How Solaric Was Created
Solaric is the SolarCity equivalent of Bangladesh – revolutionizing the solar energy space in this part of the world with innovations and better products. Officially launched in 2011, the company has seen meaningful growth over the past few years. In an interview with Future Startup, published in 2017, Mr. Didar Islam, Founder and Managing Director of Solaric explained his fascinating journey to entrepreneurship and how Solaric came into being.
Path to entrepreneurship
I graduated from BUET in 1992 with excellent results and eventually joined as a faculty at BUET where I stayed for a year. After teaching for one year, I decided to go to the US for higher studies. This was and is common in teaching. But which was not common is that faculties seldom resign from their position while going abroad. But I decided not to do that. The day I received an acceptance letter from the university, I decided to resign from BUET. The chairman of my department asked me not to resign but I decided to go ahead anyway. I thought it would work as a pullback for me.
Options are bad for focus. If you have several options to choose from, you would often end up not choosing either. I wanted to eliminate my options and focus. One thing at a time.
I received acceptance letters from three universities, including the University of Texas at Austin where I had a guarantee that I would get a scholarship and the University of Florida where they did not offer me a scholarship. But Florida had the right field for me regarding analog circuits and Austin one was more related to physics.
People suggested me to go to Austin as they offered me funding and then shift to Florida if I do not like it there. But I decided not to do that instead I told them that I would find a way to survive in Florida. In January 1993, I went to the University of Florida spending all my savings. The first semester was very tough. I had to manage my living as well as hefty tuition fees.
After the first semester, two of the faculties told me that they would try to manage a Teaching Assistantship for me in the next semester but nothing is guaranteed. It was the toughest time in my life, but I did not break. I worked harder to overcome my hardships. Now that I look back, I can connect and understand that those days were the foundation of my entrepreneurial journey. It is our ability to endure difficult days and strive through hardships that make us go through times of despair and chaos.
In the next semester, nothing happened. Things became even more stressful. At one point, I had seven days left to pay my tuition fees but I had no money. On top of that, I did not have any possibility of a scholarship or teaching assistant or research assistant position. It was a huge stress.
At the time, I came across an opening at a company where they were looking for people who are good at circuits. I faxed my resume for the position and eventually ended up with a job offer for a full-time position.
It was an interesting experience for me. There were more experienced people who applied for the position. In fact, I was the only applicant with no practical experience. But I was passionate about it. I wanted to explore and see what can be done in the space which they liked.
After joining, I requested to put me in R&D and fortunately, they agreed. I think they liked my enthusiasm for the work. While I loved the work, it was an extremely difficult pursuit. The job was in Orlando, almost 112 miles away from my campus. It was a full-time job and I had a full-time academic degree going on on the side. Moreover, I was new at the job. The challenges were paramount.
I started working at AIT in 1994 in a research project with an ambition to make single-chip RF for 900 MH frequency without any external components. Mobile phone technology was still in its early stages. The target market was small short-range radio activities such as automatic garage door opening from a distance among other things. It was an ambitious project which many people considered infeasible.
In 1996 – after working for two and a half years – we built our first working prototype. It was no less than a breakthrough. In fact, when we had a working prototype, many faculty members of UC Berkeley were still writing papers on this technological advancement. It was a huge success for me as well.
AIT later sold that technology to a company in California called MICREL who are selling the products to the garage door manufacturing company called Genie who manufactures and markets this product now. Almost 50% of US households now use it. That is also how I made my fortune. I was made a partner at the company after the chip development and shares that I bought at $3 per share became $120 per share when I exited in 2001.
Afterward, I moved to California where I lived for the next three years. I worked as an RF consultant at a company for one year during this period. But I was looking for opportunities to explore.
The inspiration and the beginning
In 2007, I returned to Bangladesh and started a chip design company. The idea was to design chip here in Bangladesh and produce it in Taiwan and distribute it in China. Because Taiwan is the world’s largest chip maker. At that time, around 70% of the world’s chips were made in Taiwan and most of the motherboards that we see today are made in Taiwan.
That’s how Power IC came into existence. In the first two to three years, we designed 10 chips and a lot of those were used in portable devices like mobile phones, MP3 players, cameras, wireless devices etc for Power Management.
In mid-2009, after two and a half years into the business, I came across a product called Solar Home System in Bangladesh during a meeting with BRAC. They showed me the product. It was an interesting product but quite inferior in quality. You had to charge the battery first then you get 12V from the battery which was (and is) insignificant to run the appliances.
