Both entrepreneur and capital needed to bring innovation to market

Husk Power Systems (HPS), a power company in Bihar, India, has just received its second infusion of capital from Acumen Fund.  The company has already delivered electricity to over 200,000 people throughout some of the poorest areas of India and this new round of funding will help scale its operations to impact even more lives.  Despite Husk’s success to date, the company began as little more than a dream and an unproven business model in one of the world’s poorest regions.

In the state of Bihar, around 80 percent of the households are un-electrified.  Villagers rely on kerosene lanterns and diesel generators for light and power, both of which are expensive and destructive to health and the environment.  Seeing these challenges first-hand, Gyanesh Pandey co-founded HPS in 2007 with a goal of bringing light to his home state of Bihar.

Gyanesh started working on this goal by investing his personal savings to build the first biomass-fired generators which convert rice husks (a locally-available waste product) into a gas that powers a turbine to produce electricity.  Each one of these mini-power plants can serve two to four villages.  Costs are kept low by wiring the villages with bamboo poles and low-voltage insulated wiring.

Yet without a diverse set of funding sources, this innovative technology that Gyanesh and his partners created never would have developed into a successful social enterprise .  Grant funding from business competitions and foundations allowed HPS to prove it was possible to deliver electricity to remote villages with this technology.  However, there is a major funding gap between the prototype stage and the stage at which a company would be attractive to commercial capital.

As highlighted in the recent Monitor Group and Acumen Fund report, From Blueprint to Scale, this funding gap is best bridged using philanthropic capital.  Impact investors like Acumen can help transition social enterprises from proven small businesses to internationally-scalable social enterprises.  The report highlights the importance of a diverse source of funds at different stages of an enterprise’s development, with Husk Power Systems being a prime example of the necessity of grants, philanthropy, impact investments and commercial capital.

With the continued support of Acumen, along with many other foundations and investors, HPS has installed more than 80 plants, bringing power to over 300 villages in a region that the Indian government claimed was “economically impossible to reach by conventional means.”  With Husk’s continued growth, they will surely attract more commercial capital and continue to bring power to more regions in India and throughout the world.

More important than the growth of this one company, however, is the fact that Husk’s success has changed how people think about energy access and the possibilities of bringing electricity to some of the economically poorest regions on earth.  New innovators and entrepreneurs can now see the social, economic and environmental potential of bring renewable power to remote regions.  This creates new markets and new forms of empowerment, both figuratively and literally, for those at the bottom of the pyramid.