PayGo solar startup Yellow raises $14 million to scale in Africa
Summary
It has since grown its footprint across Africa and increased its product offering to include electronics like smartphones.Following the new funding, Yellow plans to deepen its reach in its current markets Malawi, Rwanda, Uganda, Zambia and Madagascar, launch digital and financial products in the near-term, and prepare for future debt funding rounds to ramp up its growth. The startup says its network of 1,100 agents, who source and make applications for the asset finance on behalf of customers through its proprietary Ofeefee app, have enabled it to penetrate and reach over 400,000 customers in its five markets.The startups small home solar system, comprising a 6W-10W panel, 20-50Wh battery, 4 lights, cellphone charger and radio, remains its most popular product. We have a front-row seat to witness millions of people prospering as a result of joining the digital global economy for the first time, said Heyink.Yellow is among the asset financiers that have attracted VC funding this year indicating a sustained appetite for deals in startups making solar energy accessible, following last years trend that saw clean tech emerge as the second most-funded sector after fintech. Clean techs attracted $863M in equity or 18% of the total funding raised by African startups, according to 2022 Partech Africa report.Overall, in the last 10 years startups in Africas off-grid solar sector have attracted over $2.3 billion in funding, according to the biennial Gogla-World Bank report released in October last year.Commenting on the Yellow investment, Convergence Partner CEO, Brandon Doyle, said, we are excited to be backing the Yellow team. We have been tracking the off-grid solar power asset finance space for many years but have failed to find a business model and team that we felt we could back until now.Yellows offering also sits well with our promise to our investors of strong investment returns married with solid social development impact; in this case by tackling the triple challenge of financial inclusion, green energy distribution, and broadband penetration, and doing so profitably while servicing the unbanked communities of the lowest income countries of Africa, said Doyle.Asset financiers like Yellow, Sun King and M-Kopa operate pay-go models that offer asset-based financing (pay-to-own) for solar kits and lanterns, products that are hugely popular in Sub-Saharan Africa, where millions of people are off-grid, as national power grids remain underdeveloped.