Let there be light: Andrea Sreshta, co-founder of LuminAID Lab © FT
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Since Andrea Sreshta and Anna Stork founded LuminAID Lab, a company that makes solar-powered lanterns, early last year, they have won three business plan competitions, launched an internet sales campaign that netted $50,000 and – perhaps most notably – provided thousands of people in disaster-struck regions with a durable, waterproof light source.

“It has been extremely challenging but also an exciting time,” says Ms Sreshta, 28, who is a second-year MBA student at the University of Chicago’s Booth School of Business. “Seeing our lights being used by people around the world creates a mix of emotions for us, from feeling relieved that we were able to produce and deliver our product, to being humbled by the ability to touch the lives of people we will likely never meet.”

In May, LuminAID Lab took first place in Booth’s Social New Venture Challenge, a business plan competition for social enterprises, winning $30,000 in cash.

The company has broken even on the back of sales to customers who plan to use the lights for camping or other outdoor recreational activities. The biggest challenge for LuminAID Lab is whether it can successfully sell to one of the big organisations in the humanitarian aid world, such as the UN or the Red Cross.

It will not be easy, says Robert Gertner, professor of strategy and finance at Booth and an adviser to the team. “Those are not the easiest organisations for a start-up of two people to sell to,” he says. “They really need a focused approach and they need to continue to test the market.”

Prof Gertner is an enthusiastic supporter of the LuminAID Lab. “It really is a great product. It has a social purpose, but you could see this kind of product prominently displayed in a camping store, or on an ecommerce site for gadget lovers,” he says.

But even he admits: “It’s hard for social enterprises to make money.”

The idea for the LuminAID light sprung from an unusual class assignment. In January 2010, after hundreds of thousands of people died in the Haiti earthquake, Ms Stork and Ms Sreshta, who at the time were architecture students at Columbia University, were asked to design a relief product.

Many of their classmates created easily assembled shelters. But after speaking to a relief worker in Haiti who told them that light was an often-ignored need in the wake of a disaster, the pair focused on designing a solar-powered lantern.

“The earthquake victims felt so unsafe at night that they couldn’t get beyond survival mode,” says Ms Stork, 26. “There were high incidents of rape, kidnapping and looting. We wanted to create something that would make people feel safer and allow them to function after dark.”

The gadget looks deceptively simple: a white rectangle sealed in a sturdy, inflatable plastic bag and comparable in weight to a medium-sized apple. When charged for four hours in the sun, the lantern provides up to eight hours of light.

In their final year of architecture school, they filed a patent for the portable lamp and began entering business plan competitions. Juggling multiple competitions allowed them to hone their idea.

Around that same time, Ms Sreshta decided to study for an MBA.

“When we filed for our IP (intellectual property protection) and incorporated our LLC (limited liability company) – acronyms that I had barely heard of before then – I realised I had a lot to learn about running a company, so it pushed me further in the direction of wanting to acquire fundamental business skills,” she says.

They won a total of $45,000 from the contests and both women chipped in several thousand dollars of their personal savings. But to pay for the manufacturing of their first batch of 1,000 lights they needed more money.

In November, they started a crowdfunding campaign on the donation-based website IndieGoGo.com. The partners offered a “Give Light, Get Light” deal where customers pay $25, $50 or $100 to purchase a set number of lights, at the same time donating lights to people in need.

“We were familiar with crowdfunding as a platform for pre-selling novel design items in the design industry,” says Ms Sreshta. “It enabled those with great ideas for things they want to produce to use pre-sales of the product to fund a big production run.”

The philanthropic approach played well to their customer base, says Prof Gertner. “The outdoor camping community is attuned to the social problems that the light addresses. There was a feeling of: ‘I feel better about buying it because I’m giving one away’.”

Over 40 days, they sold 1,500 lights, had another 3,300 matched as donations and raised more than $50,000. Ms Stork and Ms Sreshta have distributed lights to more than a dozen non-profit organisations, primary schools and orphanages in developing countries.

Turning a profit is a not critical for LuminAID Lab – at least not yet. The founders expect the company to be profitable by the middle of next year, but in the meantime they have learnt to be thrifty. They have borrowed storage space from Ms Sreshta’s father and Ms Stork is the company’s sole employee, working out of a donated office in Boston. Ms Sreshta is a full-time student at Booth and plans to work full time for the company after graduation.

“It is sometimes lonely,” admits Ms Stork. “I would love to have someone to work with. We’re waiting for the right time and were waiting for the right person. We want to bring someone with more sales experience.”

The partners have found creative ways to bring in inexpensive labour. Over the summer, a team of Booth MBA students earned course credit for creating a plan for LuminAID’s pricing and distribution strategy for commercial retail sales.

Prof Gertner is sanguine about the LuminAID Lab’s leadership, but says that Ms Stork and Ms Sreshta will be tested as their company grows and they need to hire others.

“The biggest challenge is letting go of every little detail in the process as it gets bigger and bigger,” he says.

Over the coming year we will follow the fortunes of LuminAID Lab as the two founders attempt to increase their market share and try to find the “right” person with sales experience to join their team, while Ms Sreshta finishes her MBA.

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