|1||Opportunity to invest in $25B energy market in sub-Saharan Africa|
|2||Invest in a first mover in the off-grid solar market in D.R. Congo with the goal of bringing electricity to 1 million families by 2026|
|3||Completed over 300 solar installations for customers in D.R. Congo up to mid-2019, 13% month-over-month growth since mid-2017|
|4||More than 1500 people have access to electricity from NovoMoto's installed systems|
|5||More than $20,000 savings provided to our customers|
|6||Additional $18k raised in Reg D|
Life Changing, Affordable & Clean Electricity for Off-Grid Customers in Africa
NovoMoto is a for-profit social enterprise that provides clean electricity for off-grid communities in sub-Saharan Africa.
The company was started out of Madison, WI, where founders Mehrdad and Aaron met and completed their PhDs in Engineering. NovoMoto started serving customers in the Democratic Republic of Congo, where one of the founders, Aaron, was born.
Aaron was born in a small clinic in a city called Kikwit. There was no electricity in the clinic. All his mom had in the room was a dim kerosene lamp. That was over 30 years ago, and now across Congo, the situation is worse. To the point where the greater Madison area, with only 0.7 million people, has more power than all of Congo and its population of 80 million.
This means that over 90% of the population lacks access to reliable electricity. 73 million people.
The average Congolese family spends nearly about $18 per month on electricity alternatives like dim and potentially dangerous kerosene lamps, candles and flashlights. These options only provide a few hours of light per night and force families to leave their phones to charge for hours at kiosks powered by diesel generators.
We enable a brighter life for our customers with reliable and affordable electricity. Our customers get brighter and longer lasting lighting for themselves and their children along with the ability to charge their phones at their convenience. All this for less than the cost of inferior solutions.
We do this by installing complete solar power packages with a rent-to-own approach. The packages range from kits with three LED lamps and phone charging to kits with TVs and more.
We make our solutions affordable by allowing our screened customers to pay us in increments over at most 18 months. Customers pay us through their phone and receive text messages with codes to keep their systems activated.
As customers pay off their packages, they become eligible for upgrades that allow them to power more of the appliances they need at their home or small business.
NovoMoto offers rent-to-own solar-powered systems. NovoMoto's systems consist of a battery pack connected to a solar panel and energy-efficient appliances. This battery pack both powers the appliances and enables mobile phone charging. The packages offered and their payment plans are described below:
Market & Opportunity
Across sub-Saharan Africa, there are an estimated 120 million families without access to reliable electricity. They spend over $25 billion annually ($18/home per month) on grid alternatives for lighting and phone charging. Congo has the third largest off grid population on the continent with about 15 million families who currently spend over $3 billion each year on lighting and phone charging.
NovoMoto has become one of the first movers in the country with our operations in the western part of the country. In the 5 western-most provinces, there are over 3.5 million homes who spend over $740 million annually on lighting and phone charging. We already have customers, just outside of the capital, in more than 10 communities where there are at least 700,000 potential customers.
We are the only company offering rent-to-own packages in this part of the country and one of only 3 using the pay-as-you-go approach in the entire country.
To get this far we have raised $500,000 in grants, debt and equity from our great investors. Their support has allowed us to go from just 20 pilot customers in 2017, to nearly 180 by the end of last year, and to over 300 so far in 2019.
We want to serve 5,000 customers by the end of 2020. We need $1.5 million to take this step. Meeting our 2020 milestone would put us in a great position to reach profitability by the end of 2021 with over 25,000 projected customers.
After building a significant presence across Congo, we want to change lives by bringing reliable electricity to over 1 million people across sub-Saharan Africa by 2026. In doing so, NovoMoto would become a target for acquisition or merger by the large energy firms like Engie (who recently acquired two companies in our industry in Africa) that have already invested over $840M in the off-grid energy industry.
We are a strong team of passionate founders, employees, advisors, and investors. With you we will have everything we need to achieve our mission.
While finishing graduate school, Mehrdad and Aaron, validated the NovoMoto business model and turned an idea into a revenue-generating company with a strong team of managers, sales ambassadors, and technicians in Congo.
Mehrdad Arjmand (Co-Founder/CEO, Ph.D.)
Mehrdad completed his Ph.D. in Engineering Mechanics at the Materials Research Science and Engineering Center at the University of Wisconsin-Madison. Mehrdad worked in the oil and gas industry before starting his Ph.D. Mehrdad is passionate to work in the renewable energy sector and enjoys serving customers in emerging markets with huge potentials and opportunities.
Aaron Olson (Co-Founder/CEO, Ph.D.)
Aaron completed his Ph.D. in Engineering Mechanics at the Fusion Technology Institute at the University of Wisconsin-Madison. Aaron is a NASA Space Technology Research Fellow and a Graduate Engineering Research Scholars Fellow. Aaron is originally from Kikwit, DRC and co-founded NovoMoto to help solve the extreme lack of electricity in his home country.
