Connected Things Business Models: Fenix International

Jen van der MeerBusiness Model Practice, Hardware

Solar Home Systems

Fenix International Inc. designs and manufactures and distributes solar panels, energy storage, and appliances. 

Founded

Founded in San Francisco 2009 by Michael Lin and Brian Warchawsky to improve energy and telecommunications access for off-grid consumers. 

Funding

Fenix International raised money on Kickstarter through crowdfunding and an additional $16 MM in venture capital before being acquired by France-based Engie International in 2018. 

 

Sustainable Development Goals

Fenix International’s parent company Engie International’s corporate plan includes multiple Sustainable Development Goals (SDGs) for 2030: 1, 3, 4, 5, 6, 7, 9, 12, 13, 14, 15, 16. Fenix is contributing to Engie’s #7 goal, though the company had only transitioned to 5% of their total energy to renewable sources like solar as of 2020. 

Mission

Engie’s mission is to lead the zero-carbon transition. 

 

Where on the Resiliency Scale?

This series explores the variety of ways established companies and incumbents adapt digital business models for hardware, and how these are contributing to all of us understand the impact of these machines.  

Fenix International is an example of a social impact company that learned from other failures in off-grid energy projects to design a company with the customer at the center. 

Let’s take a look at the offering from Fenix International. 

 

Business Model Moves

Solve a Customer Problem 

While developing countries have seen massive investment in telecommunications infrastructure over the past decade, energy infrastructure has lagged. As more and more customers were able to access 3G or greater signals, customers often did not have access to a power outlet. The discrepancy led to a fragmented industry of car batteries and diesel generators, and other dirty, destructive sources. 

Founders Lin and Warchawsky realized they could solve a major systemic challenge: giving energy access to the soon to be millions of new mobile phone users who did not have access to grid electricity. The founders had learned about this issue when working on an off-grid energy  startup for the ambitious but ultimately failed One Laptop Per Child (OLPC) project. Where OLPC failed as a tech-first approach, Fenix International started with a customer need and then designed  a ruggedized device with smart power management features to extend a battery’s longevity.  

 

Design the Channel for Accelerated Adoption

When the company first launched their product in 2011, $150 ReadySet was prohibitively expensive in a country like Uganda where per capita GDP was only $1,300. 

Fenix solved this by partnering with mobile carriers first with MTN and then others by and promoting a “business in a box” program at stores in Uganda. 

These kits are bought by small mom-and-pop entrepreneurs assisted by micro-finance loans, who are able to provide cell phone charging for 25 cents. Grameen Bank partnered early on in the rollout of the micro-finance offering. 

Fenix International, therefore, solved the last mile distribution challenge to serve rural markets in Uganda, Zambia, Ivory Coast, Nigeria, Benin, and Mozambique.

Business Model Aligned to Value Proposition and Continuous Service

Fenix International provides a pay-as-you-go business model, combined with micro-financing, and made available to channel partners and to end customers. Pay-as-you-go is different from a pay-per-use model: customers make a deposit, take home their kit, and repay their loan over 12 to 30 months via mobile money payments of as little as $0.14 per day. Once a customer has repaid, they have free power for the life of the system, as well as access to other products and loans.

Customers without credit histories can establish repayment history, strengthen their credit scores, and then expand their system via either power upgrades for clean cookstoves or radios, or financial upgrades like school fee payments and health insurance.

The business model is not without complaints. Fenix International is able to lockout or shut down the device if customers stop paying back their loans. For those dependent on electricity for their livelihood, a disruption in payment will affect their income streams as well. For now, the experiment to provide credit to lower-income households is risk customers are willing to take, as Fenix has reached over 600,000 customers.

 

 

IoT Embedded, Not a Core Feature

Fenix International is an example of a company that was focused on customer needs, first. IoT data from solar kits are only one source including customer demographics an d regional information, and customer’s own repayment patterns. The company uses analytics and predictive modeling to intervene when a customer is falling behind on a van and works with them throughout their repayment process. 

 

Data Rights Transparency 

While Fenix International and Engie have clear privacy policies for their websites, Fenix does not provide readily accessible information for how data is used inside of their machines. Given the fact that the lockout function occurs through an IoT function and that usage of this data affects the customer’s creditworthiness, Fenix needs to increase transparency for how it uses this data to provision or shut down access to products and services. 

 

Evaluating Fenix International’s Efforts:

Fenix International is a social impact startup, meaning the company has focused its efforts on serving an unmet social need and prioritizing decisions to deliver that outcome. They have reached 600,000 customers in aggregate, and continue to grow non linearly as they expand throughout additional countries in Africa. The business decision to sell the company to Engie helped Fenix scale faster, and its customer base increased 6x since being acquired.

The founders learned from their experience observing the tech-push approach of One Laptop Per Child and centered their initial insight, product, and service design on fulfilling an unmet customer need with massive growth potential.  Multiple non-profit, public-private partnerships, and foundation investments in off-grid energy have attempted to “turn on” electricity in rural regions of Africa, and the projects were often long on promise and short on results. As regions in Africa focus on reprioritizing services to focus on COVID19 recover and response, Fenix International is positioned to continue their growth trajectory as part of the overall Engie energy transition.

 

Read more about Pay-as-You-Go

Learn the challenges and opportunities of building a pay-as-you-go business model

Read more about Hardware-as-a-Service

Learn the challenges and opportunities of building a hardware-as-a-service business model.