December 2, 2023

yellowAfrica’s asset finance arm for solar and digital equipment, has raised $14 million in Series B funding in a round led by Convergence Partners, with participation from Energy Entrepreneurs Growth Fund managed by Triple Jump, and follow-on investment from Platform Investment partner.

Yellow was launched in Malawi in 2018 by Mike Heinke and maya stewart, the first to bring solar power to the country, which has one of the lowest electricity supplies in the world. It has since expanded its footprint in Africa and increased its product offerings, including electronics such as smartphones.

With fresh funding, Yellow plans to deepen its presence in current markets in Malawi, Rwanda, Uganda, Zambia and Madagascar, launch digital and financial products in the near term, and prepare for future debt financing to accelerate its growth. The new funding round brings the total equity funding raised by Yellow to $45 million.

“The new infusion of capital is being used to leverage more debt financing to attract more customers with financed smartphones and solar systems. While the business will expand its product offerings to include other mobile financial services, growth will be largely Driven by deepening our expertise in existing product categories,” said Heyink, Founder and CEO of Yellow.

Yellow claims to have achieved a compound annual growth rate (CAGR) of 265% over the past four years. The startup said its network of 1,100 agents source and apply for asset financing on behalf of clients through its proprietary Ofeefee app, enabling it to penetrate and reach more than 400,000 clients in its five markets.

The startup’s small home solar system, which includes a 6W-10W panel, 20-50Wh battery, 4 lights, phone charger and radio, remains its most popular product. It also sells higher-capacity solar systems and smartphones.

For small and large solar home systems, users pay a deposit of $10 and $68, respectively, and remit the balance in monthly installments of 6 and 24 months.

“It’s incredibly exciting to see the early stages of continued growth in Africa. The team at Yellow is excited to be on the decades-long journey to a better life with African consumers. We’ve had a front row seat to witness millions of Thrive by joining the digital global economy for the first time,” Heyink said.

Yellow was one of the asset financiers to attract venture capital funding this year, showing that following last year’s trend, cleantech became the second-biggest funding sector after fintech, with continued interest in startup deals, making solar energy a reality. easily available. Cleantech attracts $863m in equity, or 18% of total funding raised by African startups, according to 2022 Partech Africa Report.

Overall, start-ups in the African off-grid solar sector have attracted more than $2.3 billion in funding over the past 10 years, according to the biennial Gogla-World Bank Report Released last October.

Commenting on the Yellow investment, Brandon Doyle, CEO of Convergence Partners, said: “We are delighted to be supporting the Yellow team. We have been tracking the off-grid solar asset financing space for a number of years, but were unable until now to find one that we felt we could support. business model and team.”

“Yellow’s launch also aligns with our commitment to investors to combine strong investment returns with solid social development impact; in this case by addressing the triple challenge of financial inclusion, green energy distribution and broadband penetration, and Profitably serving unbanked communities in Africa’s lowest income countries,” Doyle said.

Asset finance institutions such as Yellow, Sun King and M-Kopa use a pay-as-you-go model to provide asset-based financing (pay-as-you-go) for solar kits and lanterns, which are very popular in sub-Saharan Africa, where there are Millions of people are off grid because the national grid is still underdeveloped.It is estimated Sub-Saharan Africa accounts for 75% of the world’s population No electricity.

These companies, some of which finance other assets, also quickly added new revenue streams and used debt financing to further tap and grow their customer base.