M-KOPA snaps up $250M+ debt, equity for its asset financing platform
Summary
Following the $75 million in equity the Kenyan-based fintech announced last March, M-KOPA has raised $245 million in equity funding since its inception in 2011.Japanese-based trading house Sumitomo Corporation, which M-KOPA co-founder and CEO Jesse Moore on a call with TechCrunch described as the type of investor whose long-term visions complement M-KOPAs aspirations, led the growth equity capital, donating the lions share at $36.5 million.They share with us a conviction that even though there might be wobbles in the economy, theres an undeniable trend towards progress and an undeniable trend that the technology enablement of financial services and other digital services will only make the continent more successful, commented the CEO on Sumitomos first significant fintech-focused investment on the continent.The firm, known for its infrastructural deals in Africa, in a statement, said, By leveraging each expertise and resource, we believe this partnership will have a positive impact on both the financial and telecommunications sectors, ultimately enriching the lives of people across the continent. Meanwhile, Blue Haven Initiative, Lightrock, Broadscale Group and Latitude, the sister fund to Local Globe, participated in the equity round alongside Sumitomo.Underbanked customers in emerging markets face challenges due to low-income, limited credit histories, and lack of collateral. Development financial institutions the IFC, FMO and BII and funds managed by Lions Head Global Partners, Mirova SunFunder and Nithio supplied the rest.Moore noted in a TechCrunch interview that the funding, one of the largest combined debt and equity raises in African tech, will allow M-KOPA to double the size of its now 3-million-strong customer base in existing markets (a metric which already witnessed an 85% CAGR from 2020 to 2022. Theres work to be done and our sustainability-linked facility is effectively an agreement between the lenders and M-KOPA to continue to try to overachieve on that front, especially as the quality of credit from female customers bests that of men globally so the ability to reach more female consumers with life-enhancing smartphones, and digital financial services is a win-win for us.In addition, last year, M-KOPA claimed to have provided over $600 million in cumulative credit for its underbanked customers via a network of over 10,000 agents; 52% of these agents are women, Moore disclosed on the call, and the credit figure now touches over $1 billion.Various models, such as agency banking and community-based finance, tackle the financial inclusion problem in Africa. But the pay-as-you-go model employed by M-KOPA, which starts with providing assets on a credit sale basis (as the wedge fintech product) and building on that relationship to cross-sell financial services via partnerships (for instance, it partnered with Turaco to offer health insurance), is unique in itself, and according to Moore, highly scalable, very commercially sustainable with a huge impact.Given its success in East and West Africa, where it has sold over a million solar home systems and helped avoid 2 million tonnes of carbon dioxide emissions, M-KOPA will now set its sights on South Africa, where Moore says the company is ready to open a pilot operation in the next few weeks.