GreenSpark- Road to success

Problem being addressed: GreenSpark addresses the most critical issue constraining rural development in Bangladesh energy. To that end, GreenSpark is taking a home-grown-patented technology to the poorest rural Bangladeshis for the first time at a price that is within their reach and requires no largescale infrastructural investments by either party.

Mission Statement: GreenSpark works to alleviate poverty in Bangladesh through rural development and synchronizing economic efficiency with environment and human friendly technology by generating electricity from Bryophyllum plants. At every step, GreenSpark empowers women, creates jobs and profits, while meeting serious social and economic needs.

Value Proposition: GreenSpark brings 24/7electricity to a 486 million dollar rural market in Bangladesh at 1.875 USD/month with a portable battery. The process, using Bryophyllum plant, emits zero CO2, empowers rural women and produces methane & fertilizer as by-products.

Description of the product: GreenSpark offers improved electricity generation technology through portable D.light battery in households (at USD 1.875/month), supporting a bulb, a fan, and a cell phone charger 24/7. D.light battery will be connected to a switch box which will in turn be wired to a fan/bulb. User interface is simple: buttons/switches. Our service for rural households includes free installation, maintenance, refilling and repair. The battery generates DC electricity from Bryophyllum plants juice a process that produces ZERO CARBON (Co2) EMISSION and results in two valuable by-products: Methane gas and a high quality fertilizer. Bryophyllum leaves contain 78% acidic hydrogen-ions which help to produce electricity. Bryophyllum plants can be grown through vegetative propagation. The plants take 45 days to mature and can grow up to 6 feet tall with 8-inch leaves.

When the leaves are crushed, they take a thick liquid form. Inside the battery, when the juice is merged into parallel Bronze, Zinc and Copper plates (with appropriate wiring), it generates continuous electricity. Please see the attached Document B for details.

Historical data: Our pilot phase (on 56 families) in Sylhet, has shown that the average income of households in a village with electricity is 27% higher than in households without electricity. Moreover, the average income of non-agri based households increased by 33%.

Management Team (what are the qualifications that will make the company successful?): The CTO is a PhD in Physics (Renewable Energy) and Chairman of Physics Department at Jagannath University. After extensive R&D, he invented Bryophyllum electricity and patronized government support for it. The Chief Advisor, a Harvard MPA, is CEO of mPower Social Enterprises. He has experience in technology roll-out and women empowerment in developing countries. Chief Strategy Adviser, a MIT graduate, has founded Bangladeshs first WaterHealth Center. She has great experience in development work. Another Strategy Adviser, co-founder of ClickrBD, teaches Strategic Management at a university. The CFO is a brilliant and experienced Financial Analyst. The CMO has 4 years of experience with donors in rolling out projects for underprivileged communities. The COO is doing MBA in Strategic Management. His expertise is in production planning and supply chain. Our accountant is a CA, Sales & Logistics Manager is a marketing major. Both have commendable experience and great accomplishments in respective fields. The CEO is a successful young entrepreneur. His passion for social entrepreneurship, vast network and leadership skills will drive the team forward.

Goals, Strategy & Financials: In the first 5 years, GreenSpark intends to serve 30,945families (136,158 people) in 68 villages with a low-cost and convenient green technology. A price of 1.875USD/month, no set-up cost, free refueling and maintenance will ensure fast and deep penetration into the market. Appointed rural women will distribute our products. By leveraging their geographic reach, social capital, and understanding of the market, GreenSpark will spread word-of-mouth and develop close customer relationships to optimize operational execution and satisfy clients. By creating strategic alliances with NGOs, local administration and opinion leaders, we will organize buzz-creating public events like puppet shows and Jatra (folk dramas) which will entertain, educate and persuade potential clients. Marketing and promotions will be PR based, through buzz-creating events. We will also use personal selling. We will use a low-cost infrastructure to transport products from our central factory in Moulovibazar, Sylhet, Bangladesh to our network of rural women. To smoothly roll-out our technology, we will educate our clients about benefits of GreenSpark and help them adapt quickly by partnering with an NGO. Energy sector in Bangladesh is highly regulated; therefore our lobbyists will be in close contact with government and consistently communicate how we contribute to reducing carbon emissions and comply with regulations by government and UNFCCC. We will strike a 5 year deal with a local NGO, where they will sell bulbs and fans at a subsidized rate to our target market. Access to electricity in rural areas will open up a huge market for electronic devices in the long run (as we expand capacity of D.light battery). To reap its benefits; we intend to enter this market in the 6th year and start selling electronic devices. After 8 years, when geographic density of our customers intensifies, we will introduce 10KW Rural Power Plants which will reduce our per unit operational cost. The initial start-up capital is USD 149,512, with 80% equity financing. Capital budgeting analysis of our business shows that we have a positive Net Present Value (NPV) of USD 204,900 by discounting the future cash flows by a weighted-average-cost-of-capital of 17.21%. A high Internal Rate of Return (IRR) of 36.09% portrays the profitability of our business. We get back our initial investment within 3.062 years of operation. Although Return on Equity (ROE) is negative in the first year, it is an impressive 86% at the end of 2nd and 37% at the end of 5th year, both are well above cost of capital.

