It was not so long ago that Anna Stork and Andrea Sreshta – founders of LuminAID Lab, a social enterprise that makes solar-powered lanterns – sold their flashlights in batches of one or two through a website they cobbled together themselves. They responded to every single customer inquiry personally and single-handedly ran a successful crowdfunding campaign, “Give Light, Get Light”, where customers bought and also donated thousands of lights for people in the developing world.
Now, a little over two years after Ms Stork and Ms Sreshta took first prize in the University of Chicago Booth’s Social New Venture Challenge, a business plan competition for social enterprises, things are different.
Sales have doubled over the past six months, buoyed by 35 new wholesale accounts and a new sales channel on Amazon. The partners received an infusion of $100,000 in the form of a grant from the Clean Energy Trust in Chicago. And in July and August, the company hired – and paid – a team of undergraduate interns to run its social media efforts.
“They are getting there,” says Craig Wortman, professor of entrepreneurship at Booth and an informal adviser to Ms Stork and Ms Sreshta.
The past few months have been a time of clarity for LuminAID Lab. It has two distinct ambitions: to provide lights – at a deep discount – to humanitarian agencies that work in disaster-hit regions so that relief workers and victims can function after dark; and to sell lights to outdoor enthusiasts and campers at a sufficient profit to support the business. These goals require markedly different sales strategies, marketing plans and pricing models – things that would be tricky for an established company to pull off and are incredibly challenging for a start-up.
“For a while there were so many sales avenues to pursue we weren’t sure which ones to devote our time and energy to,” says Ms Stork, 27. “But recently we’ve had really good sales through both traditional retail and disaster relief channels. It’s an affirmation that this model can work.”
In July the partners inked a deal to sell the LuminAID on Amazon, the world’s largest online retailer, and formed partnerships with international distributors to sell the light in camping stores across the UK, Japan, Korea and Germany. They also won accounts with several state emergency management systems in the US and international aid agencies, including Shelterbox, a UK-based group that distributes kits filled with supplies in post-disaster and conflict areas.
Ms Sreshta, 29, is a second-year MBA student at Chicago Booth. This semester she is taking one course. “If we have customers that need to be talked to, I don’t want to put that off because I have to go to class. I want to make sure we’re doing everything we can to move the business forward.”
The biggest priority for the company this year is to crack into a large, name-brand sport and camping store. Indeed, “getting early traction with selling” is critical to LuminAID’s future growth, according to Prof Wortman. “They need to get aggressive and network their way into [a big retail outlet] by doing what aggressive sales people do,” he says.
“We are working on building relationships with retailers, refining our packaging and taking a close look at potential displays,” says Ms Stork.
In late May, the business partners introduced an updated version of their light. The model is similar to the old one – a white rectangle, sealed in a sturdy, inflatable plastic bag – but provides light for a day and a half after only five to seven hours of sun exposure. The previous model provided eight hours of light after about six hours of sun exposure. “This [shorter charge time] is critical because in many places you don’t have continuous sunlight,” says Ms Sreshta.
They are also working on a second product: a brighter solar-powered light that requires even less charge time and also powers mobile phones.
While the business partners are eager to diversify their product offerings, Prof Wortman is more cautious. ”That’s a tough one,” he says. “The problem with expanding the product line is that you’re doing product development and you’re not selling.”
For now the company is self-financed. The partners have received close to $200,000 in “free money” from business plan competitions and grants and each chipped in several thousand dollars of their personal savings. Neither Ms Stork nor Ms Sreshta take a pay cheque and beyond a handful of part-time workers who help with web development, and PR, they are the only two employees.
“We are still trying to run things as leanly as possible and scale up in a smart way,” says Ms Sreshta, adding that they occasionally consider the possibility of taking venture funding. “We are always asking ourselves: what does this business need?”