YELLOWan asset financier for solar power and digital devices in Africa, raised $14m in Series B funding in a round led by Convergence Partners with participation from the Energy Entrepreneurs Growth Fund, managed by Triple Jump, plus a follow-on investment from Platform Investment Partners.
Yellow was founded and launched in Malawi in 2018 by mike heyin And Maya Stewart, to initially bring solar energy to the country, which is among those with the lowest access to electricity in the world. Since then, it has expanded its footprint across Africa and expanded its product offering to include electronics such as smartphones.
Following the new funding, Yellow plans to deepen its reach in its current markets of Malawi, Rwanda, Uganda, Zambia and Madagascar, launch near-term digital and financial products, and prepare for future rounds of debt financing to accelerate its growth. The new round brings the total debt and equity funding raised by Yellow to $45 million.
“The newly injected capital is being used to leverage more debt financing to reach more customers with funded smartphones and solar systems. As the company expands its product offering to include other mobile financial services, growth will primarily be fueled by deepening our expertise in our existing product categories,” said Heyink, Founder and CEO of Yellow.
Yellow claims to be profitable after recording a compound annual growth rate (CAGR) of 265% over the past four-year period. The startup says its network of 1,100 agents, who research and apply for asset finance on behalf of clients through its proprietary app Ofeefee, has enabled it to penetrate and reach more than 400,000 clients across its five markets. .
The startup’s small solar home system, featuring a 6W-10W panel, 20-50Wh battery, 4 lights, cell phone charger and radio, remains its most popular product. It also sells larger capacity solar systems and smartphones.
For small and large solar home systems, users pay a down payment of $10 and $68 respectively, and release the balance in monthly payments spread over six and 24 months.
“It is incredibly exciting to see the early stages of sustained growth in Africa. The Yellow team is thrilled to be on the decades-long journey with the African consumer, towards a better life. We have a front row seat to seeing millions prosper as they join the global digital economy for the first time,” Heyink said.
Yellow is among asset financiers that have attracted venture capital funds this year, indicating a sustained appetite for startups making solar power accessible, following last year’s trend that saw cleantech emerge as the second most funded sector after fintech. Cleantech attracted $863m in equity, or 18% of total funding raised by African startups, according to 2022 Partech Africa report.
Overall, over the past 10 years, off-grid solar startups in Africa have attracted more than $2.3 billion in funding, according to the biennial Gogla-World Bank report released in October last year.
Commenting on Yellow’s investment, Convergence Partner CEO Brandon Doyle said, “We are delighted to support the Yellow team. We’ve been tracking the off-grid solar asset finance space for many years, but have been unable to find a business model and team that we thought we could support until now.
“Yellow’s offering also aligns with our promise to our investors of strong returns on investment coupled with strong social development impact; in this case, by tackling the triple challenge of financial inclusion, green energy delivery, and broadband penetration, and doing so cost-effectively while serving unbanked communities in low-income countries. back from Africa,” Doyle said.
Asset financiers like Yellow, Sun King and M-Kopa operate payment models that offer asset-based (pay-to-own) financing 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. It is estimated that sub-Saharan Africa represents 75% of the world’s population without access to electricity.
These companies, some of which provide financing for other assets, have also been quick to add new revenue streams and leverage debt financing to further leverage and grow their customer base.