How can mergers and acquisitions help renewable energy startups achieve 10x growth?
Installing solar panels

From Bboxx to Starsight and Daystar, renewable energy startups in Africa are taking names and cashing cheques—literally.

On the 6th of September, Bboxx announced its acquisition of PEG Africa, expanding its operations to Senegal, Ivory Coast, Mali and Ghana. In the same month, Starsight Energy merged with South Africa's Solar Africa to attain its new Pan-African status. Last but certainly not least, Shell acquired Daystar, also in September. There was definitely something in the September air the rest of us missed.


Key takeaways:

  1. Startups need to grow fast, and African renewable energy startups are no exception.

  2. However, their operations are capital intensive, meaning renewable energy startups need access to larger funding volumes to grow as fast as other startups.

  3. Mergers and acquisitions allow renewable energy startups to grow exponentially across markets while providing exits for founders and investors.

But, renewable energy startups, like other startups in other sub-sectors, need to grow fast—the definition of a startup is a fast-growing company. 

For startups like Kuda Bank or Bamboo, fast growth could mean increasing the company’s customer base by 10x from 3,000 to 3 million in 3 years; it’s slightly different for renewable energy startups. Kuda or Bamboo can grow without significant additional cost because the cost of an additional person using Kuda or Bamboo’s services is marginal. Rather, Bamboo and Kuda will spend more on marketing to drive growth.

With renewable energy startups, fast growth requires an increase in generation capacity. It means installing more solar-generation plants, home systems and appliances to serve customers. Like other startups, it means foregoing profitability for growth in the short term while clearing a path for profitability in the future. But, building or installing solar infrastructure comes at a high capital cost.

So, how can renewable energy companies raise enough funding to grow fast? The first place to look is the path most startups travel—debt and equity financing.

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Noelle Okwedy

Noelle Okwedy

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