SUMMARY
When the founder of Aerem started out, he realised that there were two major issues that MSMEs in real Bharat were grappling with in their quest to go green — a lack of credit support from banks and reliability on solar means
The startup offers collateral-free loans between INR 5 Lakh and 1 Cr for a tenure of 36-72 months to MSMEs
Aerem recently raised $5 Mn (INR 41 Cr) in a Pre-Series A funding round led by climatetech investor Avaana Capital and follow-on participation from Blume Ventures
Despite being one of the largest contributors to the country’s GDP, India’s micro, small and medium enterprises are bogged down in issues ranging from energy crisis and cost of power to unavailability of financing options.
Not only this, even though MSMEs account for about 48% of the total energy consumed by the country’s industrial sector, the players of the space have failed to take any major advantage of the Sun-rich country.
Understanding the gravity of the situation and the opportunity that many Indian MSMEs, otherwise fail to comprehend, Anand Jain founded Aerem in 2020. The startup aims to give the nation’s more than 635 Lakh MSMEs 360-degree assistance in the adoption of solar energy.
Jain, who holds an MA in Economics from the Delhi School of Economics and an MBA degree from Yale, has a long professional history of 15 years in the solar industry. He has also worked with some of the prominent names in the solar and financial service industries such as Lehman Brothers, SunEdison, and KPMG, among others.
When he saw solartech emerging as one of the promising industries in India, he realised that solar rooftop adoption for MSMEs was not seeing an uptick. Subsequently, he decided to delve deeper into the issue and do something about it. This is how Aerem was born, he said.
“What we are building is a full-stack solution and an end-to-end ecosystem for rooftop solar, with a special focus on MSMEs. We are a solartech platform that provides a set of tools and services for installers. We handhold them and support them in the installation efforts. And then we provide financing for the solar. We have an NBFC exclusively for solar rooftop loans,” Jain told Inc42.
Boulders Eclipsing Solar Adoption In Bharat-Based MSMEs
When Jain started out, he realised that there were two major issues that MSMEs in real Bharat were grappling with in their quest to go green — a lack of credit support from banks and reliability on solar means.
To solve the financing issue, which is largely due to inadequate working capital, insufficient bureau score, and documentation, Aerem started offering collateral-free loans between INR 5 Lakh and 1 Cr for a tenure of 36-72 months to MSMEs. Apart from providing capital to MSMEs through its own NBFC, Aerem provides capital through its partner bank, Bank of Baroda.
To fix the second major hurdle, Jain focussed on providing quality solar plants to MSMEs through its tech platform registered under Aerem Asset Insurance.
The MSMEs that Aerem is working with largely come from Tier 2 and 3 cities – places where the real Bharat is. Although the startup has its presence across North, South and West India, it has yet to expand its operations to East India.
Currently, Aerem is earning money through its interest charged by offering loans on solar systems. Going forward, it is also planning to monetise its tech platform.
“We have so far helped many Bharat-based MSMEs slash their electricity bills by 40-60%, Jain claimed, adding that an MSME saves INR 4-5 per unit on average, depending on the usage.
Aerem’s Customer Acquisition Strategy
According to Jain, the company’s customer acquisition strategy is simple — it focuses on MSMEs in real Bharat.
“We reach them via traditional methods that typically work in Bharat. So, to reach them, we engage ourselves in a lot of offline marketing activities and have field sales teams,” Jain said.
Along with on-ground sales teams, the startup acquires customers through its website and customer referrals.
For MSMEs and industrial units, they do know that solar is a cheaper alternative, but they are often at a crossroads in terms of what to choose and whom they trust. Jain said that, with Aerem behind the scenes, he is trying to remove this trust deficit from the market.
Looking At A Greener Future
Aerem recently raised $5 Mn (INR 41 Cr) in a Pre-Series A funding round led by climatetech investor Avaana Capital. The round also saw follow-on participation from Blume Ventures and it includes debt financing of $1.5 Mn from financial institutions.
The startup has raised $7.5 Mn since its inception.
The startup wants to focus on growing its current asset under management (AUM) and loan book, although Jain resisted spilling the beans on current numbers.
“We will also invest substantially in our marketing efforts in the next few months. You will see more visibility from us,” Jain said.
The startup is also expecting to break even on the NBFC side of the business this year and set up a loan management system.
“We aim to solarise every roof in Bharat. We want to help create a cleaner tomorrow. Our vision is to create a triple-bottom-line impact — environmental, social, and financial. While India gets 300 days of sun, the time has come to fully harness the power of the Sun,” he concluded.
The Current State of Solar Affairs
Renewable energy capacity additions have been on a steady rise in India. The country added 2.5 gigawatts (GW) of solar open access in 2022, up 92% compared to the 1.3 GW installed in the calendar year 2021, according to a report by Mercom India. As of December 2022, the total installed solar open-access capacity was over 7.7 GW.
In contrast, India added 1.6 GW of rooftop solar capacity in 2022, down 4% YoY from 1.7 GW installed in 2021.
On April 1, 2022, the Indian government imposed a basic customs duty of 40% and 25% on the import of solar panels and solar cells. According to industry experts, this surge in cost may have impacted the overall adoption sentiment.
Experts believe a conducive and standardised regulation is needed in the area to foster India’s net zero emissions goals by 2070.
