the busi­ness. How did you meet? 

AS: In 2014, we both atten­ded a climate entre­pre­neur­ship summer school orga­nised by Climate-KIC, at the time the EU’s largest public-private part­ner­ship addres­sing climate change. 

And that’s where the colla­bo­ra­tion started?

AS: That was the begin­ning where we concep­tua­li­sed the idea. I come from the social deve­lo­p­ment sector, where I was a corpo­rate social respon­si­bi­lity consul­tant. I also foun­ded a small orga­ni­sa­tion that works to support slum dwel­lers in Mumbai. I came up with
the idea of using agri­cul­tu­ral waste
to produce energy. And that was the topic of Clementine’s PhD.

CC: I was working in the lab on a novel tech­no­logy. Through a kind of fusion of ideas, we thought: why don’t we explore the use of agri­cul­tu­ral waste to gene­rate elec­tri­city in remote villa­ges in India? But we quickly deve­lo­ped the idea further.

Meaning?

CC: We never actually imple­men­ted that approach. At the time, prices for solar tech­no­logy were falling shar­ply. That’s why we opted for this energy source instead of using agri­cul­tu­ral waste.

AS: There was a pitch at the end of Climate-KIC and our idea won. That made up our minds. We deci­ded to enter the market with it. And since I am from India, it was a natu­ral choice to start here. 

So you linked tech­no­lo­gi­cal know­ledge with know­ledge of the local social context in India? 

AS: Although I myself come from a privi­le­ged family, I was fami­liar with diffe­rent groups of people, inclu­ding the ones that expe­ri­ence abject poverty. I also had over a decade’s profes­sio­nal expe­ri­ence in India. 

What role did this know­ledge play? 

CC: It was crucial. Our goal was to solve a problem. Initi­ally, we inves­ted heavily in market rese­arch. We wanted to under­stand the problem and then find the right kind of solu­tion through a parti­ci­pa­tory process. We knew it could be tech­no­logy-based, but it’s not about pushing a speci­fic tech­no­logy. Tech­no­logy is just the enabler.

AS: For an effec­tive solu­tion to the problem of contin­ued use of fossil energy in rural areas, the ques­tion of tech­no­logy is not key. It’s more essen­tial that we have suita­ble busi­ness models that actually work for the needs of rural customers. 

CC: Our first approach was an off-grid elec­tri­fi­ca­tion project for house­holds. During imple­men­ta­tion, it became clear that this was not actually people’s main problem. For them, agri­cul­ture is key. This is where they earn their income. So we shifted our efforts to convert the infra­struc­ture for irri­ga­ting fields to clean energy. It was clear that the high invest­ment costs for the tech­no­logy were the reason that farmers couldn’t afford access to solar energy. 

And this is where your approach came in?

CC: We saw that we had to solve the problem of invest­ment requi­red for the acqui­si­tion of the tech­no­logy. If you install a solar pump, it can cover the needs of seve­ral people, with very low opera­ting costs and much grea­ter relia­bi­lity than a diesel pump. That’s why we opted for a service-based solu­tion, because it remo­ves the upfront cost barrier. Instead, you only pay the costs of using a service based on consumption. 

So that was the start? 

CC: I think it was only when we star­ted imple­men­ting the projects that we reali­sed what the real chal­lenges were. Initi­ally, of course, the finan­cing. Espe­ci­ally when it came to getting the first projects off the ground. We applied to social entre­pre­neur­ship funding sources, incu­ba­tors and acce­le­ra­tors in the United States and Europe. 

AS: Our very first finan­cing was a very small amount of 5,000 US dollars from Climate-KIC which we used for market rese­arch to deve­lop the idea. Then the US orga­ni­sa­tion Echo­ing Green also gave us a grant of 90,000 US dollars, which enab­led us to pilot the first project.

What kind of orga­ni­sa­tion is that? 

AS: It is a non-profit foun­da­tion funded through phil­an­thropy in the US which supports social entre­pre­neurs with inno­va­tive ideas worldwide. 

