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Startup Street: This Startup Says It Can Nearly Wipe Out Your Electricity Bill

A cheaper electricity bill, India’s private equity exit boom and NABARD’s new fund on Startup Street this week.

People walk past solar panels mounted on the roof of a building, part of a solar power microgrid, in Dharnai village, Jehanabad in Bihar (Photographer: Prashanth Vishwanathan/Bloomberg)
People walk past solar panels mounted on the roof of a building, part of a solar power microgrid, in Dharnai village, Jehanabad in Bihar (Photographer: Prashanth Vishwanathan/Bloomberg)

This week on Startup Street, a solar-tech company that wants to slash your electricity bill by almost 90 percent. A new report by Bain & Company that shows how startup exits boomed in 2018. And the government-owned NABARD increases its commitment towards startups. Here’s what went on:

The Quest For A Lower Electricity Bill

It started with two friends, a Facebook page and the desire for lower electricity bills.

Pranesh Chaudhary, chief executive officer of ZunRoof, founded the company with his IIT Kharagpur batchmate Sushant Sachan in mid 2016. Over two years and 10,000 customers later, the startup is cutting electricity bills by an average of 80-90 percent, Chaudhary told BloombergQuint. In some cases, the bill has also reduced to zero.

The solar tech startup designs custom solar roof panels for homes according to the electricity consumption and surface area available. A virtual reality-enabled app allows customers to visualise how the panels will look after installation. Once the design is approved, ZunRoof installs the solar rooftops. The app then works as a monitoring system for the solar panels.

"This not only lowers the electricity bill, but also allows owners to sell the excessive electricity generated by sending excess electricity produced from solar back to the grid," he said.

 A visitor inspects photovoltaic panels operating in a  solar park. (Photographer: Waldo Swiegers/Bloomberg) 
A visitor inspects photovoltaic panels operating in a solar park. (Photographer: Waldo Swiegers/Bloomberg) 

"For instance, if you use 1,000 units of electricity in a month and solar on your rooftop produced 950 units, so at the end of the month, you will pay for the net 50 units,” he said. “If you produced more than what you consumed, excess will be transferred to the next month."

ZunRoof's 10,000 customers, however, have come about after assessing 1.5 lakh households—which means only one out of 15 sales pitches actually turn into clients. That's because of lack of awareness among consumers, Chaudhary said. "Very often, people assume that solar rooftops don't work for ACs. However, that isn't true,” he said. “We recommend most of the AC users to install solar rooftops, which can save up to 90% of their power bills."

Another constraint could be the lumpsum investment. ZunRoof's current range for a 2kW system starts at Rs 1.5 lakh.

The challenges ZunRoof faces is reflective of the challenges faced by the industry. While Prime Minister Narendra Modi's 175 GW power capacity goal has created a conversation around the renewable energy sector, India has achieved only 10 percent of its 40 GW goal for solar roof tops, a report by the Institute for Energy Economics and Financial Analysis says. India needs faster implementation of solar rooftops to reach its ambitious renewable energy goals by 2022, it said.

ZunRoof is using marketing campaigns and social media platforms to overcome this. "Being a digital first company, we are very active on Google, Facebook, Quora, LinkedIn and YouTube," he said. It also uses videos to explains how an investment in a solar rooftop system compares with a fixed deposit or a mutual fund investment. "Estimates say 1KW of solar power is equivalent to planting 154 trees", Chaudary said.

ZunRoof has raised three rounds of funding from i3N, led by Pradeep Tharakan from ADB and Vismay Sharma from L’Oreal, Gaurav Gupta from Dalberg, Ajith Pai of Paipal Ventures and Ramakant Sharma from LivSpace. Combined funding for these rounds amounted to around $0.5 million.

Recently, the company raised $1.2 million in a pre-Series A round from Pirojsha Godrej through his family fund.

Great Year For Startup Exits

Early-stage startup investors were able to cash in on their bets in 2018 as the year turned out to be one the best on record for private equity exits.

“Exits have increased consistently in the last two years in India, with 265 exits in 2018 valued at nearly $33 billion,” according to the India Private Equity Report 2019 by Bain & Company. “Even excluding the $16 billion Flipkart sale to Walmart, it was one of the strongest years for exits in the last decade.”

Consumer tech, information technology and banking and financial services were the three biggest sectors that contributed to exit values. “Most sectors have earned reasonable returns on exits over the past five years, with consumer tech, IT/enterprise tech and BFSI reaping the highest multiples on invested capital,” the report said.

Investors attributed successful exits to strong management teams and keen buyers. Management issues and macroeconomic headwinds were cited in exits that weren’t so successful.
Bain & Company India Private Equity Report 2019

Investors surveyed in the report said that, over the next five years, revenue growth, cost and capital efficiency will be the biggest value creators for deals they exit. “Investors generally expect small to moderate changes in net returns over that period.”

NABARD Announces Rs 700-Crore Fund

The National Bank for Agriculture and Rural Development has announced a Rs 700-crore venture capital fund for investments in agriculture and rural-focused startups.

The fund has been launched by Nabventures, a subsidiary of NABARD, and has a proposed corpus of Rs 500 crore with an option to retain over-subscriptions of Rs 200 crore, an official statement said. Nabventures is now scouting for equity investments in asset-light, innovative, technology-led startups, the statement said.

NABARD has given an anchor commitment for the fund, which will be investing across startups engaged in agriculture, food and rural development space, it said.

The fund will have a high impact as it will provide a boost to investment ecosystem in the core areas of agriculture, food and improvement of rural livelihoods, NABARD chairman Harsh Kumar Bhanwala was quoted as saying in the statement.

Till date, NABARAD has contributed Rs 273 crore to 16 alternate investment funds.