Market, problems, trends & opportunities: A typical tenant in Sylhet, Abdul Ali, said he would immediately buy a fan if electricity reaches his village because he is old and sick and cannot bear the heat during summer. Abduls 13 -yearold son, Asif, works with him in afternoons. Asif said if he could study after dusk, he could rejoin his village school (if electricity reached his village). Amena, a homemaker, said when it gets dark it is hard to see the food she is cooking - cannot determine if it is done. These stories have inspired us to take electricity to them. 58% of total and 80% of rural population (95.2 million people) in Bangladesh have no access to electricity (WB). The suffering is severe among the rural people with 10% of them having access to on-grid electricity. Of the 42% Bangladeshis who are served on-grid. Average earning per capita of these rural Bangladeshis is USD 30 per month, they are hard-core poor people. In fact, they are some of poorest people you can find in the world. Taking electricity to them is a challenge. GreenSparks potential clients are poor-rural-people without electricity. It is 58% population of Bangladesh (95.2 million people), they earn on average 30 USD per month, have an average family size of 4-5 people, They typically use the hazardous kerosene or diesel for lighting, most importantly, they want a better life and they deserve it: all they need is a spark of life! That is what GreenSpark is trying to bring. We have an opportunity to tap into a market worth USD 486.82 million, consisting of 95.2 million poor Bangladeshis in 21.64 million families with aspirations for a better life. After a prudent consideration of alternative sources of electricity, geo-demographics and our resource constraints, we estimate that 5% of the 21.64 million families (1.082 million families) need our services the most; they are our target market. Due to lack of purchasing power and being in a geographically disadvantageous position, these people are less likely to get any access to electricity by the year 2020. Therefore, in 5 years, we plan to reach out to 30,945 families, 2.9% of target market, 136,158 people, in 68 villages, in order to make a real difference to lives of hard-core poor people of Sylhet region of Bangladesh. In the first year, we plan to serve 13,176 families (57,945 people, in 29 villages). In 2nd, 3rd and 4th years our clients will grow at a rate of 25% per annum. For the next 3 years, it will grow at a rate of 18% per annum. For the next 4 years, our clients will grow at a rate of 10% per annum. From then onwards, estimated long-term growth rate is 5% per annum. Our clients prefer to make cash payments and to make things easier for them and us, we will collect the subscription fees every 3 months (when we refill the D.light battery with Bryophyllum juice).

Motivations & buying decisions (convenience, status and savings of time or money): GreenSpark is reaching out to poor people in remote rural areas that have no access to electricity, while keeping in mind the affordability of the technology to the target market. The average monthly rural household income in Bangladesh is BDT 2400 (USD 30) and they spend, on average, 9% of the income (USD 2.7) on kerosene alone. Oue servcie is available at USD 1.875 per month. Unlike other renewable energy alternatives like solar PV, wind, and hydro-power, electricity from portable D.light batteries is available continuously without interruption, and without being dependent on weather patterns and climate conditions. GreenSpark offers technical maintenance, quarterly refilling and servicing as part of its monthly package. The D.light batteries require no maintenance by consumers, so the complexity or inability to understand how the electrification system works is not a barrier to adopting this technology. The main perceived benefit is the shift from traditional to modern lighting systems and the benefits that follow and new world of opportunities it is opening up. Surveys from our feasibility study in Sylhet, Bangladesh have shown that rural households perceive benefits such as less expensive and expanded use of lighting, radio, and fan; time savings for household chores; continued activities after dusk and improved returns on education and wage income after using D.light batteries by GreenSpark. Typically from kerosene lamps to superior quality electric lighting, D.light batteries facilitate income generation, provide better light and are more versatile. Our pilot phase in Sylhet, Bangladesh has shown that the average income of households in a village with electricity is 27% higher than in villages without electricity. Moreover, the average income of non-agri-based households increased by 33% with the introduction of electricity. Electric lighting also provides approximately 100 times more light than a kerosene lamp without the resulting indoor air pollution, soot and noxious odors; contributing to the general better health and well-being of individuals in a household. In our buzz-creating public events like puppet shows and Jatra (folk dramas) we will entertain, educate and persuade potential clients about these benefits and importance of green technology to save the world. The market we are targeting has a profound need and strong motivation to use electricity in order to improve their lives. However, their affordability is a big setback for them to access so called luxury. GreenSpark is changing all that, we are making electricity, previously a luxury, available at an unbelievably affordable price through a convenient user interface and a supportive customer service.