It was a low price device and thus had few functionalities. They wanted a solution to this. I told them that we can solve the problem but I was not sure about the market potential of the product. BRAC said that if we could come up with a solution they would buy almost 1000 systems per month.
I later came to know that the market was huge for this system. The rural people needed it to watch TV, charge mobile phones, laptops, and many other household purposes, mostly in off and semi off-grid areas. We entered into an agreement with BRAC under which BRAC will buy our system when we come up with the solution.
Within the next 6 months, we came up with a solution to this problem and built the world’s first and only high voltage or utility voltage solar power system. Everyone was using 120V AC which was costly and inefficient but we used 120V DC in our system as DC is better for backup, more efficient and used fewer resources and also affordable. That was our first milestone in 2010. We have patented this technology and we are the only company to supply 120V DC solar system solutions in the world.
We changed our company name from Power IC to Solaric. We started supplying to BRAC. And eventually, we started working with Infrastructure Development Company Limited (IDCOL), the authority in this space. We came to know that IDCOL was financing all these Solar Home Systems (SHS) through the NGO network. Then we got involved with the network. Now, most of our systems go through the IDCOL network.
Over the past years, we have supplied over 150,000 home systems across Bangladesh. We are also exporting to a few countries in Africa and Asia including Myanmar, Nepal, and India.
The formal beginning of Solaric
We started our formal journey as Solaric in 2011. IFC (International Finance Corporation) was our first investor. They had a fund for small enterprises through SEAF and we were chosen for that. The initial investment was $1 million. With that money, we established our first manufacturing plant. Now our manufacturing happens both in Dhaka and also in China. We bring components from China and the US and we have also a chip designed in-house.
IFC stayed with us till the end of 2014 and exited in 2015. Before the exit, they turned their preference shares into equity. We bought their share back at 25% IRR, which was according to our agreement.
Since 2011, we never had to look back. Our revenue has been growing consistently. We have introduced a host of new products over the past few years. We have developed 220V DC, 120V DC and even 400V DC. We used the 400V DC in Myanmar as the world’s first mini-grid with 400V DC. We now have operations in Singapore, Myanmar, and Bangladesh.
We have raised another equity investment in Singapore from OSIRIS Group in 2015 when IFC took an exit. We raised $4 million for about 25% of the equity.
Our ambition is global. We have already started walking in that direction with our operations in Singapore and Africa and Asia.
We now offer three products. The first one is a solar home system that I have already mentioned. The second one is a solar Nano Grid which you can put in one place and connect up to 40 or 50 households. We are giving 20V DC solutions to these households. Nano Grid has already been up and running in 40 different places in Bangladesh for the past 3 years. We did that without any donor money. It is a fully sustainable and commercially driven entity. Now we are in the process of upgrading it even further. The third one is Mega Rooftop which we are currently working on.
If you have a huge garments industry or a manufacturing plant and a big roof then it can give you around 30-50% of the energy requirement. It is cheaper than other alternatives. There is a host of factors working in favor of it.
One is that you do not need batteries and there is no problem with storage. If your factory is running for 12/15/18 hours a day, you need all of its resources in the daytime.
Secondly, you do not need additional structures to install this system, you can use the roof as a structure. Thirdly, in the factories, energy usage is almost always at 100% because there is no lack of demand. This solution can be cheaper than many other alternatives if we can utilize it properly.
This is, to some extent, similar to what SolarCity is trying to do in the US. They too have with battery and without battery system. The only major distinction, however, is that they are doing it for households with 3 KW to 4 KW and we are doing it for the industries with 300 KW to 500 KW. We are about to roll out the first few installations in the next few months and we have already a list of factories lined up for the installation.
IDCOL is also supporting this installation with a lucrative interest rate and a ten years time period for the factories. It is designed in such a way that factories will have a lower amount of per-unit spending even after paying the monthly interests to IDCOL compared to any other alternative.
In one way the factories would not have to think about financing the installation, they would not have to depend on the national grid for power and they would have lower per-unit cost for energy. It helps all the stakeholders.
Ayrin Saleha Ria is an undergrad student currently studying Applied Sociology at ASA University Bangladesh. She takes a deep interest in human society and behavioral science and loves reading. She works at FS as a Community Management Fellow and writes about interesting companies.