How has your finan­cing mix changed? 

AS: In the begin­ning, we mainly recei­ved phil­an­thro­pic grants for a few years.

CC: After about three years, we had vali­da­ted our model and gene­ra­ted enough user trac­tion to receive larger grants. We recei­ved close to 300,000 US dollars from the DOEN Foun­da­tion in the Nether­lands, which enab­led us to install demons­tra­tion units that served about 2,000 users. 

AS: We were able to show that our model works, which allo­wed us to attract insti­tu­tio­nal capital. 

CC: Schnei­der Elec­tric Energy Access Asia is our first insti­tu­tio­nal inves­tor. They’re a kind of special fund that focu­ses on energy access. It was a real cata­lyst. Having the first equity inves­tor on board opened other doors. We used this finan­cing for two years to scale up further. We recently closed a second round of financing.

Are there any funders from Switz­er­land involved? 

CC: Yes, Schnei­der put us in touch with the elea Foun­da­tion in Zurich. What distin­gu­is­hes elea in terms of its invest­ment thesis is its prac­ti­cal approach. They contri­bute as board members, but also are actively invol­ved in helping the company grow, almost like consul­tants at times. They have tried to under­stand our company and find out what we can do better. And they have invi­ted us to meetings where we met other entre­pre­neurs they support, which provi­ded an oppor­tu­nity to exch­ange ideas. This sense of commu­nity is very enriching.

AS: They serve as a sound­ing board for diffe­rent ideas and support us with stra­te­gic decis­i­ons around adding some­thing new to our port­fo­lio, expan­ding geogra­phi­cally or even working on team buil­ding. We also have on board Artha Impact, Part­ners Group Impact and 1to4 Foun­da­tion as equity inves­tors from Switz­er­land. The Swiss Re Foun­da­tion has exten­ded a sizeable grant to grow our farmer advi­sory verti­cal to help farmers adapt and become more resi­li­ent to climate change. 

Is it chal­len­ging having all these diffe­rent sources of funds?

CC: Yes. Some funds are clearly earmarked for a speci­fic project, such as the funding we recently recei­ved from the Swiss Re Foun­da­tion. This applies to the accoun­ting side. But on the legal side, too, we some­ti­mes have to look at the status of diffe­rent grants, depen­ding on the source, and how the money gets to India. 

AS: Then there are outco­mes-based funds, which are only released once we have reached certain mile­sto­nes. We also have conver­ti­ble grants, where the donor reser­ves the right to convert the grant into a loan or even equity. Each of the funders has their own finan­cial and impact report­ing requirements. 

What are the next steps in your expansion? 

CC: At the moment, we have around 150 projects deployed in total, giving us a base of around 30,000 users. The aim is for the current round of finan­cing to enable around 500 projects. 

AS: In the next year and a half. 

CC: This will bring us to the criti­cal number of projects. 

AS: Then we will break even. 

Your impact model has chan­ged since the begin­ning. What does this mean for your motivation? 

CC: In the begin­ning, it was a desire to do some­thing about climate change. Through the work, I have seen how social justice and energy justice are closely linked to climate change. For me, the moti­va­tion today is to give access to tech­no­logy to people who have been excluded. That is why we remain commit­ted to commu­nity-based climate solutions. 

AS: For me, it was the other way around in a way. I grew up in India and saw so much multi­di­men­sio­nal poverty. I had people who came to my home and worked for my family, but they were trea­ted differ­ently than I was. They had no access to good schools, to basic health­care, to clean drin­king water and confron­ted other discri­mi­na­ti­ons. Back then, the climate was not yet a big issue for me. But over the years, it has become clear how the issues are rela­ted. You can’t isolate one and solve another. The grea­test victims of climate change are actually the people with the lowest inco­mes; even though they are the least respon­si­ble for it, they are the most vulnerable. What really drives me today is a better under­stan­ding of how the diffe­rent intrac­ta­ble chal­lenges are inter­wo­ven and we need a systems change approach to address them.