Positioning Strategy: We will position our products as affordable and efficient way of improving life. Our marketing program will focus on the benefits customers will gain from our service and differentiate it from the alternatives in terms of affordability, customer service, ease of use, consistency and efficiency. Our basic marketing strategy is to spread and manage word of mouth or create a buzz.

Marketing Program: Technology education and information dissemination are the key objectives of our marketing program. We will try to make people understand the benefits of the service, what they can do with it and how will that improve their lives. Also, how to use the service, how we are always be there to help and how they can easily access the service and get a product demonstration at their own home. So, in order to build awareness, we will use posters and radio advertisements.

Public relations: Opinion Leaders: We will pick out some popular and/or influential personalities in each village for example, Mowlanas (religious leaders) in mosques, teachers, senior citizens, rich & wise people, and persuade them that our services are great. We will give away free service for 3 months to all opinion leaders who we promote our brand. Then they will influence others. Their endorsement and recommendations will be valuable for us. Strategic Alliance: BRAC, the largest NGO in the world, is working on public health projects in rural areas of Bangladesh. GreenSpark can make alliance with them through working to achieve mutually beneficial goals. We will use their resources to communicate with people that using firewood causes deforestation and harms them in the long run. Also, demonstrate the dangerous health hazards caused by and inefficiency of diesel and kerosene. Through this campaign, we will stimulate the demand for our service. GreenSpark will serve the purpose of lighting without harming environment and health. Mosques: We will present our service to Mowlanas (religious leader) and give away some free products. We will request them to share the idea about our service if they like it and ask people to try it. Also, they will help us create health and environmental awareness about our products. Buzz Creating Events: We will use some buzz creating events in the introduction phase of our business. We will organize public events like puppet shows and Jatra (folk dramas) which will

entertain, educate and persuade potential clients about our services and start a great customer relationship. Awareness Building: We will visit the schools and drive awareness building campaigns emphasizing environment and health awareness and how GreenSpark helps to solve such problems. We will also promote the service to kids and show how their lives will improve, how they can get more time to play as they can study under lights at night (which they can't do currently). These kids will push their parents to subscribe to our services. Sales Promotion: During launch, we will hold small booths or information centers in the Bazaars (village center) and create some buzz through using 5 of our D.light batteries to light up the whole place at night. This will create traffic and then our promoters will give product demonstration. Sales Strategy: Distribution Channel: Collection of raw materials: We will train and support rural women to grow Bryophyllum plants in our farms surrounding their village land areas. These hired rural women will be closely monitored and facilitated to ensure consistent and sufficient supply of the crucial raw materials. Then the raw materials will be collected from the farms and taken to the factory to be converted into liquid juice. Distributing the products: We will hire a different set of women (5 per village) to distribute our products to the houses of our clients and a technician per village to set-up the D.light battery. We will partner up with a local NGO which will keep a decent level of inventory for us and our own distributors will use that as a center point in a village. We will train the technicians on how to wire and set up switch boxes and connect them to the converter box. They will go and set up the converter boxes in households and shops. Female distributors will also refill the Bryophyllum juice periodically (every 3 months), collect the subscription fees and act as customer relationship managers, building stronger bonds with our clients.

Method: We will select opinion leaders who can influence others and spread word of mouth. Moreover, women are more trustworthy in villages. They will be very useful for personal selling. We will also use door to door selling with customized product demonstration.

