CookClean Investor 10 Pager

8/2/2019 CookClean Investor 10 Pager

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D a n a B l e c h , J o h n C o o g a n , F r a n k M a r i n o , T h i b a u t M e n t h e , A l e x a T e s t e r m a n

InvestorProposal

CookClean

AnAlternativeSolutiontoEradicatingHazardousCook

StovesandPromotingGlobalHealth

February29



2 INVESTORPROPOSAL

BusinessSummary

CookCleanIncorporated:

Ourmainofferingisaservice:rentalofcleaner,healthier,fasterandmoreefficientcook

stoves.PeoplelivinginruralvillagesandtownsinIndiadonotenjoyaccesstotheelectric

grid. Those who can afford cook stoves spend a significant portion of their income on

solutionsthatareexpensiveanddamagingtousers’health,suchasbiomass.Ourbusiness

model allows customers to rent technologically advance Envirofit stoves from local

entrepreneurs and pay for the stoves per night. Our target customers cannot afford the

costsinvolvedinswitchingfromkerosenetohigh-efficiencyEnvirofitstovesdirectly.They

can afford smalldailyorweekly amounts,and therefore needabusinessmodelthat fits

theirspendingpatterns.

TheCookCleanFoundation:

TocomplimenttheCookCleanforprofitsocialenterprise,wehavea501cnon-profitarm

that, in addition to accepting tax-deductible donations, also receives a percentage of

CookClean'sprofits.Ourfoundationtrainscommunityambassadorstospreadinformation

promoting global health awareness, specifically regarding the negative health effects of

hazardouscookingmethodsinlow-incomecommunities.Weaccomplishthisthroughthe

provisionofclearanddigestibleeducationalresourcesaswellasopportunitiesforthese

ambassadorstobecomemicroentrepreneurs.



INVESTORPROPOSAL 3

MarketAnalysis

EnergyPovertyandHazardousCookingPractices

For nearly half the world, cooking over an open fire is an every day reality and

struggle. Aside from the devastating environmental effects of deforestation and toxic

emissions,thepoorbearthehighlydisproportionateburdenofdiseaseanddeathdueto

respiratoryfailure,tuberculosis,lowbirthweightfornewborns,andsevereburns.These

problems also disproportionately effect women and children, as they primarily cook,

collectbiomassusedasfuel,andinhalesmokeandtoxicemissionsinthehousehold1.Ina

study conducted by the World Health Organization (WHO), fuel stoves can be held

accountablefor800,000to2.4millionprematuredeathsannually.Astaggering6.3%of

newbornsdiebeforetheageoffivewithindoorairpollutioncitedasthenumberonefactor,

afactorthatispreventablemerelywiththeuseofacleancookingstove.

RegionofFocus:India

InIndiaalone,120millionhouseholdscooktheirmealseverydaybyburningbiomassfuel

such as kerosene, wood, animal manure, or agricultural waste. TheWHO estimate that

indoorairpollutionkillsoverhalfamillionpeopleinIndiaeachyear,with56%ofthese

deathoccurringinchildrenunder5.Basedonthesestatistics,wecanconcludethatIndia

alone accounts for around or greater than half of all premature death annually due to

indoor pollution and fuel cook stoves. For this reason, thefirst market that CookClean

intendstotargetistheruralpoorinIndialivingonlessthan$5perday.

1Source:www.inforse.dk/asia



4 INVESTORPROPOSAL

TargetedIndianStates:

WithinIndia,weplanontargetingUttaranchal,MadhyaPradeshandUttarPradeshbecause

thesestatessufferfromextremecasesofbothlowincomeandinadequateaccesstoenergy.

Thesethreestateshaveacombinedpopulationofapproximately279millionpeopleandan

averageyearlyincomeof$500USDor$1.40perday.

Wealth(GDPperCapita) EnergyAccess(kWhperCapita)

CriticalRegions:Statesinboldsufferfrombothlowincomeandenergyaccess.

• Uttaranchal

• JammuandKashmir

• MadhyaPradesh

• Bihar

• UttarPradesh

• Uttaranchal

• Chhattisgarh

• MadhyaPradesh

• Assam

• UttarPradesh

Pleasevisit:http://jacoogan.com/indiaformoreinformation.



INVESTORPROPOSAL 5

ProductOffering

Envirofit

LaunchedinIndia,May2008,EnvirofitInternationalmanufacturesandsellsclean-burning

cooking stoves. They have an excellent track-record of customer adoption and reached

60,000customersintheirfirstyearofoperation.Theirsolutionhasthepotentialtoreduce

CO2 emissions by over 400,000 tons and prevent over 85,000 kg of black carbon from

enteringtheatmosphere,allwhilegeneratingsavingsof$18million.Weplantopurchase

theirG-Seriesstove,whichisacheapanddurablemodelandrentittopoorfamiliesinthe

developingworld.

