SunFi: managed solar marketplace in Nigeria

Biography

Rotimi Thomas is the co-founder of SunFi, a Nigerian startup helping solar providers offer payment plans to their customers. In 2023, SunFi raised a $2M+ seed round.  Today, SunFi manages over 1500 distributed solar systems in Nigeria, representing an energy capacity of 4MW.

Prior to SunFi, Rotimi worked at Siemens, managing electrification projects in the US, Europe, and Africa. He holds an MBA from Duke University. 

How did your work at Siemens lead to you founding SunFi?

Back in 2009, I read a book called Natural Capitalism, which advocates for a greater recognition of earth’s natural resources in our economic system. What I took away from it was the need to scale up renewable sources of energy, especially in Africa where we had an abundance of renewable energy potential but low energy access. 

One way to summarize my work at Siemens is energy finance. My work consisted in bringing renewable and conventional energy access to electrical grids in North America, Europe, and Africa, and finding ways to finance those projects. 

I’m Nigerian and wanted to be part of a movement electrifying Nigeria. Through Siemens, I got to work on a large project the company had with the Nigerian government, aimed at powering up Nigeria’s deficient grid. That project is still underway today. 

I learned a ton, notably on the operational, financial, business, and systems side of the industry. We also encountered the limits of centralized, large-scale electrification projects. One friction point was the need for a sovereign guarantee. To raise funds for the project, the Nigerian government had to guarantee its creditors that it would prioritize the repayment of their debt over other obligations. This implies changing the direction of the country’s balance sheet, a Herculean bureaucratic lift. Nigeria had a precedent for a similar operation (the Azura power plant), but it’s a daunting task every time. 

My co-founders and I concluded that while centralized solutions were the most effective, they weren’t the quickest to market for Nigeria. Decentralized solutions, such as the petrol and diesel generators Nigerians use to compensate for the deficient grid, were here to stay. We wanted to transform those dirty decentralized solutions into renewable ones, hence our interest in spreading solar. 

So you initially launch your own solar installation company (Aspire). What led to the pivot into SunFi?

By launching Aspire, we wanted to confirm that solar was the best renewable, decentralized energy solution available. We handled the hardware and the installation of the panels. We were active in various parts of Nigeria. 

We eventually figured that while the demand for solar was clear, most customers couldn’t bear the upfront costs. They needed credit. One could argue the availability of customer credit is what powered the growth of the American car industry. Following that same logic, we reasoned that the only way to scale up Nigerian solar was giving consumers credit to buy panels.

The problem was that local financial institutions weren’t ready to underwrite that credit. Solar was still new and financiers didn’t want to dabble in it. We started providing payment plans (ie: payment in installments) using our own bank account, gauging non-performing loans (NPLs) and gradually improving our underwriting process. 

The only way to scale this was to build a retail solar credit ecosystem, capable of safely underwriting solar payment plans en masse. Safe underwriting, in turn, depended on controlling the quality and the installation of the assets we underwrote. Indeed, faulty solar solutions would translate to customers unwilling to pay us back, resulting in ballooning defaults.

These reflections coalesced into what SunFi is today.

How is SunFi’s current product segmented?

We buy solar solutions from installers, sell them to end clients and enable them to pay in installments. The installer who we purchased from takes care of the installation, but we oversee their relationship with the client. If a client has an issue, we’re their single point of contact. We redirect relevant demands to installers ourselves. 

Clients have the choice between two payment plans. One is a “lease-to-own” plan, where they own the solar panels at the end of their repayment period. The other is “solar-as-a-service” where the client “leases” solar panels for a monthly fee. 

What’s important to note here is that we’re not lending anyone money. We don’t send money to customers. We sell them a real-world asset, oversee its quality and installation, and enable them to pay in installments. We’re a textbook example of a managed marketplace.

The other side of our product is that we act as solar installers’ digital back-office. Through our platform, installers can keep track of the different clients they’re serving, manage the different products they offer,  access various business analytics…

SunFi’s product, installer side

What are your client demographics today?