Phil LaRocca and Christine Eibs-Singer, E+Co founders, were convinced that small and medium-sized energy enterprises held tremendous potential to simultaneously address energy power and waste. So, when this duo founded E+Co (pronounced “E and Co”) in 1994, they explained their company’s mission as empowering “local small and medium-sized energy enterprises to supply clean and affordable energy to households, businesses, and communities in developing countries through a combination of capital investment and business development support.”
The founders encouraged local solutions to energy poverty and energy waste, tailored to the needs and means of each community. They argued that grassroots entrepreneurs were the missing link between local needs and global investment so E+Co trained local entrepreneurs within developing countries who had an interest in starting clean-energy businesses. E+Co offered seed capital (ranging from $25,000 to $1,000,000) along with a range of enterprise development services. This is an early example of impact investing.
The company was technology neutral with an eye on moving people “up the ladder” of modern practices. For example, if a household used firewood, the goal would be to use that resource more efficiently (e.g., by installing a more efficient, wood-burning stove or substituting firewood with agricultural residue). The long-term goal would be to transition a household off a resource, like firewood, entirely. Eventually, homeowners could use renewable and environmentally beneficial resources, such as solar energy, to heat their homes. Entrepreneurs collaborating with E+Co would have the technologies to enable households to use these types of energy.
This model of empowering local entrepreneurs, through a focus on improving energy power and energy waste, enabled E+Co to help over 250 small but growing clean-energy businesses. In turn, E+Co was a major participant in supplying clean energy to over five million people, reducing carbon dioxide emissions by four million tons, generating thousands of jobs, and garnering millions of dollars in income and financial returns for the employees and companies of E+Co’s partners. This vast impact is particularly noteworthy as the firm’s projects are located mainly in northern and southern Africa, Central America, Brazil, Peru, Cambodia, and southern rural China – all regions of the world with limited resources for developing clean and sustainable energy.
One of their particularly important case studies involved a company in Ghana called Toyola. Black carbon, caused by cooking over open fires, is linked to the spread of toxic air over much of the developing world, and scientists recognized it as a significant contributor to climate change. In Ghana, two entrepreneurs developed an energy-efficient cook-stove business to respond to this environmental and social need; their cook stoves produce 40 percent less black carbon emissions than traditional cook stoves. Working with an initial loan of $70,000 from E+Co (and with the ongoing support of E+Co’s staff in Ghana), Toyola expanded beyond their initial market coverage in urban centers, increased sales by 500 percent after one year of operation, and has become a major success story for E+Co. The Toyola case study also illustrates how to successfully engage potential competitors as business partners.
Today, Toyola has launched a “purchase on credit” consumer option, expanded into commercial distribution, employs over 200 people, and is evaluating the implementation of a franchising infrastructure. The company responded to certain social needs (i.e., employment and health) by developing a business related to environmental sustainability; E+Co continues to partner with it through two additional loans of $100,000 and collaboration to create carbon offsets, bringing the benefits of carbon finance to local African markets.
E+Co now needs to consider how it will scale its operations to grow throughout Africa and other parts of the world, and it will feel more and more pressure to act as a good corporate citizen. How will it balance these demands as it struggles to maintain its growth?
E+Co Has Many Opportunities
The E+Co case presents some interesting ideas for understanding organizations and their relationships to their communities. E+Co is responding to a social need; however, it is doing so with a for-profit governance structure. At this point, it may want to scale up its operations to gain efficiencies and remain competitive; given its mission and operations, it is likely to increase its scale through partnerships. E+Co has forged partnerships with like-minded organizations (e.g., Greenpeace International and the Bill & Melinda Gates Foundation). But at this point, it may need to also join with more traditional organizations (e.g., franchising or partnering with larger energy companies). Some would argue that such partnering would be a bad decision because E+Co would then be dominated by the larger companies; however, its power is in its expertise and network. Thus, it may be able to create an entirely new model to serve the “bottom of the pyramid” (i.e., those that are generally not considered to have the capacity to purchase goods and services in world markets). Also, it could look to other successful organizations that share certain commonalities (e.g., Teach for America).
As E+Co develops, its social responsibility values may serve it well. For example, it may find certain opportunities and financial support because it adheres to its social values. Yet, it struggled maintaining its capital structure and in 2012 restructured as Persistent Energy Partners . Their current website states ” Persistent invests in the value chains which provide essential products and services to customers in frontier markets. Persistent is a leading investor in startup and early stage companies in the off-grid energy sector. We provide hands-on support to our partner companies. We can add financial and legal expertise, sector and regional experience as well as a wide network of relationships.”