Serving the sellers: We will have a sales team to 5 women per village in 5 villages for the first year. They will be located in their own villages to serve the fellow villagers who will be their customers. Training: The sales force (distributors) will be trained on product knowledge, selling techniques and customer relationship management. We will also launch peer-training programs where one woman trains the other new member. Selling Aids: Sales teams will have one product to demonstrate with them all the time.

Demonstration model: Women will go door to door, and show product demonstration and use personal selling techniques to sell the products.

Incentive: Distributors will receive a fixed salary plus and 200 BDT of commission on each product sold (or for bring each new customer). Each village team of 5 women will have specific sales targets based on the size of their village.

Finances: Capital Expenditure: The initial start-up capital for GreenSpark will be USD 149,512. 80% (USD 119,609) of the investment will be provided by equity financing and 20% will be debt financing, a loan from BRAC Bank Ltd. as a 10 year loan at 17% interest. Finance plan: Sales revenue for the first year is USD 289,242, it shows a steady growth over the years. In 2nd, 3rd and 4th years our sales will grow at a rate of 25% per annum. For the next 3 years, it will grow at a rate of 18% per annum. For the next 4 years, our clients will grow at a rate of 10% per annum. From then onwards, estimated long-term revenue growth rate is 5% per annum. Though in the first year we experience a negative net income due to huge capital expenditure, we become profitable from the very second year, and remain profitable in the forthcoming years. Please refer to the attached Income Statement for details (All calculations done in BDT, Exchange Rate: USD 1 = BDT 82). The financial mode used in the calculations is the free cash flow to firm under the Discounted Cash Flow (DCF) technique. Capital Budgeting Analysis of our business shows that we have a positive Net Present Value (NPV) of USD 204,900 by discounting the future cash flows by a

weighted average cost of capital of 17.21%. A high Internal Rate of Return (IRR) of 36.09% portrays the profitability of our business. We get back our initial investment within 3.062 years of operation. Sensitivity analysis shows that Return on Equity (ROE) is well above cost of capital. Even though ROE is negative in the first year due to huge capital outlay, it is an impressive 86% at the end of 2nd year and 37% at the end of 5th year, both of which are well above cost of capital. Sensitivity Analysis also states that ROE is very closely related to total asset turnover and changes in total asset turnover have the most impact on the variability of ROE. The financial information and statements have been estimated based on both data from different sources and application of subjective judgment by the CFO of GreenSpark who is a CFA Level II candidate and reviewed by a CA. Investment pay-back, exit strategy and schedule of return: Sensitivity analysis shows that Return on Equity (ROE) is well above cost of capital. Even though ROE is negative in the first year due to huge capital outlay, it is an impressive 86% at the end of 2nd year and 37% at the end of 5th year, both of which are well above cost of capital. Capital Budgeting Analysis of our business shows that we have a positive Net Present Value (NPV) of USD 204,900 by discounting the future cash flows by a weighted average cost of capital of 17.21%. A high Internal Rate of Return (IRR) of 36.09% portrays the profitability of our business. We get back our initial investment within 3.062 years of operation.

Manufacturing and operations: Total operations of the business are divided into three segments namely- Leaf Cultivation Unit, D.light battery Manufacturing Unit, and Refueling and Maintenance Unit. The main revenue model is based subscription from the clients in return the client will be provided a D.light battery and life-long maintenance services. The business process is entirely integrated at initial stage; however, it is subject to evolve over time. The operation starts with leaf cultivation in our own procured land of .5 hectare (5,000 sqm). Initially the leaf will be cultivated in horizontal landscape afterwards when manufacturing of D.light battery increases, the cultivation will be grown at two levels through vertical cultivation process (Bryophyllum plants require very little land area to grow). In the first year, production will be 120 tons of Bryophyllum leaves. The yearly production of cultivation will be increased by 25% in the firthe years, by 18% for the next 3 three years, by 10% in the next 4 years and by 5% from then onwards. The capacity will be increased accordingly, using just in time basis.

Availability of land is not a problem. The internal client of The Cultivation Unit is D.light battery Manufacturing Unit. The manufacturing unit will extract juice from the collected leafs and put them in the specially constructed containers which will be distributed to the rural women (distributors and sales representatives) by vans every three months. These containers will be stored by them and used to refill the butteries whenever clients will need them. That juice, once poured in the battery, will generate electricity. Subscription fee will be collected by the female distributors every three months in order to minimize the collection and operational costs.