Question: “We have noted that Tekedia Capital has not invested in any renewable energy solar company especially in Nigeria. Can you explain why?”
Our response: We understand that energy is a big opportunity in Africa. However, the solar-based model with retail customers is not something we are open to explore at this time. This is not because of the usual challenges of manufacturing and selling hardware systems. Our real concern is that some of the major investors in these markets are actually international oil companies. (The largest investors in this sector are funds related to or connected with major oil companies, where the oil majors are not investing directly.)
We posit that these oil firms are not necessarily investing in these companies for direct financial profits, rather, they are investing to have companies they can use for carbon credit transfers. In other words, if you flare gas in the core operation, you can also zero that out, via carbon credits, from a solar-based energy provider you invested in. That model is cheaper than going to Tesla, forest reserves, etc to buy carbon credits.
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Consequently, for Tekedia Capital, it is going to be challenging to fund firms with capacity to beat that oil company-supported solar energy provider, as generating carbon credits is more important for the firm, than making direct financial gains. That is why we have avoided this sector because the competitor could be structured to be loss-making, even as it ramps up carbon credits to funnel to its major backers.
Of course, there are investors who do not care. But for us, we look at the terminal enterprise value and how this vector could affect our support system to make that investment worthwhile. Some investors do have those capabilities; we do not, and that is why we are not investing in the sector today.
As always, feel free to check what we fund here https://capital.tekedia.com/startups/ . Of course, we welcome new members as the next investment cycle will open in Oct 2024, and we have great companies coming https://capital.tekedia.com/course/fee/
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