Notes by Narsi
In the last few months, I have been having discussions with assorted friends and business acquaintances on the opportunities existing in the intersection of fintech and climate tech. Of specific interest to me were fintech firms that enable lenders to discover good firms to lend to in the small to mid ticket regions, something that the traditional lenders were ill equipped to discover on their own.
I was wondering if there could be a climate tech play for a similar concept.
And then I heard about this firm Aerem which had recently raised about $2.5 million which actually has taken the lending discovery to really small ticket loans - for small rooftop solar projects. As the report (see link) says, "The company offers a digital platform that allows clients to get access to loans from Aerem’s in-house non-bank financial companies and partner banks."
Financing is critical for effective decarbonization and climate action. Distributed solar plays an important (though, in my opinion, not a decisive) role in India's decarbonization and the capital cost of rooftop solar and its financing challenges certainly are a bottleneck for expansion (though, again in my opinion, not perhaps a show stopper).
All these considered, Aerem seems to have started on the right idea at the right time (and the founders' backgrounds - investment banking - also suggests with the right people).
There will surely be challenges - small ticket sizes, maintenance and service requirements for rooftop solar, ability to find EPCs who can provide reliable service at a local level are some of them - but this is an idea that I like and will hence keep an eye on.