Most of NovoMoto's customers are gaining access to electricity in their homes for the first time! They immediately benefit from a far superior lighting experience. Those that are switching from using kerosene lamps are saving their families from inhaling toxic fumes.
As part of NovoMoto's new marketing strategy, 25 clinics share information about NovoMoto's systems to their patients and community in exchange for a lighting and phone charging system that will help them better serve patients.
Retailers of kerosene, candles, and disposable battery flashlights are NovoMoto’s largest competitor in DRC. There are local companies that retail solar power equipment in DRC, but these companies charge high upfront costs that are unsuitable for most off-grid families. One other Pay-As-You-Go (PAYG) company is active in the western part of DRC. Their solutions are more expensive and are offered on a perpetual lease, thus making them even more expensive than the rent-to-own NovoMoto solutions. A comparison of lighting & phone charging solutions in NovoMoto’s target market is below:
Impact Energies was acquired by Persistent Energy Partners in Q1 2014 for an undisclosed amount while it had 5000 customers. Fenix International was acquired by Engie, a French utility, in Q4 2017 for an undisclosed amount (estimated to be ~$100M) while it had 140,000 customers. The industry attracted over $840 million in strategic investment by the end of 2018. The table below shows some investments into PAYG firms in other African markets:
Financing and Milestones
NovoMoto has financial statements ending December 31 2019. Our cash in hand is $31,431, as of December 2019. Over the three months prior, revenues averaged $1,000/month, cost of goods sold has averaged $8,000/month, and operational expenses have averaged $15,000/month.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
NovoMoto sells high-quality solar systems for off-grid homes and small businesses in Sub-Saharan Africa. The systems transform customers' lives! Customers use our systems to improve how their children study, boost their business activities & save money. NovoMoto's systems are made affordable with payment plans. They are secured with technology that enables customers to use electricity only when they are up to date with their payments. All NovoMoto systems include customer service & a warranty.
Our goal is to bring reliable electricity to 1 million customers across multiple markets in Sub-Saharan Africa. To date, we have done over 300 installations. Our goal for 2020 is to do 5000 total installations.
Novomoto LLC was organized in the State of Wisconsin in November 2015.
Since then, we have:
Historical Results of Operations
Liquidity & Capital Resources
To-date, the company has been financed with $120,000 in debt and $230,000 in convertibles.
After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 3 months before we need to raise further capital.
We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.
We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. We plan to raise capital in 6 months. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.
Runway & Short/Mid Term Expenses
Novomoto LLC cash in hand is $21,743, as of the end of 2019. Over the last three months, accrual revenues have averaged $10,000/month, cost of goods sold has averaged $6,000/month, and operational expenses have averaged $15,000/month, for an average burn rate of $22,000 per month. Our intent is to be profitable (operationally break-even) in 12 months. If need be, we are able to pause short-term operations to limit our burn rate. Additionally, we have several lead investors that have committed to investing as soon as this Offering is live.
In 2019, we made two big changes:
1- We decided to diversify our offerings by providing TV systems in addition to our lighting and phone charging systems. This was due to the many requests we received from our customers. We are going to start selling TV systems by the end of December.
2- We have hired a core team of two managers in mid-2019. A sales manager and a customer service manager. After training them for a few months, we have decided to expand our team. Now, we have a team of three lead ambassadors and two technicians that are working with the sales and customer service managers. We are hiring 15 new sales ambassadors to ramp up our sales by the end of December 2019.
Based on our projections, we hope our revenue grows substantially in the next 6 months while our expenses will grow at a much lower rate. No, we do not have any other sources of capital and hence we need to raise funding from our campaign or through other methods that we are exploring (Angel investors, Business plan competitions, Grants, etc.).
Slow traction is one of our biggest risks which will cause us to burn our cash on operations instead of growth. To mitigate that risk, we need to raise enough money to be able to grow as fast as possible.
Lack of adaptivity to the market is another big risk. To mitigate this risk, we are doing ongoing surveys in different segments of the market to observe any changes in the consumption of our user as early as possible.
Having a lean team is another challenge. So far, we have been able to put a small team together and now are working with them and are using their network to bring new talent to the team.
Technology competitive advantage is another risk in our industry. We are leveraging the first mover advantage in our market and at the same time are working on some ideas to modify the product from a technology standpoint to be the best fit for this market and have an advantage against all the other products in the market.
Running a company in a country and fundraising in other countries is another risk to our operations. To address this risk, we are training managers who are capable to run the operations seamlessly at all the times.
Our operations are capital intensive and hence we will need multiple rounds of investment which could be viewed as a risk. However, as soon as we get to multiple thousands of installations, we can use the incoming cash flow to leverage the use of debt financing to reduce our need for equity raise as much as possible.
Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.
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