Guest Articles

October 15

Leslie Labruto / Sarah Bieber

Exit Strategy: How Cashing Out Can Move Us Closer to Universal Energy Access

You might think that a lack of investment is the biggest problem facing off-grid energy companies seeking to achieve SDG7. But while there is some truth to this, it’s not the industry’s only challenge. In Acumen’s new report, Lighting the Way: Roadmap to Exits in Off-Grid Energy, produced with Open Capital Advisors, we demonstrate that the shortage of exits is a big negative for the sector. It stands in the way of achieving affordable, reliable, sustainable and modern energy for all by 2030.

Over the past 12 years, Acumen has invested in 25 off-grid energy companies – but we have only exited five. This experience is typical for the sector, which has seen over $1.4 billion in debt and equity invested since 2012, with only $50 million returned to investors.

This is nowhere near enough. In more developed off-grid energy markets like East Africa, the lack of exits keeps later-stage commercial investors, who look for exits as proof points, on the sidelines. These later-stage investors are the key to providing companies with the capital they need to reach scale, expand into new markets, and ultimately serve more off-grid customers.

As Lauren Cochran, Managing Director of Blue Haven Initiative – another early-stage investor in the off-grid sector – puts it, “If we want the off-grid market to be taken seriously by investors and capital markets, we need to show that we can both deploy capital into promising business models, as well as get it back over time. We bought secondary shares when we invested in M-KOPA because of the growth and exit potential in the company but also to allow recycling of capital into newer business models.”.

In emerging off-grid energy markets like West Africa, the lack of exits prevents early-stage investors like Acumen, Blue Haven, and others from recycling their capital into new companies, inhibiting their growth. New companies need early-stage investors with a high risk tolerance to help find the right business model to reach off-grid customers in new and often difficult markets. If early-stage investors aren’t getting their capital back to invest in the next generation of pioneers, it’s ultimately going to reduce the chances of customers gaining energy access through bold new ventures willing to go where established companies are not.

As we lay out in our report, there are some potential fixes to this situation. After months of research and interviews, we found that three major factors limit exits in off-grid energy:

  1. Off-grid energy companies have yet to achieve the levels of profitability that later-stage investors require;
  2. There is limited secondary capital in the sector; and
  3. A lack of debt and a resulting overreliance on equity in the early years of the market’s evolution led to a significant number of companies being overvalued, which has stymied many mergers and acquisitions.

Despite these hurdles, some strategic investors have already placed bets. ENGIE was a first mover in 2015, making large investments in solar home system companies Fenix International ($12.6 million) and BBOXX ($20 million). The global energy corporation went on to acquire Fenix, Simpa Energy, and, most recently, Mobisol. Others global conglomerates like Shell, Total, Mitsubishi, Mitsui, Marubeni and Sumitomo have made strategic investments, as they look to grow their renewable energy presence in emerging markets.

To encourage exits — and the sustainability of the off-grid energy sector as a whole — we recommend the following:

  1. Off-grid companies and their investors must shift their focus from growth at all costs to demonstrating clear progress towards profitability.
  2. Development finance institutions need to provide liquidity to early-stage investors, recognizing that secondary investments to build more mature capital markets can be as impactful as primary investments – as long as companies continue to prioritize low-income customers.
  3. Capital providers should ensure that companies have access to the right types of capital to fund their growth as they scale and avoid being overvalued.
  4. All stakeholders must work together to increase transparency and build benchmarks around operational efficiency and unit economics.

Ultimately, successful exits demonstrate that off-grid companies can scale sustainable businesses. According to Ned Tozun, co-founder and CEO of d.light (a long-time Acumen investee and an exit example we reference in the report), “As d.light scales up, it’s important for our early investors to make a return on their capital invested. It helps us attract more commercial investors and sends a strong signal that this market is ready for them.”

Exits are a critical component in building the robust capital market needed to support continued innovation and scale in the off-grid energy sector, which offers a cheaper, faster and cleaner alternative to traditional grid power. The continued growth of the sector is crucial in solving one of the world’s biggest problems and improving the lives of millions of low-income people. That growth is only possible if early-stage investors can reliably cash out. At this point, some of the most impactful investors in off-grid energy are those using capital creatively to facilitate exits and further the longevity of the sector, enabling millions to keep the lights on.

Learn more about the crucial role exits play in expanding energy access.


Acumen is changing the way the world tackles poverty by investing in companies, leaders and ideas. We invest patient capital in businesses whose products and services are enabling the poor to transform their lives. Founded by Jacqueline Novogratz in 2001, Acumen has invested more than $124 million in 122 companies across Africa, Latin America, South Asia and the United States. We are also developing a global community of emerging leaders with the knowledge, skills and determination to create a more inclusive world.


Leslie Labruto is the Associate Director of Global Energy and Sarah Bieber is Associate Director for Strategic Partnerships at Acumen.


Main photo: PEG customers pose with their new solar panel. Photo courtesy of PEG.


Homepage photo: A Simusolar solar panel rests on the roof of a customer in Tanzania. Photo courtesy of Peter Irungu.




Energy, Investing
energy access, impact investing, off-grid energy, SDGs, sustainable business