For those who are unaware, Nick Quintong is the CEO and Co-Founder of Paygo Energy. The fresh startup is prepared to take LPG distribution and usage to the next level starting with Nairobi, Kenya. We managed to spend some time with Nick to find out about more about the company and its plans for revolutionizing the LPG industry from what we know it as today.
Tell us how and why you and your co-founders ended up starting PayGo Energy:
PayGo’s founding team worked in the utilities and services industry in Kenya prior to starting PayGo Energy. In 2014, companies like M-Kopa were testing the ‘pay-as-you-go’ business model to reduce cost barriers to accessing electricity. We observed similar cost barriers for low-income customers accessing clean cooking fuel, so we thought we could we apply a similar approach. What started as a quest to improve product market fit, led to a much broader challenge, which is how do we leverage technology to help the industry unlock new markets.
What are some of your most notable experiences/achievements so far?
First off, we have made great strides in the design for manufacturing front, working closely with key industry players and regulators to ensure that we launch with a product that meets the needs of our customers and key stakeholders. Second, we have been able to demonstrate clear market validation and product market fit through our pilots in Nairobi. And lastly, we secured venture capital from Novastar Ventures, Energy Access Ventures and others, that allowed us to invest heavily in design, engineering, and software development.
What were some of the challenges and difficulties you faced in trying to get PayGo Energy started?
The first challenge is navigating a hardware development process that is fairly lengthy and capital intensive. We now have the capital and partners in place to de-risk the process, however, we know we need to get it right, so it remains a key focus area. The second challenge is developing a product and service that meets the needs of the industry as well as end-users. From an end-user perspective, PayGo makes clean, modern cooking, affordable. Consequently, the UX/UI and the service model needs to make cooking with gas easy and convenient. From an industry perspective, PayGo’s technology accelerates adoption and perhaps, more importantly, de-risks investments in cylinder fleets. PayGo has the potential to disrupt illegal refilling with a market-based approach, which is the first of its kind. Developing a complete solution that meets the needs of the industry and the market is a challenge, but we feel like we are well positioned to crack it.
Tell us about PayGo Energy and exactly how it works.
From a customer perspective, households pay a small fee to access the service, we then deliver a cylinder, smart meter, and a two burner appliance to their home. After the PayGo system is installed, customers can use M-Pesa (Mobile Payment System in Kenya) to top-up their account with as little as $0.50 USD to start cooking. If their account balance runs out, access to gas is shut off via a remote valve until they top up. In the background, our software platform is trending their gas consumption and predicts when a household is going to run out of fuel so that we can exchange their cylinder before they run out of gas.
What are the costs involved for the consumer when using PayGo?
Our pricing model is still under development. However, prices through our system can be competitive with the retail cost of gas.
PayGo Energy was recently reported to have raised US$1.43m during its latest round of equity funding. What are the plans for using this capital?
We are investing in three key areas. First, we have invested in design for manufacturing with a consortium of design, engineering and manufacturing partners that have deep domain expertise in smart metering for gas. Second, we have invested heavily in software development, which will be the backbone for the PayGo platform. Lastly, we are expanding our pilot activities in Kenya to continue to gain important insights, on the ground, from customers and stakeholders in the industry.
Are there plans for expansion to countries outside of Kenya in the near future?
The market dynamics in Kenya are not that different from countries like Uganda, Mozambique, India, and the Philippines. So there is an opportunity to expand beyond Kenya in the near future. What we look for is markets with low LPG consumption per capital and developed LPG infrastructure.
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