The renewable energy sector may be booming, but the high cost of materials and hardware generally pushes the business beyond the reach of many entrepreneurs. The one thing all installations need, however, is batteries. For some brave businesspeople, this has been enough to take on the world of imports and develop local alternatives.
One company using the fact that ‘local is lekker ‘to its advantage is IG3N, which realised that being a local producer of LiFePO4 (Lithium Iron Phosphate) batteries provided a marketing advantage. Large buyers of imported batteries run the risk of finding that at least a portion of the stock is faulty. There is then no comeback, and the importer must live with the financial loss.
“On the other hand, having a local source means that there is technical backup when required, and company specialists can visit customer premises to fix problems,” says co-founder Tumi Mphahlele. This ‘can-do’ approach has undoubtedly led to the company’s rapid growth, from when just three founders, Tumi, Sydney Phakathi, Jaques Buys and a technician, were involved to a company that now employs more than 40 people.
Now, in customised premises at the Deco Park industrial park in Johannesburg, the company is looking to its next technical challenge: producing high-voltage batteries for the industrial sector.
But, as Maphahlele quickly points out, reaching this stage hasn’t been easy. Although she had a technical background as an industrial chemist and experience in the renewable energy field, including a stint trying to enter the solar market, it was not enough for the partners to raise the capital needed.
“People at institutions found it difficult to understand the business and were reluctant to support the company,” she recalls, pointing out that during 2019, the founders had already spent months sorting out the logistics and building the supply chains needed to launch the company from its starting blocks and were already operating.
“We were looking for money to fund our development, and even though we were in a high-growth industry, we were being judged for not having been in business for long.
“Things got even worse when the COVID-19 pandemic hit in 2020. At this point, when things were desperate, Standard Bank rescued us. We were given a soft loan of R 1 million and a grant. We were able to pick up and move ahead. “
“The bank saw that we needed the money to gain traction and had space to grow. We had several interactions with the Standard Bank team, who helped us guide the business and investment process. We were able to keep operating and develop our product line.”
“By November 2020, the first private equity firm was knocking at our door, wanting to invest. The Standard Bank’s support for IG3N and their confidence in us was enough to create a comfort factor for other investors to look at us seriously, ” says Mphahlele.
Following this outside investment, a second investor entered the picture, and the company now has two equity partners. The banking relationship with Standard Bank is still in place, and although over 80% of the initial loan has been repaid, other banking solutions are now in place.
“Since we received the initial loan from Standard Bank, our revenue had increased 10-fold in our last financial year. We are confident that this is just the beginning, and more rapid growth is ahead.”
“We have moved facilities twice to keep up with our growth. We are beginning to look like a large business and have expanded our product base into building high-voltage batteries. We are also refining our supply chains to improve capacity and inventory levels and building customer relationships.”
“Along the way, IG3N is helping young people achieve their dreams. Most of the company’s employees are under 30, making their work dreams come true and receiving on-the-job training that will hold them in good stead for the future,” says Mphahlele.