ATEC Partnered with CCA to Explore Scaling Through Licensing
ATEC is an international social enterprise decarbonising cooking at scale. To date, ATEC has sold 6,500 of their patented pay-as-you-go (PAYGO) enabled magnetic induction stoves, eCook, and small-scale PAYGO biodigesters in Bangladesh and Cambodia. Until now, ATEC has owned the full process of a product sale from initial customer marketing, sales, transport, installation, and service after sales. However, continued country expansion through such a model is resource intensive given the time required to establish entities, recruit a full team, and build market knowledge.
ATEC partnered with the Clean Cooking Alliance (CCA) to examine opportunities to expand their business through licensing, franchising, and working with distributors in other markets. This would allow ATEC to implement a leaner approach to international expansion whilst also leveraging the existing experience, networks, and infrastructure of potential local licensees. Through this review with Spring Impact, ATEC was able to establish key requirements, restraints, and the most appropriate way forward.
Spring Impact reviewed both franchising and licensing for ATEC’s products, business model, and plans. Traditional franchising was not applicable as there was a likelihood of different business models across markets, with sales and marketing being market specific. The associated systems must align. In addition, potential partners must have an established business and not rely solely on this product, whereas franchisees usually focus on one brand or product range. Spring Impact reviewed licensing as a potential option in the right circumstances, with applicable partners being those vertically integrated with manufacturing and selling other agricultural products to small-scale farmers to balance revenue across products as they start off with low volumes of biodigesters.
Spring Impact also found that a fully traditional ‘hands off’ licensing approach may also be challenging given the markets and partners – in short, it was important to be involved at the right level to succeed. Finding the balance and make licensing a success requires both appropriate market conditions and business standardisation. An appropriate market for licensing, in this case, would include a large enough market size for the product with the identification of an appropriate licensee partner who has the required market reach. In the case of biodigesters, the initial manufacturing set-up and launch in a new territory is capital intensive. Before carbon market maturity, it is difficult to fund privately due to the long lead time and initial low sales volumes of biodigesters. Identifying the appropriate partner (initial carbon partner), investor, or donor funding to support and market the start-up is critical to launching in a new market. For licensing opportunities and partnerships to succeed, a business must standardize their operating practices, including manufacturing and installation. After-sales, they must standardize expectations for product quality, customer retention, and impact measurement. These standard operations and expectations must be supported with ongoing training of the start-up and licensee to ensure product quality and customer satisfaction.
While the market potential for biodigesters remains high, this project’s work brought up key challenges to review as ATEC looks at options for continued scaling. These included the limited numbers of commercially viable biodigester distribution partners reducing ATEC’s chance to scale. Viable agriculture partners rarely have experience in PAYGO or carbon credits, and PAYGO partners (like solar) often find biogas’s high-touch manufacturing, installation, and service requirements challenging.
The licensing approach for biodigesters is therefore not without challenges. However, with maturing carbon markets, these challenges are diminishing relative to return. ATEC’s other product range, eCook, was designed partly out of the findings from Spring Impact and seeks to address some of these scalability challenges around centralised manufacturing, scalable distribution, installation, and automated carbon credits. As of 2022, ATEC has deepened its focus on scaling both of its products across Asia and Africa, with MOUs signed across Nepal, Zambia, Rwanda, and Kenya.
“This piece of work with Spring Impact, supported by CCA, was immensely beneficial in our strategic development. It helped us plan out a more scalable approach for biodigesters as well as inform the launch of our eCook product range and what it needs to look like to achieve high growth and impact. This piece of work was a foundation to making ATEC reach its potential as a leader in PAYGO cooking and carbon markets.”
– Ben Jeffreys, CEO of ATEC