Lessons from Investing in Cookstoves, Acumen’s Most Profitable and Impactful Sub-Sector

April 17, 2023

Acumen, in partnership with Loughborough University under the Modern Energy Cooking Services (MECS) program, which is funded by the United Kingdom Foreign, Commonwealth and Development Office (FCDO), announced the release of a new report—Recipe for Success: Lessons from Acumen’s Cookstoves Investments.

The last decade has seen the beginnings of a revolution in cooking for people in poverty. Ever since the fuel crises of the 1970s, development organizations and governments have been trying to help low-income households shift away from inefficient, dangerous wood cookstoves, and towards more efficient designs and energy sources. But despite hundreds of projects and billions of dollars, adoption remained low; in 2009, Professor Dean Still, the director of Aprovecho, a leading cookstove research center, told The New Yorker: “the world is absolutely littered with failed stoves.” 15 years later, thanks to dynamic companies, committed entrepreneurs, and patient capital, the for-profit cookstove sector has grown beyond belief, raising significant commercial investment and selling millions of stoves per year. How did we get here?

The Problem

The vast majority of low-income households around the world rely on traditional cookstoves that burn wood, charcoal, and other solid fuels inside their homes. These fuels are inefficient, costly, and unhealthy. Families can spend dozens of hours each week and hundreds of dollars each year preparing to cook their food on these stoves, time and money they simply don’t have. Traditional cooking also emits carbon monoxide and other toxic fumes that are exceedingly harmful to human health, leading to 3.2 million deaths each year.

Worryingly, McKinsey projects that these stoves are set to become even more popular—1.7 billion people could be relying on them by 2050 in sub-Saharan Africa alone. In addition to the human toll, these stoves have significant ramifications for the environment, releasing a gigaton of carbon dioxide—as well as other greenhouse gasses like black carbon—through inefficient combustion and deforestation.

Recipe for Success: People, Planet, Profit

Since 2015, Acumen has invested $6 million in five companies that are transforming the way households cook through improved cookstoves and access to cleaner fuels. BioLite, BURN Manufacturing (BURN), Green Energy Biofuels (GEB), Greenway Grameen (Greenway), and KopaGas (since acquired by Circle Gas) have collectively sold more than four million cookstoves, impacting the lives of 20 million people. 

These five companies make up one of the most impactful sub-sectors Acumen has ever invested in. Furthermore, Acumen’s expected multiple on invested capital (MOIC) for its cookstove investments is 3x higher than its historical portfolio average. As an impact investor, this is a true realization of a triple bottom line—benefiting people, planet, and profit.  

The next frontier of cooking is to move beyond wood and charcoal altogether, and embrace modern energy cooking: electric pressure cookers, induction stoves, and gas. In 2020, Acumen launched a pilot project with Loughborough University under the Modern Energy Cooking Services (MECS) program, funded by UKaid through the United Kingdom Foreign, Commonwealth and Development Office, to support five companies in developing modern energy cooking business models and experimenting with product design and delivery. These pioneering companies can play a crucial role in demonstrating viable business models, attracting more capital into the sector, and sharing the lessons they learned on their pathways to scale.  

Five Lessons from Investing in Clean Cooking

For the next generation of cookstove companies and investors, Acumen is proud to share five lessons from our investments in the clean cooking sector:

  1. To succeed, cookstove companies must sell high-quality appliances at affordable prices. This requires innovative finance and working closely with customers on product design. Biomass cookstoves have been the most successful thus far—making up 69% of total revenues in the sector—but they are not the ultimate solution. 
  2. In the shift to modern energy appliances, behavior change is hard, but early adopters are rewarded. Electric and gas stoves are cleaner and more sustainable than biomass cookstoves. They also save time in cooking and collecting firewood. However, modern energy cooking companies are still early in their journey.  
  3. Scale in clean cooking has come through distribution partnerships. Many companies pivoted to strategic partnerships rather than selling directly to customers. The majority of sales were B2B, with stoves being sold wholesale to distributors or retailers, who then sell to the final customer. Companies also found success marketing to customers of microfinance institutions, who could access loans to pay for their stoves over time.
  4. Carbon financing has transformed the sector. Not only do carbon credits contribute to a reduction in greenhouse gas emissions (Acumen’s investments have mitigated at least 18 million tons of carbon dioxide), they have also made cookstoves more affordable, and the companies more profitable. Carbon financing has a huge role to play in creating universal access to clean cooking.
  5. It is impossible for entrepreneurs to succeed in this sector without a strong moral compass. Clean cooking has been an amazing success, but Acumen’s portfolio companies went through lean times. Several came close to folding before reaching scale. Strong character and committed teams are essential when undertaking a long-term endeavor to change behavior.

The Role of Patient Capital

Acumen invested at a time when little equity was going into cookstoves, and few believed market-based solutions could lead the transition to cleaner cooking practices. But Acumen persevered by backing a cohort of companies that have since demonstrated scale and financial sustainability, helping them understand their impact on the end-customer, partnering to unlock further funding through carbon markets, and providing technical assistance grants to enable them to experiment with new products and refine their business models. To learn more about our approach to investing as a means, read the Patient Capital report

Going forward, both Acumen and our partners at the MECS program see a continued need for Patient Capital to support the growth of this sector and the transition to modern energy, both through equity and equity-like instruments. Funding for this sector remains a major challenge, especially in the early stages of company development. To learn more about the type of investment capital needed to fuel the transition to modern energy cooking, read MECS’ 2022 Financial Landscape report.  


Photo: Peter Irungu

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