I recently had a call with Manoj Sinha, co-founder and CEO of Husk Power Systems. I've known him for several years via my work with Miller Center for Global Impact, and it was great to catch up.
Manoj grew up in India, went to IIT, then came to the US for a Master's in engineering and an MBA. While working in the NYC corporate world, he and some friends created a startup on the side to solve a big problem back in India: many people in rural villages didn't have access to electricity. These villagers were forced to burn wood and kerosene — bad for the planet, bad for their health, and the kids couldn't read or study at night. The UN estimates this affects 1.3 billion people worldwide, and that access to electricity is highly correlated with life expectancy, literacy, and per capita GDP.
Husk Power Systems was founded with Manoj in an engineering role and his co-founder as CEO. They developed a carefully-engineered system that produced electricity in rural villages using waste rice husks, powering a mini grid that brought power to each house. They raised money in grants from philanthropic foundations and government subsidies, and went on to build 80 biomass-powered mini grids in rural India, with a goal of eventually serving 1,000 villages. (You can read more in this excellent Harvard Business School case study.)
But here's where the story really gets interesting.
Eventually they ran out of money, the economics of the model weren't working, biomass power didn't seem to be the right solution, and the co-founder quit.
In the startup world, this is known as a "WFIO moment" — as in "We're F****d, It's Over." It's that horrible, terrifying moment that nearly every entrepreneur goes through when they are certain their company is dead. Every great startup must have one, and for Manoj and Husk Power Systems, this was theirs.
Manoj took over as CEO and decided he had two choices: shut it down, or do a complete pivot. He was living in Pittsburgh at the time and had to convince his wife he needed to move to India for a few months to really understand the situation on the ground with their 80 installations.
What he found was not good. In India, 30% of all electricity produced was stolen — it was common for people to illegally tap into lines. Many villagers used the Husk Power hookup but never paid the bill. Bill collectors employed by Husk often made side deals with customers and pocketed the money. The biomass plants required more maintenance than expected and only produced power about six hours a day. Meanwhile, the cost of photovoltaic cells had dropped dramatically, making biomass energy far less attractive than it once seemed. And the government of India had proven to be an unreliable partner — promised subsidies were subject to bureaucratic roadblocks and uncertain disbursements.
Given all of this, Manoj made the decision to shut down 75 of the 80 installations and fly home to design a completely new approach.
The new model had to address every lesson from the first attempt: fix the economic leakage, switch from biomass to solar, and add a second geography to reduce dependence on Indian politics and broaden the total addressable market.
There was something else going through Manoj's mind. He wanted to move away from philanthropic grant funding entirely and toward conventional venture capital and private equity.
"Grants helped us to make mistakes and not get obliterated… but free money also brings indiscipline." — Manoj Sinha, co-founder & CEO, Husk Power Systems
So Manoj and his team engineered a whole new approach. The new mini grids would run primarily on solar with biomass as backup. The cables would be shielded to make electricity theft more difficult. Each house would have a mobile-phone-enabled meter — making it easy for villagers to pay, and easy for Husk to automatically cut power to anyone who didn't.
Armed with this, Manoj went out to raise conventional capital. "The problem," he told me, "was that at this point we really didn't have anything more than learnings. We had shut down almost all our existing operations and were pitching investors on something completely new." So with nothing but learnings, he went out and pitched.
In October 2023, Husk Power Systems raised $100 million from traditional sources of capital. They now have over 200 power installations across India and West Africa, serving more than 50,000 households. Their unit economics are strong, they're growing fast, and Bloomberg says they're headed for an IPO.
All of this despite the fact that the original idea failed. Manoj survived his WFIO moment by staying true to the original problem — rural electrification — while being willing to pivot completely to a better solution.