In a round led by Convergence Partners and including the Energy Entrepreneurs Growth Fund, managed by Triple Jump, as well as a follow-on investment from Platform Investment Partners, Yellow, an asset financier for solar energy and digital devices in Africa, has raised $14 million in series B funding.
In order to first provide solar energy to Malawi, which has some of the least access to electricity in the world, Mike Heyink and Maya Stewart founded and launched Yellow there in 2018. Since then, it has grown to encompass the entirety of Africa and expanded its product line to include items like smartphones.
Yellow’s Future Goals
Yellow intends to use the capital raised optimally by expanding its presence in its current markets, including Malawi, Rwanda, Uganda, Zambia, and Madagascar where it intends to provide digital and financial products soon. Furthermore, in order to accelerate their growth, they want to get ready for future funding rounds. By adding this round, Yellow has now secured $45 million in debt and equity financing.
Outlining their business goals, Yellow founder and CEO, Heyink said, “The newly injected capital is being used to leverage more debt finance to reach more customers with financed smartphones and solar systems. While the business will broaden its product offering to include other mobile financial services, growth will be fuelled primarily by deepening our expertise in our existing product categories”.
Yellow: A pioneer in the African startup ecosystem
Over the past ten years, the startup environment in Africa has been rapidly changing and gaining speed. Africa has developed into a promising center for innovation and entrepreneurship due to its expanding population, increased access to technology, and rising middle class. The following are some significant elements of the African startup scene.
Yellow is undeniably revolutionizing the African startup landscape. With a compound annual growth rate (CAGR) of 265% during the previous four years, Yellow claims to be profitable. The firm claims that it has penetrated and reached over 400,000 consumers in its five countries thanks to its network of 1100 agents, who find and submit asset finance applications on behalf of customers through its own Ofeefee app.
The entire yellow team and Heylink are delighted to be part of the sustained growth in Africa, he quoted.”It’s incredibly exciting to see the early stages of sustained growth in Africa. The team at Yellow is thrilled to be on the multi-decade journey with the African consumer, to a better life. 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”.
Investors’ perspective
keeping with the trend from the previous year, when cleantech overtook fintech as the second most-funded industry, Yellow is one of the asset financiers that have attracted venture capital money this year, demonstrating a persistent interest for deals in firms making solar energy accessible. According to a 2022 Partech Africa study, cleantechs received $863 million in equity, or 18% of all the capital raised by African entrepreneurs.
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.”
Further, he also quoted, “Yellow’s 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”.
Flourishing African Solar Sector
According to the Gogla-World Bank study, which is updated every two years and was published in October of last year, companies in Africa’s off-grid solar industry have received over $2.3 billion in capital overall in the last ten years.
Asset financiers with pay-go business models, such as Yellow, Sun King, and M-Kopa, provide asset-based financing (pay-to-own) for solar kits and lanterns, which are enormously popular in Sub-Saharan Africa where millions of people live off the grid due to the underdeveloped state of the country’s electrical systems. According to estimates, sub-Saharan Africa is home to 75% of the world’s population without electricity.
