E+Co's vision for how to resolve this issue was equally revolutionary. Rather than deliver energy via large-scale utilities, it advocated a bottom-up approach. Arguing that distribution rather than technology was the issue, it identified local entrepreneurs as an untapped resource. And instead of relying on western experts, it hired locals to support the small and growing businesses that could distribute clean energy to their communities.

The successes were many. In 2006, for example, it made a loan to Toyola Energy, Ltd., a company in Ghana that manufactures and sells energy-efficient cookstoves that replace charcoal, wood or dung. Toyola has since sold more than 250,000 cookstoves, and each one eliminates five tons of carbon emissions that E+Co helped the firm monetize by selling carbon credits to Goldman Sachs.

E+Co's model had a heavy emphasis on technical assistance to its borrowers by helping with market assessment, business plans and the like. It followed up with seed loans ranging from $25,000 to $500,000 at 8% to 12% and expansion capital later on. An independent investment committee made up of financial professionals approved all loans.

According to co-founder and former CEO Christine Eibs Singer, who left the fund in January, technical assistance was the firm's top risk mitigation strategy and a necessary component to its success. But it cost 30 cents for every dollar loaned in seed capital. Since it was not funded by grant dollars, E+Co typically could not recoup this investment until a later stage in a company's development when it sought expansion capital, which was both lower risk and more profitable for E+Co.

In fact, Singer had complained for years that E+Co itself never had the working capital it required. But not until early 2011 did the fund's board begin to have concerns about the fund's loan portfolio.

"Repayment rates were dipping, and the data was inconsistent," Usher says, describing the red flags. "There was staff turnover, and a lack of information [regarding] what was really going on in the field."

The fund, meanwhile, was in the throes of building a new private equity platform. Singer invited Aidun, whose legal practice was private equity, to join and oversee the effort.

In November 2011, Aidun officially joined E+Co as co-managing director, alongside Singer,  and was charged with overseeing administration, finance and investments. At the board's request, he, along with the new CFO and CIO he had hired, took a deep dive into the organization's finances and portfolio.  

"When we took over the portfolio, we immediately knew there were some big losses," he says. "We went straight to the lenders and said we cannot certify that we are in compliance with the covenants. [We said] we're starting to examine the portfolio, and when we're done, we will come back and tell you more."

The trio concluded that with approximately 140 investments in 90 companies in 20 countries with an average value of $200,000, the complexity of the fund's portfolio had outgrown its financial systems.