Originally posted by Devin Thorpe
CEO Galen Welsch launched Jibu with his father to provide affordable access to clean water to people in three countries where culinary water–where available–isn’t safe to drink. Already operating in Kenya, Rwanda and Uganda, customers already number in the hundreds of thousands.
While the most prosperous folks in these three countries have long purchased bottled water to drink, Galen believed that he could not only make a profit selling water to less affluent people in three African countries, he also saw the potential to accelerate growth by giving more economic opportunities to people.
Jibu operates with a franchise model, unlike almost any other. With just about five percent down, Jibu will finance a franchise for a would-be entrepreneur. The total cost of a franchise is about $25,000, but franchisees put down only $1,000 to $1,500 to acquire a store and pay the rest back via volume-based assessments.
Jibu recovers the balance in about three years in Uganda and Kenya but notes that economics in Rwanda allow the company to recover the balance in the first year.
Ron Mugisha is a franchisee in Kampala, Uganda. He says he is happy with the deal. He reports that he is earning more now as a franchisee than he was before. He is excited to earn even more, both by increasing revenue at his current store and by adding new stores.
Ron has already opened a few “micro-franchises.” While Ron, like all of the 20 or so franchisees, operates an actual water filtration system that produces up to 20,000 liters per day, the micro-franchisees are employees of a franchisee and are typically hoping to learn the ropes so they can open their own franchise store. A few micro-franchisees, including one of Ron’s, are simply agents content to represent the company in a small, strategic location where bottled water is stocked but not produced.
The franchisee’s operations aren’t quite as challenging as you might expect, operating a small-scale bottling plant. The water filtration system, developed by a partner in Colorado, is maintained by corporate; the franchisees just need to bottle water and sell it. In fact, to simplify the franchise structure, the company maintains ownership of the equipment, even after the franchisee has paid off the initial financing.
The Jibu strategy is to serve the middle 70 percent of the market, essentially ceding the relatively small market of affluent customers to legacy bottled-water providers and competing instead for the largest part of the market, those who are typically boiling their water. Because boiling isn’t free and isn’t completely effective–you can’t remove some contaminants by boiling–most people in the three countries served can afford Jibu bottled water.
The poorest people, those who can’t afford to pay for water at almost any price, comprise about 20 percent of the population. Jibu doesn’t ignore them entirely, instead, Galen has helped to create “water clubs” for people who are referred to a franchisee. After some modest screening, these customers are given an opportunity to buy filtered water at 90 percent off the list price. While these customers are not profitable, it provides a model for helping rather than ignforing the poorest people in the markets Jibu serves.
Jibu has already raised over $5 million and is working on another round of financing to allow the company to keep growing quickly. Santa Clara University’s Miller Center for Social Entrepreneurship estimates that the number of customers reached by Jibu over the past 30 months has grown by more than tenfold to about 250,000. Galen represented Jibu at the Center’s Global Social Benefit Institute accelerator program in 2014.
The total population of the three countries Jibu serves approaches 100 million people, providing ample opportunity for growth.
The company’s social and environmental goals–and progress toward achieving them–has allowed the company to raise millions in the form of grants. The company hopes to quickly scale to 1,000 franchises, employing 8,000 people, including 5,000 women and youth (for whom the unemployment rate is stratospheric). By encouraging customers not to boil water, Jibu hopes to prevent the emission of 300 tons of CO2.
This looks like one to watch.