Raising Capital for Solar: Lessons From Silicon Valley

Q: What sets Bright apart from other solar energy companies in terms of its approach to technology and its business model?

A: We have an ambitious mission: to reverse global warming. When we started with such a big mission, we first had to figure out what we could do to solve real problems across the globe and how to achieve this goal quickly.

We focused on establishing partnerships in any country we entered. Mexico has great solar potential and it already has a great ecosystem of solar installers and distributors but the sector is missing links in finance and software. Our goal is to streamline operations through software and to give partners access to low-cost capital to finance installations that clients cannot pay upfront. 

We offer a fintech layer on top of the existing ecosystem to help it scale, reduce friction, reduce cost and bring in low-cost capital providers. Today, we partner with over 50 installers across Mexico in all major geographies. We bring in capital from the Inter-American Development Bank and, now, also from the International Fund for Developing Countries (IFU). In doing so, we aim to really help the ecosystem to scale up, first in Mexico and then in surrounding countries in Latin America and, hopefully, Asia, someday.

Q: Why is Mexico so important for Bright? 

A: Mexico is where we thought we could have the fastest and largest impact to then build the foundation to scale to other countries. It has a population of around 130 million people and more sun than the Middle East and Africa, with an aging infrastructure and a high electricity rate. We saw a real opportunity here to develop quickly and move to similar countries even if they have less sun or lower energy rates. It is really exciting to think about helping to unlock that natural resource for wealth creation and prosperity as we work to reverse global warming.

Q: How will technology enhance the industry in Mexico?

A: Mexico is facing a couple of challenges. One major issue is the surge in electricity costs, which is impacting Mexico's standing as a manufacturing powerhouse. Given that the country is a significant producer of goods, particularly for the US, rising electricity rates reduce its competitiveness in the global market and pose a significant threat to the economy. Other challenges include power outages caused by aging infrastructure and congestion on transmission lines. A solution is needed to improve power distribution, which aligns with our priorities toward change. However, there are positive opportunities as well. By harnessing solar energy and reducing electricity rates, Mexico could enhance its manufacturing competitiveness at the global level. 

Q: How do you navigate the regulatory environment in Mexico?

A: Over the past two years, raising funds to scale our project proved to be quite challenging due to regulatory uncertainties. However, we were fortunate to find a remarkable partner in IFU: a growth equity investor that comprehends the risks associated with the DG sector. IFU recognizes that these operations are gaining popularity with both the government and consumers, as well as businesses, given their ability to lower electricity costs and operate on-site without relying on extensive transmission lines.

Raising capital in the midst of regulatory uncertainty in the DG sector was challenging. Despite numerous interested investors, many preferred to wait for more clarity before committing. However, we surpassed our target and successfully raised over US$30 million, overcoming this significant obstacle for now. Furthermore, we are navigating through difficult economic times, with many businesses facing struggles in meeting their financial obligations. High interest rates and expensive capital are adding to the burden, affecting businesses across Mexico.

We are entering a new era and it is evident that the government acknowledges the advantages of our initiatives, while being committed to achieving environmental targets. We are enthusiastic about the prospect of working closely with the government to solidify policies that bring about certainty, paving the way for increased investments in Mexico. Our goal is to scale up this sector not only for our own benefit but also for the benefit of all our partners and customers.

Q: What advice would you give to potential clients wanting to migrate to solar energy?

A: Many businesses are unaware of the tax benefits associated with adopting solar energy, leading them to explore other avenues to offset tax liabilities. However, these benefits are readily available today. Solar energy is highly favored by employees and customers alike, providing cost savings for businesses. The key question to answer is when will they start reaping these benefits and which provider to choose. Given the urgency of addressing global warming, it makes sense to act swiftly rather than delaying the transition to solar energy.

Q: Are there any specific emerging opportunities or trends that Bright is capitalizing on to further its growth in the Mexican solar energy market?

A: We are helping installers to access more technology, enabling them to find more customers and expand their businesses. Our roots lie in the heart of Silicon Valley and we are fortunate to have some of the best investors from the region, including those who founded companies like OpenAI, Tesla and Sunrun. With our strong network of investors, we have the advantage of seeing around corners, gaining insights into what is happening and what is to come in this ever-changing AI landscape. We leverage this knowledge and expertise to provide our installers with valuable tools and resources.

We have developed customized landing pages for our top ambassadors, equipped with their logo, our logo and a user-friendly platform for customers to create proposals and explore their benefits. Our quick access to AI developments allows us to empower our partners with a competitive edge in terms of timing and innovation. As the technology and finance partner for the ecosystem, we strive to create synergies that drive growth and success for all stakeholders involved.

Q: How do you think AI is changing the solar energy landscape?

A: A big challenge is the fact that people already have access to electricity, making them less inclined to urgently seek a better energy solution. To overcome this, we are committed to simplifying the transition to solar power so there is no reason for individuals to delay the switch. 

Leveraging artificial intelligence, we can harness our vast knowledge and present it to customers at the very moment they contemplate adopting solar energy. This significantly streamlines the decision-making process and reduces the time required for our partners. Moreover, it enhances the customer experience, as they can access all the necessary information on our website without the need for scheduling an appointment to solve questions.

From both an education and sales perspective, AI is immensely beneficial. Similarly, in the realm of customer service, AI empowers our agents with a comprehensive knowledge base, enabling them to efficiently address customer issues and provide prompt solutions. 

One of the most exciting aspects of AI is its role in mentorship. As we hire talented graduates, we take it upon ourselves to mentor and coach them on startups and scaling. The high-growth startup ecosystem in Mexico is still relatively young and local knowledge on effective scaling is limited. AI accelerates the mentoring process, allowing us to provide answers, tips and insights from our extensive knowledge base and access to experienced managers. It is like having an automated buddy at Bright, always ready to provide answers, ideas and troubleshooting assistance.

Q: How does Bright foster collaboration and knowledge exchange between Silicon Valley and its Mexican team? 

A: We were fortunate to be Y Combinator's first investment in Mexico, alongside Platzi. At the time, Silicon Valley showed limited interest in Latin America, or Mexico, specifically. However, over the past decade, we have witnessed a significant shift in this regard. We take pride in contributing to the ecosystem by providing capital and supporting businesses with the potential to scale up in Mexico.

We anticipate more innovations in the finance sector in the future. Our goal is to bring Y Combinator and seed capital into Mexico and Latin America, supporting future leaders and spreading best practices in entrepreneurship throughout the region. Many of our employees have gone on to start their own businesses, which reflects our commitment to nurturing entrepreneurial talent.

The investment landscape in Mexico has evolved positively. Previously, local investors offered lower valuations and longer timelines to raise funds. Now, valuations are more favorable and it is easier to secure financing in the country. This trend is likely to continue, attracting even more interest from capital providers. However, the fintech sector faces a significant challenge in the coming years due to high interest rates. Collaboration will be essential as we navigate this aspect of the ecosystem. In the US, many fintech companies are facing bankruptcy because of high interest rates and we must work together to prevent a similar situation in Mexico. By addressing these challenges, we can foster a thriving and sustainable fintech environment in the country.

Bright offers accessible and sustainable solutions through an innovative subscription-based model to make solar energy accessible for all.