Editor’s note [9 October, 2019]: At the request of the featured startup, the amount raised in funding has been taken out of the headline and body of this article.
In Nigeria, liquefied petroleum gas (LPG) is the cheapest cooking fuel yet it is not a popular choice.
However, Nupe Energy, a hardware startup, has raised seed funding to try to fix this.
Price effectiveness and environmental friendliness of gas are supposed to make it the choice for homes across the country’s over 200 million people but that is not the case.
Apart from a nagging worry of deadly explosions from the cylinder, most of which experts say is caused by inattention to proper usage guidelines, price is one of the biggest worries.
In Nigeria, cooking fuels like kerosene, firewood, and charcoal, can be bought in smaller units starting from ₦100 ($0.28) as opposed to gas that is sold in much larger quantities with ₦500 ($1.38) for between 1.5kg and 1.6kg being the lowest available price.
And this is not all.
Even though not recurring, the initial upfront cost of setting up a cooking gas unit in homes includes cylinders, accessories, and installation costs, which can sit anywhere between ₦5,000 ($13.8) to ₦20,000 ($55.3) depending on the size and specification.
With a smart LPG regulator metre called NUGAS, Nupe Energy is trying to change the culture of cooking gases in Nigeria.
The economy in developing countries means instalment payments and small packages are attractive options.
Consumer electronics and fast-moving consumer goods (FMCG) companies have figured this out in these regions, especially the latter option.
This is exactly what NUGAS is looking to do with LPG.
“We want to bring metering technology to gas cylinders and work with LPG wholesalers to remove the upfront cost of cylinders for customers planning to make the switch and cannot normally afford to,” co-founder, Funfere Koroye said.
The IoT-based NUGAS will measure the volume of gas in a cylinder, convert it to naira, and then charge customers a daily usage fee for the exact volume of gas used; payment will be made using USSD codes.
The company says it has been an uphill battle through research, and the processes of building a minimum viable product (MVP).
“In Nigeria, trying to do something hardware related that has never been done before is a herculean task,” Koroye tells me in a phone conversation.
And he is not wrong.
As I have noticed over many years of covering and observing hardware related startups and the culture in Nigeria, and Africa as a whole, hardware is hard.
Suggested Read: The hard thing about hardware in Nigeria
As an industrial designer and one of the few active ones in Nigeria, Koroye is no stranger to the difficulty of building a hardware-based MVP.
Hundreds of promising hardware startups have died over the years because of reasons centred largely on funding, and research and development.
As a large pointer, Koroye tells me the NUGAS project is generally centred on making gas cooking more efficient and initially began tackling this problem through another channel.
“Research has shown that many people die from cooking gas explosions and generator fumes inhalation every year. So we [Nupe Energy] built a detector to prevent these things, the market was not ready, nobody cared,” he said.
What Koroye references is a smoke alarm and carbon monoxide detector built and released in October 2018.
Nupe Energy eventually settled on NUGAS.
This is why even though seemingly minuscule in the face of recent rounds in Nigeria, Nupe Energy’s recent seed fund raised from a Nigerian-based angel investor may herald good things.
It shows investors may finally be paying attention to the hardware space in Nigeria and foretells a future where hardware startups thrive.
There is a seemingly long road ahead for this startup and a certain blurriness around its business model, but the solution looks like a winner with a lot of prospects.
Koroye admits that the business model for NUGAS is not tied down all the way and that the startup is still in an iteration process.
He says the company will deploy the funding into accelerating the product’s pilot programme, fixing marketing and legal foundations, and making new hires.
If NUGAS manages to break the glass ceiling of hardware startups and products in Nigeria, the possibilities are endless for the ecosystem and the environment.