Despite his business background, Michael Bloomberg's philanthropy has been pretty traditional, albeit in an outsized way: with big cash grants to NGOs trying to solve major problems.
Now, Bloomberg Philanthropies is trying something different, making its first-ever "impact investment" to a Berlin-based company, Little Sun, which creates portable solar lamps for use in the developing world.
The Bloomberg funding comes in the form of a $5 million low-interest loan that will allow Little Sun to continue growing and providing clean and affordable energy to homes, businesses and schools in Sub-Saharan Africa.
Five million bucks is small change for Bloomberg, who's quick to add another zero or two to the checks he writes. But this investment strikes us as a big deal, potentially opening a major new chapter for one of the nation's most active large-scale philanthropists. It signals yet another step forward for the field of impact investing, which is red-hot and, clearly, getting even hotter. (See, among other developments, the new venture launched by Michele Demers, Boundless Impact Investing.)
Oh, yes, and it's also potentially a big deal for people in Sub-Saharan Africa. Little Sun Managing Director and CEO Felix Hallwachs said that seven out of 10 people in the region currently lack access to basic electricity and instead rely on toxic kerosene lamps, which, over a four-hour period, causes as much damage to human health as smoking 40 cigarettes.
Given that Bloomberg has been one of the top funders fighting smoking-related deaths, you can see why Little Sun caught his eye.
Climate change is another top Bloomberg cause, and Little Sun is engaging here, too. Kerosene has been estimated to emit up to 200 million tons of carbon dioxide per year, which is equivalent to emissions from 60 large US coal plants. And it isn’t even that cheap, costing households in Africa that are unconnected to the electric grid about 20 per cent of their household budget.
Little Sun works with local entrepreneurs to sell its lamps at affordable prices to households where electricity is scarce or unavailable. The appeal of its products is increased by their durability: The lamp batteries can run for up to three years before needing replacement, saving users up to 90 per cent of previous kerosene-derived energy costs over a three-year period.
In keeping with Michael Bloomberg’s much-vaunted business acumen and attention to detail, his namesake foundation undertook a “rigorous due-diligence process to evaluate the viability the Little Sun business model.”
Another factor counting in its favor is the fact that the Little Sun lamp is seen as an attractive piece of design, having been created by the team of artist Olafur Eliasson and engineer Frederik Ottesen.
Thanks to this pedigree, it's sold in museums and other outlets at a higher price in developed countries, and the proceeds are channeled back into low unit prices for those off-grid communities, and for further developing business.