Thestoveweplantosell(seeattachedproductbrochure)ismadeoutofmetal,whichis

stronger and cheaper to produce than traditional ceramic stoves, and burns the same

materials (likewood) that peopleare already using. The difference is that the Envirofit

stovehasauniqueandinnovativecombustionchamberthatusesupto60%lessfuelthan

otherstovesandslashestoxicemissionsbyupto80%.

Envirofit'sG-Seriescanbepurchasedfor$25and,althoughit'sexpensiveformanyfamilies

who survive on $2 to $5 a day, CookClean’s rental servicemakes them accessible and

affordable. The stoves also offer households fuel cost savings and drastic reductions in

toxicindoorairpollution.

EnvirofithasbeenprovenintheIndianmarketandhashadsuccessfulcustomeradoption.

Theyarerapidlyexpandingtootherdevelopingnations(inAfricaspecifically)andwehope



6 INVESTORPROPOSAL

tohelpthemachievescaleasquicklyaspossibletomaximizetotalsocialimpactandhelp

solvetheindoorcookingcrisisglobally.

CompetitiveAnalysis:

In addition to Envirofit, other organizations, such as First Energy and the Aprovecho

Research Center, have succeeded in creating cost effective, clean and convenient cook

stoves.Theseserve asbothvalidationofourassumptions that technologycan solvethis

problem and examples of potential suppliers as our rental service business scales. Our

businessmodelhasbeenvalidatedbyLumaLight,anMIT$100Kcompetitorthatprovides

rechargeablelightsinSierraLeonthroughasimilarrentalmodel.

TheCookCleanSocialEnterprise

Description&Design

CookClean is a for-profit social enterprise established with the mission of educating

impoverished communities about the advantages of investing into and adapting to

widespread use of cleaner stoves for cooking. CookClean aims to connect the poor to

cleanerstovesbypartneringwithEnvirofitandpromotingthecompany’senvironmental

andhealthfriendlystovetechnology.EnvirofitiscurrentlyworkingwithEco-Securitiesto

providecarbonfinanceinIndia.Oncecarbonfinanceisimplementedintheirmodel,itwill

offsetthecostofmanufacturingstovesandraisingawareness.Whilenewrevolutionary

technologieshavebeendevelopedandarefinanciallysustainable,theylacksolidstrategies

toadapttothepoorestareassustainablyinthelong-term.Communityengagementisthe

keytothismodel,whichothercleanenergyprogramsinIndiahaveemphasized.According

toINFORSEAsia,12villageslaunchedtheRuralEnergyandEcologicalVolunteersCorps



INVESTORPROPOSAL 7

(REEVOC)thatplayed akey role inimplementingandmanagingrenewableenergy (RE)

programs in these communities. In their analysis, they state, “the last 4 ½ years of

experiencesinthe‘ecovillagedevelopmentproject’hasshownthatunlessacommunity

has ownership of a program and is involved at all levels from planning, implementing,

monitoringandevaluating,longtermsustainabilityisnotpossible.”CookCleanproposesa

similar model that mimics the REEVOC approach. A group of four volunteers will be

selectedfromeachvillage,twomenandtwowomenmakingatotalof48volunteergroups.

Thisgroupgoesthrougha training/educationseminarwhere theylearnhowtobecome

ambassadorsandmicroentrepreneurs.Theymeetatleastonceamonthtolearnaboutthe

necessity of eliminating indoor pollution and the economic, environmental, and health

benefitsthisaffordstheentirecommunity.Thegoalistotargetall-importantgroupsinthe

village,thereforevolunteersintheinitialambassadorgroupareresponsibleforpromoting

and organizing, in their villages, women’s groups and youth groups to motivate and

empower women to become involved in the transformation and betterment of the

communityasawhole.Thisisachievedbyworkingwithteachers,communityleadersand

elected officials who educate and explain the benefits and importance of clean cook

technologytothepeopletheyrepresent.

ImpactMeasurement

The impact of CookClean will bemeasured in several ways: the number of households

equipped,theamountofmoneysavedbyfamiliesusingthecleanerstove,andthefuture

positiveeffectsonhealth.ForourfirstinstallmentofCookCleanwewillchoosetodefine

impact as high frequency of use of the stove and recruitment of new stove micro



8 INVESTORPROPOSAL

entrepreneurs. Tomeasure this impact, wewill have our micro entrepreneurs conduct

simpleinterviewswitheachoftheirclientswhentheycollecttheirpaymentsandrecord

theclient’susage.SimilartotheGrameenmodel,communityambassadors/entrepreneurs

will serve as the lenders. This does not simply imply selling stoves, but rather going

through trainingto effectively impact the communitiesand their ‘clients.’ Weekly visits

shouldensurethatanyquestionsareanswered,sanitaryconditionsareimproved,andthe

stoveisbeingadaptedintocomfortabledailylife.Microentrepreneurswillalsochronicle

theirclients likesand dislikesof the new stove, and howmuchoftheirmoneytheyare

spendingonfueltotracksavings.Recruitmentofnewstovemicroentrepreneurswillbea

key indicator of this program’s impact, as growing numbers of ambassadors increase

impact, access, and education to more neighborhoods and communities. It also

demonstratesindividuals’andcommunities’stakeinimprovingthehealthandconditions

oftheirowncommunity,andthisvalueontheproductandinvestmentintocleancookingis

essentialtotheCookCleanmodel.Ourfirstimpactgoalwillbeachievedwhenwehave

successfullytransitioned5%ofthehouseholdswithinourdesignatedregions(Uttaranchal,

Madhya PradeshandUttarPradesh)fromusingbiomasscookstoves toclean, safe,eco-

friendlycookstoveswhichshouldoccurwithinfiveyears.Ourultimategoalistoeradicate

theuseofhazardousstovesentirely.

