From testing a prototype to scaling their innovations – A Catch up with Green heat International who recently finalised their loan payment

From testing a prototype to scaling their innovations – A Catch up with Green heat International who recently finalised their loan payment

In the midst of preparing for our deal making event in November, we caught up with Gabriel Okello Co-founder of Green Heat International who recently finalized their loan payment that was facilitated through BiD Network.

Green heat received debt financing at 6% interest rate in 2016 from an Angel Investor from the Netherlands. They used the investment to purchase refrigerators thus increasing in revenues and refining their business model. The company received a loan just after they had tested their prototype, and Gabriel describes the phase they were in at that time as a “growth phase.” Green heat provides environmentally friendly products that convert waste products into clean and reliable biofuel and fertilizer thus reducing the dependence on water resources, reliance on non-sustainable biomass, and mitigating deforestation.

The purpose of the loan was to invest in a particular  project where they would support the farmers to sterilize their milk through installation of biofuel refrigerators. Green heat realized potential to do hire purchase  of their equipment to the farmers because the farmers were not able to pay cash. This hire purchase model enabled the farmers to pay off the biogas fueled refrigerations in installments. Additionally , they also wanted to scale this model in both the eastern and western part of the country.

Lesson from regional scaling

‘Looking at it now, I realized that installing the innovations in western Uganda would have been easier than starting with the eastern region’, said Gabriel. Additionally, for the farmers they supported, they appreciated  more of the hire purchase financing since it supported their activities that kept their milk last longer overnight and helped keeping the prices stable.They cited the biggest challenge being middle men offering unfavourable terms of sales.

biogas fridge empowers farmers

FARMERS BENEFIT FROM BIOGAS FUELED REFRIGERATION – (Green heat International 2018)

Unforeseen impact

Gabriel stated that they did not foresee how much their model would impact on the farmer’s communities; for example; They enabled farmers to set up support groups and diversify their businesses into producing yoghurt, hence increasing household incomes. Since the scaling of the business, Gabriel noted that they increased the number of farmers they were working with from 30 to 90 for each the regions – western and eastern.

Experience working with Angel Investors

Taking the time to recollect his thoughts, Gabriel says that he had a good experience working with the investor. However, he quickly stated that there were some challenges in reporting their impact, an area he thinks he could have prepared for better. He further thanked BiD Network for getting hands on with support through the whole process especially considering none of the founders had a finance background.

The terms of the investment

With a hearty laugh, the kind that expresses his disbelief at his good fortune, Gabriel told us how great the terms of the loan were to him, “ We have now bought 75 refrigerators and the with an investor being so far away and trusting you to deliver on their investment – , it is a good return on investment even after paying off the loan.”

However, Gabriel pointed out how important it was to clearly have the term sheets and paper work ready if Green heat ever thought of a second round of investment.

Advice to other entrepreneurs

The entrepreneur environment in Uganda is hesitant to take on foreign loans however, plan thoroughly  for money usage because once you get the money, you are on a ticking clock and under pressure to ensure your business succeeds.

“I would recommend BiD network because it’s one thing having a business and another thing being prepared for investment especially, I emphasise if you do not have a financial background.”

About Green heat International

Green Heat International provides revolutionary energy, waste and fertilizer solutions for homes, schools, farms and commercial buildings. More information about Greenheat can be found on their website or watch this video about biogas refrigerators.