FinancialModelQualitativeAnalysis

Our solution generates revenue by selling stoves using a microfinance model that

empowers micro entrepreneurs to create businesses renting stoves to end-users.



INVESTORPROPOSAL 9

Individualspurchasestovesthroughusbypaying$25over30weeks,brokeninto$1per

week installments. We feel that 30 weeks is an appropriate time-span because the

purchaserwillownthestovefreeoffinancialobligationafterlessthan8months,whilethe

stovehasanaveragelifeof 5years.Naturally,oncewebegin selling thesestoves inour

targetmarket,wewilladjustfinancingschedulestomaximizeourimpactandoptimizeour

profit.Regardlessofhowlongweallowforrepayment,wewilleventuallyreceiveatotalof

$30on our initial $25 investment. This equates to a20%rate of return,whichwe feel

representsasafeandsustainablereasontopursuefundingfroma socialimpactinvesting

firm.

TheaddedbenefitofpurchasingaCookCleanstovecomesintheformofanopportunityto

become a micro entrepreneur. Because they are portable, stove owners can rent their

stoveswithintheirlocalcommunitywhentheydonotneedthem.Tobreakevenentirely,a

stoveownercouldrentthestove5timesaweekfor20centsperdayandcompletelyfund

theirobligations tous. Once the ownerhas become anentrepreneur and iscomfortable

renting their single stove, they can easily buy more from us under the same original

financing terms to scale their rental business. Additionally, we would happily share

revenuewithstoveownersshouldtheywanttoactasambassadorsinencouragingtheir

peerstopurchaseCleanCookstovesoftheirown.

QuantitativeProjections

Ofthenearly300millionpeoplewithinourtargetmarket(Uttaranchal,MadhyaPradesh

andUttarPradesh)wehopetogain5%marketshareoverthenext5years,meaningtotal

stovesalesof15millionunits.After5years,userswillbeforcedtoreplacetheirstovesand



10 INVESTORPROPOSAL

hopefullywillreturntous.Thismeansthat,onceourbusinessismatureandstable,wewill

seeanaverageof3millionstovessoldperyear.Atatotalpriceof$30perstove,thesesales

willearnCookClean$90millioninrevenue.Eachstovecosts$25,meaningthatourannual

costofgoodssoldwillequal$75million.Thisleavesus$15milliondollarsinoperating

profitthatwillbeusedtofundfuturegrowththroughmarketing(sellingexpenses)aswell

as cover our general and administrative (G&A) costs. Assuming $5 million in selling

expensesandanother$5millionto run the company(G&A), CookCleanwillgenerate$5

millioninnetincomeperyear.

Naturally,scalingto3millionunitswillbenoeasy taskbutthe tablebelowsummarizes

whatwefeelarereasonablegrowthprojectionsoverthenext5years.

Year 2012 2013 2014 2015 2016

TargetMarket(Pop) 300,000,000 300,000,000 300,000,000 300,000,000 300,000,000

MarketShare 0.01% 0.05% 0.10% 0.25% 1.00%

Sales(Units) 30,000 150,000 300,000 750,000 3,000,000

Revenue $900,000 $4,500,000 $9,000,000 $22,500,000 $90,000,000

CostofGoodsSold ($750,000) ($3,750,000) ($7,500,000) ($18,750,000) ($75,000,000)OperatingIncome $150,000 $750,000 $1,500,000 $3,750,000 $15,000,000

SellingExpenses ($50,000) ($250,000) ($500,000) ($1,250,000) ($5,000,000)

G&AExpenses ($50,000) ($250,000) ($500,000) ($1,250,000) ($5,000,000)

NetIncome $50,000 $250,000 $500,000 $1,250,000 $5,000,000

Inordertobenchmarkourfinancialperformance,wecomparedouroperatingandprofit

margindriverstothefinancialperformancemetricsofRoom2Readinthetablebelow.

CookClean Margins Room2Read2 Metrics

CoGS/Revenue 83.3% ProgramExpenses 84.5%

G&A/Revenue 5.6% AdministrativeExpenses 6.9%

Selling/Revenue 5.6% FundraisingExpenses 8.5%

ProfitMargin 5.6% ProfitMargin 0.0%

2Source:http://www.charitynavigator.org/

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CookClean Investor 10 Pager